Tribunal Sets Fair Rent for Property Under Rent Act 1977

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. LON/00AC/F77/2024/0680

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 15 [ADDRESS] [POSTCODE]

[NAME] [NAME]

[APPELLANT].

Tenant Mrs [APPELLANT]

1. The fair rent is £880 Per month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 10 March 2025

3. The amount for services is - Per -

negligible/not applicable

4. The amount for fuel charges (excluding heating and lighting of common parts) not counting for rent allowance is

- Per -

negligible/not applicable

5. The rent is/is not to be registered as variable.

6. The capping provisions of the Rent Acts (Maximum Fair Rent) Order 1999 apply (please see calculation overleaf)/ do not apply because 1st registration/15% exemption.

7. Details (other than rent) where different from Rent Register entry

8. For information only:

(a) The fair rent to be registered is the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was ……………….. per ........................... including ......................... per annum ..................... for services (variable).

(b) The fair rent to be registered is not limited by the Rent Acts (Maximum Fair Rent) Order 1999, because it is the same as/below the maximum fair rent of £ 1,045 .......... per month ......... including £ 0 ....................................... per month ...................... for services (variable) prescribed by the Order.

[NAME] [NAME] of decision 11 March 2025

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 392.1

PREVIOUS RPI FIGURE Y 281.7

X 392.1 Minus Y 281.7 = (A) 110.4

(A) 110.4 Divided by Y 281.7 = (B) 0.391906

First [NAME] for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C) n/a

If no (B) plus 1.05 = (C) 1.441906

Last registered rent* £725.00 Multiplied by (C) = £1,045.38 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £1,045.50

Variable service charge YES / NO If YES add amount for services -

MAXIMUM FAIR RENT = £1,045.50 Per month

Explanatory Note

1. The calculation of the maximum fair rent, in accordance with the formula contained in the Order, is set out above.

2. In summary, the formula provides for the maximum fair rent to be calculated by:

(a) increasing the previous registered rent by the percentage change in the retail price index (the RPI) since the date of that earlier registration and

(b) adding a further 7.5% (if the present [NAME] was the first since 1 February 1999) or 5% (if it is a second or subsequent [NAME] since that date).

A 7.5% increase is represented, in the calculation set out above, by the addition of 1.075 to (B) and an increase of 5% is represented by the addition of 1.05 to (B).

The result is rounded up to the nearest 50 pence.

3. For the purposes of the calculation the latest RPI figure (x) is that published in the calendar month immediately before the month in which the Tribunal’s fair rent determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the rent is to be registered as variable under section 71(4) of the Rent Act 1977. In such a case the variable service charge is removed before applying the formula. When the amount determined by the [NAME] of the formula is ascertained the service charge is then added to that sum in order to produce the maximum fair rent.

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Case Reference

: FR/LON/00AC/F77/2024/0680

Property : 15 [ADDRESS] [POSTCODE]

Tenant

: Mrs [APPELLANT]

Landlord : [APPELLANT].

Date of Objection : 21 October 2024

Type of [NAME] : Section 70, Rent Act 1977

Tribunal

: [NAME] [NAME] Member

Date of Reasons : 11 March 2025

_______________________________________________

DECISION

The sum of £880.00 per month will be registered as the fair rent with effect from 11 March 2025, being the date, the Tribunal made the Decision.

____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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FULL REASONS

Background

1. On 23 August 2024 the Landlord applied to the Rent Officer for registration of a fair rent of £1,450 per month for 15 [ADDRESS], [POSTCODE] (the subject property).

2. The rent was previously registered on 29 May 2020 at £144.00 per week with effect from 29 May 2020. On 14 October 2024 the Rent Officer registered a fair rent of £725 per month with effect from 14 October 2024. This rent appears to have been the rent determined under section 70 of the Rent Act 1977 and was below the capped rent as provided for by The Rent Acts (Maximum Fair Rent) Order 1999.

3. By an email dated 21 October 2024 the Tenant objected to the rent determined by the Rent Officer and the matter was referred to the First- tier Tribunal.

4. The Tribunal issued Directions on 27 November 2024 setting out the timetable and the steps the parties were required to take in preparation for the determination of this case.

The Law

5. When determining a fair rent the Tribunal, in accordance with section 70 of the Rent Act 1977 (the Act), had regard to all the circumstances including the age, location and state of repair of the property. It also disregarded the effect of (a) any relevant tenant's improvements and (b) the effect of any disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of the property.

6. In [COMPANY] v [NAME] etc. Committee (1995) 28 HLR 107 and [NAME] v [NAME] [1999] QB 92 the Court of Appeal emphasised

(a) that ordinarily a fair rent is the market rent for the property discounted for 'scarcity' (i.e. that element, if any, of the market rent, that is attributable to there being a significant shortage of similar properties in the wider locality available for letting on similar terms - other than as to rent - to that of the regulated tenancy) and

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(b) that for the purposes of determining the market rent, assured tenancy (market) rents are usually appropriate comparables. (These rents may have to be adjusted where necessary to reflect any relevant differences between those comparables and the subject property).

7. The Rent Acts (Maximum Fair Rent) Order 1999 (the 1999 Order) provides the framework that places a ceiling on the maximum rent that can be registered. The calculation is based upon a formula that applies an increase in the monthly United Kingdom Index of Retail Prices to the previously registered rent.

Hearing and Evidence

8. A hearing was held on 31 January 2025 at 10, [ADDRESS], [POSTCODE]. At the hearing Mr [APPELLANT] (the Tenant’s son) attended the hearing on his mother’s behalf. Written confirmation of Mrs [NAME] consenting to her son representing her was sent through to the Tribunal in a letter dated 14 October 2014. The Landlord did not attend the hearing.

Tenant’s Submissions

9. Mr [APPELLANT] began by explaining that the property has changed hands (i.e. the Landlord) and that from the beginning they were made to feel that they were not interested in maintaining the property.

10. Issues relating to the leaking roof, water ingress and damp throughout the property was highlighted as a large part of the disrepair being claimed by the Tenant. Mr [APPELLANT] referred to the photos evidencing this which were sent through to the Tribunal.

11. Whilst the Landlord installed a new bathroom in the property, the quality of the installation was questionable as Mr [NAME] drew the Tribunal’s attention to areas of the plaster being blown.

12. The current kitchen that is present at the property was installed by [APPELLANT] installed the kitchen in 2013. It was also confirmed that the Tenant installed the central heating system at the property.

13. The Landlord also installed new double-glazed windows throughout the property, but the finish of the work was poor. This has led to the plaster around the window falling away or cracking.

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14. More recently, one of the fences in the rear garden was blown down and despite the Landlord knowing about this for some weeks now, it remains fallen.

15. The Landlord put artex on the ceiling in the master bedroom in October / November 2924. The Tenant believes that this was trying to hide the damp and water ingress that is being suffered throughout the property. The signs of damp and water ingress and beginning to reappear through these works.

16. Whilst the Tenant understands that there needs to be a fair rent in place, the property is in a state of disrepair that the Landlord has shown little to no interest in wanting to resolve.

17. The Tenant also provided documentation and submissions as part of the Reply Form to the Tribunal which also included photographs of the property and background to the on-going rook leak issue at the property.

Landlords’ Submissions

18. The Landlord was not present at the hearing.

19. However, the Landlord has provided written documentation as part of their Reply Form including a property valuation report which assesses the values in the local area and documentation setting out the works that the Landlord has undertaken on the property to try and rectify the leaking roof issue.

Inspection

20. The Tribunal inspected the property on 31 January 2025. The property is a three-bedroom end terraced house with a rear garden. It is of brick and tiled roof construction with white rendering to the front and pebble dash rendering to the side and rear. The property includes separate living and dining rooms on the ground floor, together with the kitchen which then leads out into the well-sized garden.

21. Both the living and dining rooms have double glazed windows. The installation appears poor given the finish around the window frames and resulting plastering falling away from some areas around the windows.

5 22. The kitchen is located at the rear of the property and is dated. It has a ceramic tiled floor and wooden back door with single glazed glass that leads out into the garden. The window in the kitchen is double-glazed.

23. The back garden is a good size containing mature confer trees. At the time of inspection one of the side fences had fallen and was still in a state of disrepair.

24. The hallway leads up to the first floor. There is evidence in the hallway of leaking water ingress and signs of damp. On the first floor the three- bedrooms and family bathroom are located.

25. The third bedroom houses a single bed together with one piece of bedroom furniture. Whilst the window is double glazed the finish around the frame when installed is poor and has led to plaster falling away. The room is carpeted with no central heating.

26. The second bedroom is a large size room located at the rear of the property which has been carpeted and includes a double-glazed window. The wall facing the external of the property has signs of damp and recent water ingress.

27. The family bathroom is accessed via the second bedroom. It is carpeted and includes a bath with a shower heads, sink with mixer tap and a toilet. The airing cupboard is also located in the bathroom.

28. The master bedroom is at the front of the property and of a very good size. The ceiling is of artex and has signs of damp appearing. The room is carpeted. The window is double-glazed but the installation appears to be poor due to the cracking that is visible around the window. The built- in wardrobe has significant damp with a large hole present which appears to be because of the plaster deteriorating.

29. The basement was viewed last due to the condition of the area. There are significant signs of deterioration of timber joists in the area and significant damp throughout the area. Due to the condition the area is not used by the Tenant.

30. The Tribunal viewed the external side wall of the property which appeared to show signs of damp together with a hole in the soffit. Where windows were not double glazed the paint was flaking around the frames.

Determination and Valuation

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16. The Tribunal initially needs to determine what rent the Landlord could reasonably be expected to obtain for the property in the open market if it were let today in the condition that is considered usual for such an open market letting. In doing this, the Tribunal will consider the rental value of the property and will not the personal circumstances of the Tenant, as that is not a factor envisaged by the Act.

17. The evidence provided by the Landlord showed an average rental price for a terraced property in this area of £2,318 per month. When considering this together with the Tribunal’s own expert knowledge of rental values in the area, the Tribunal consider an amount of £2,200 per month reflective of the open market rent.

18. The next aspect to be considered is the issue of scarcity. The Tribunal was not provided with any specific evidence on this issue. However, the issue of scarcity is considered on the basis of the number of properties available to let and considering the demand for such properties and over a really large area. Neither party provided any specific evidence in respect of scarcity. Therefore, using our knowledge and experience we consider that in the wide geographical area of [NAME] there is an imbalance between supply and demand and this impacts upon rental values.

Accordingly, we make a deduction for scarcity of approximately 20%. The full valuation is shown below.

£/month Market Rent

2,200

Less Damp throughout the property ) 10% Condition of basement

) 5% Unmodernised kitchen

) 10% Unmodernised bathroom ) 5% No curtains or carpets

) 5% No provision of white goods ) 5% Tenant’s repair liability

) 5% Installation quality of windows ) 5%

1,100

1,100

Less Scarcity

approx. 20%

220

880

7 19. The Tribunal determines a sum of £880 per month for the open market rent value of the property.

Decision

20. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was £880.00 per month. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £1,045.00 per month. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £880.00 per month is to be registered as the fair rent or this property.

21. Accordingly, the sum of £880.00 per month will be registered as the fair rent with effect from 11 March 2025 being the date of the Tribunal's decision.

[NAME]: [NAME]: 11 March 2025

APPEAL PROVISIONS

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the Tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the Tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the Tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

[NAME] [NAME]

[APPELLANT].

Tenant Mrs [APPELLANT]

2. The effective date is 10 11 March 2025

3. The amount for services is - Per -

negligible/not applicable

- Per -

negligible/not applicable

5. The rent is/is not to be registered as variable.

8. For information only:

[NAME] [NAME] of decision 11 March 2025

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 392.1

PREVIOUS RPI FIGURE Y 281.7

X 392.1 Minus Y 281.7 = (A) 110.4

(A) 110.4 Divided by Y 281.7 = (B) 0.391906

If yes (B) plus 1.075 = (C) n/a

If no (B) plus 1.05 = (C) 1.441906

Rounded up to nearest 50p = £1,045.50

MAXIMUM FAIR RENT = £1,045.50 Per month

Explanatory Note

The result is rounded up to the nearest 50 pence.