Tribunal sets fair rent for property under Rent Act 1977

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. FR/LON/00AW/F77/2025/0002

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME] [NAME] Member

Landlord [NAME]

Tenant [NAME]

1. The fair rent is £190.50 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 24 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 £ 326 ...................... per week .......................... including £ ...................... per ................................. 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 £ ................... per .................... including £ ......................................... per ................................. for services (variable) prescribed by the Order.

[NAME] of decision 24 March 2025

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 391.7

PREVIOUS RPI FIGURE Y 280.7

X 391.7 Minus Y 280.7 = (A) 111

(A) 111 Divided by Y 280.7 = (B) 0.395439971

First application for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.445439971

Last registered rent* 131.50 Multiplied by (C) = 190.08 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 190.50

Variable service charge YES / NO If YES add amount for services n/a

MAXIMUM FAIR RENT = £190.50 Per week

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 application was the first since 1 February 1999) or 5% (if it is a second or subsequent application 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 application 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/00AW/F77/2025/0002

Property : [ADDRESS] [POSTCODE]

Tenant

: Ms [APPELLANT]

Landlord : [NAME] of Objection : 3 November 2024

Type of Application : Section 70, Rent Act 1977

Tribunal

: [NAME] [NAME] Member

Date of Reasons : 24 March 2025

_______________________________________________

DECISION

The sum of £190.50 per week will be registered as the fair rent with effect from 24 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 24 October 2024 the Landlord applied to the Rent Officer for registration of a fair rent of £177.95 per week for [ADDRESS] [POSTCODE] (the subject property).

2. The rent was previously registered on 3 May 2018 at £131.50 per week with effect from 3 May 2018. On 28 October 2024 the Rent Officer registered a fair rent of £189.50 per week with effect from 28 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 3 November 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 15 January 2025 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 Chairman of the Greater Manchester 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.

Evidence

Tenant’s Submissions

8. The Tenant provided written submissions to the Tribunal which included the completed Reply Form, a two-sided letter and copies of previous rent increases from the Landlord.

9. The Tenant wished to highlight a rodent problem in the building in that she could hear rodents in the walls, an issue with missing / stolen parcels and a lack of sound proofing between properties. There were further comments relating to works that the Landlord undertook some years ago (approximately 15-16 years ago) relating to the installation of kitchen cupboards and a breakfast bar and that a hole remained from those works through which rodents were able to enter. The Tenant also advised that these holes were filled in by the Landlord.

Landlords’ Submissions

10. The Landlord provided no written submissions to the Tribunal.

Inspection

11. The Tribunal inspected the property on 24 March 2025. The property is a one-bedroom flat in a Victorian house conversion. It is of brick and tiled roof construction. The property includes separate living and kitchen area together with a bathroom.

12. The wooden front door leads into a small hallway which is carpeted. There is also a large built-in storage cupboard.

4 13. Off of the hallway is the kitchen which contains a freestanding oven with gas hob, fridge freezer and washing machine. The boiler is located in this room which is not boxed in. The room has a large wooden framed single glazed sash window together with a radiator and vinyl flooring and a good number of kitchen cabinets.

14. The bedroom is large with a wooden framed single glazed sash window, a radiator and is carpeted. The room contains a large wardrobe, dressing table and chest of drawers.

15. The carpeted hallway then leads down to the room which is currently being used as a living area. This is a small room which contained a single bed and small couch. The room is carpeted with a wooden framed single glazed sash window and has the use of an electric wall mounted heater.

16. Off of the hallway, down some stairs the bathroom is located. This is a small room containing a bath, mixer taps and shower head as well as a sink and toilet. There is a smaller wooden framed single glazed sash window.

17. More generally the common areas of the building has vinyl flooring and appears to be in a general state of good condition.

Determination and Valuation

18. 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 consider the personal circumstances of the Tenant, as that is not a factor envisaged by the Act.

19. Neither party provided evidence of market rents in the area. Having consideration of our own expert, general knowledge of rental values in the area, the Tribunal consider that the open market rent for the property in good tenantable condition would be in the region of £480 per week.

20. Whilst the Tenant made references to issues with rodents at the building, the Tribunal were not presented with any evidence of this in written submissions and could see no evidence of this during the inspection (e.g. no rodent traps, no rodent droppings, no damage by rodents etc.).

21. 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

5 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 Greater London 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.

£/week Market Rent

480

Less Tenant’s decoration liability ) 5% No curtains or carpets

) 5% No provision of white goods ) 5%

72

408

Less Scarcity

approx. 20%

81.60

326.40

Say £326

22. The Tribunal determines a sum of £326 per week for the open market rent value of the property.

Decision

23. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was £326.00 per week. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £190.50 per week. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £190.50 per month is to be registered as the fair rent of this property.

24. The Tribunal should comment that the rent fixed by the Tribunal is the maximum rent and the Landlord may not charge a rent above that figure. However, in many cases when the Landlord is a Registered Social Landlord, the rent charge may be significantly less than the rent fixed by the Tribunal. As per the letter dated 15 July 2024, the Landlord has stated that the level of increase they will apply is in line with government

6 policy and for the 2024-25 period this is an increase of 7.7%. This results in a rent of £119.22 per week.

25. Accordingly, the sum of £190.50 per month will be registered as the fair rent with effect from 24 March 2025 being the date of the Tribunal's decision.

Chairman: [NAME]: 24 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 application for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application 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 application for permission to appeal to proceed, despite not being within the time limit. The application 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 making the application is seeking. If the Tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).