Tribunal Sets Fair Rent for Property Using Maximum Fair Rent Formula

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. HS/LON/00BJ/F77/2024/0110

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME]

Landlord [COMPANY])

Tenant Mrs [APPELLANT]

1. The fair rent is 245.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 14th May 2024

3. The amount for services is

Per

negligible

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

Per

not applicable

5. The rent 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)

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 £294.40 per week.

[NAME] of decision 14th May 2024

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 383

PREVIOUS RPI FIGURE Y 314.3

X 383 Minus Y 314.3 = (A) 68.7

(A) 68.7 Divided by Y 314.3 = (B) 0.219

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) 1.269

Last registered rent* 193 Multiplied by (C) = 244.92 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £245

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £245 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.

1

Case Reference

: LON/00BJ/F77/2024/0110

Property : [ADDRESS] [POSTCODE]

Tenant

: Mrs [APPELLANT] [NAME]

Landlord : [NAME] of Objection : 26 January 2024

Type of Application : Section 70, Rent Act 1977

Tribunal

: Mr [NAME] of Summary Reasons

: 14 May 2024

_______________________________________________

DECISION

The sum of £245 per calendar week will be registered as the fair rent with effect from 14 May 2024, being the date, the Tribunal made the Decision. ____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 SUMMARY REASONS

Background 1. Following an objection from the Tenant to the determination of a fair rent by the Rent Officer, the Tribunal has made a determination under the provisions of the Rent Act 1977.

Inspection 2. The Tribunal did not inspect the property and relied on the information provided by the Rent Officer together with [ADDRESS] and its expert knowledge.

Evidence 3.. The Tribunal had copies of the Valuation Office Agency correspondence including the rent registers effective 5th November 2021 and 11th January 2024 together with the calculations for the most recent registration.

The parties provided limited information in connection with the property and Reply forms were not completed. No comparable evidence was provided by the parties.

Determination and Valuation 4. Having consideration of our own expert, general knowledge of rental values in the Tooting area, we consider that the open market rent for the property in its current condition would be in the region of £460 per calendar week (£2,000 per month). From this level of rent we have made adjustments in relation to:

Terms of tenancy, no white goods, no carpets or curtains, which equates to approximately 20%

5. The Tribunal has also made an adjustment for scarcity at 20%

6. The full valuation is shown below:

Market Rent £460 pw

Less (as above)

approx. 20% £92.00

Leaves: £368.00

Less Scarcity

approx. 20%

£73.60

Leaves: £294.40 pw

3

7. The Tribunal determines a rent of £245 per calendar week

Decision

8. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was £294.40 per calendar week. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £245.00 per calendar week. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £245.00 per calendar week is to be registered as the fair rent for this property.

9. It is often the case that rents determined by the Tribunal are in excess of those that may be charged by social landlords as it is a significant part of their remit to provide affordable housing. As such depending on the type of tenancy agreement their calculation of rent is either at a percentage of market rent or by way of index. Comparison is made with the open market rather than limited to other properties which are offered by social housing providers. It is assumed that the landlord will by usual convention of social landlord’s not seek to increase the rent proposed in its original notice as a result of this determination

Chairman: [NAME]: 14 May 2024

APPEAL PROVISIONS

These summary reasons are provided to give the parties an indication as to how the Tribunal made its decision. If either party wishes to appeal this decision, they should first make a request for full reasons and the details of how to appeal will be set out in the full reasons. Any subsequent application for permission to appeal should be made on Form RP PTA