Tribunal Sets Fair Rent for Regulated Tenancy

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. CHI/00MW/F77/2018/0062

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 11 [ADDRESS], [POSTCODE]

[NAME] Mr [RESPONDENT]

Landlord [APPELLANT]

Tenant Mrs [APPELLANT] J [APPELLANT]

1. The fair rent is £135.90 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 10 January 2019

3. The amount for services is £1.40 Per Week

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

n/a Per n/a

not applicable

5. The rent is 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 £143.00 per week including £1.40 per week for services (variable).

[NAME] of decision 10 January 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 284.6

PREVIOUS RPI FIGURE Y 256.7

X 284.6 Minus Y 256.7 = (A) 27.9

(A) 27.9 Divided by Y 256.7 = (B) 0.108687

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) 1.158687

Last registered rent* £116.00 Multiplied by (C) = 134.41 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £134.50

Variable service charge YES If YES add amount for services £1.40

MAXIMUM FAIR RENT = £135.90 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.

© CROWN COPYRIGHT 2019

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : CHI/00MW/F77/2018/0062 Property : [ADDRESS], Newport, Isle of Wight [POSTCODE] Type of Application : Determination of a fair rent: Rent Act 1977 Date of Decision : 10 January 2019

REASONS FOR THE DECISION

Background

1. On 14 August 2018 the landlord made an application to register the rent of the property at £ 108.80 per week inclusive of £ 1.40 for services (variable).

2. On 03 October 2018 the Rent Officer registered the rent at £ 135.90 per week exclusive of rates and inclusive of £ 1.40 for services with effect from the same date.

3. On 17 October 2018 the tenant objected and the matter was referred to the First Tier Tribunal (Property Chamber).

4. The Tenant made brief representations to the Rent Officer, Neither party submitted representations in response to Directions or requested an oral hearing.

Inspection

5. On 10 January 2019 the Tribunal inspected the property accompanied by the Tenant, the Landlord was not represented.

2

6. The property is a three bedroom mid terrace house probably constructed in the 1980s of brick with a pitched, tile-covered roof. It was found to be generally in satisfactory condition.

7. The accommodation comprises: Ground Floor: Entrance Hall; Cloakroom with W.C. and washbasin; Living Room; Kitchen fitted with worktops, cupboards and stainless steel sink. First Floor: Landing; Three Bedrooms; Bathroom with W.C. bath and washbasin.

8. Heating is by free-standing electric storage heaters or convector heaters and the water is heated by electric immersion heaters.

Representations

9. When making her objection the Tenant thought the proposed increase was huge bearing in mind that she is a pensioner and it is the highest yet. She has been a good tenant for the 34 years she has lived at the property but the landlord has made no improvements.

The law

10. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, must have regard to all the circumstances including the age, location and state of repair of the property. It must also disregard the personal circumstances of the Landlord or the Tenant and 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.

11. 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).

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

Valuation

13. In the first instance the Tribunal determined what rent the landlord could reasonably be expected to obtain for the property in the open market if it were let today on the terms and in the condition that is considered usual for such an open market letting.

14. Neither party provided any evidence of open market lettings, so we therefore relied on our own knowledge of general rent levels for this type of property in the locality and determined that the starting point should be £170.00 per week.

3 15. However, the rent referred to in the above paragraph is on the basis of a modern open market letting of a centrally heated property where the tenant has no liability to carry out repairs or decorations and the landlord supplies white goods, carpets and curtains. In this case there is only electric local heating which is generally uneconomic to run. The Tenant also supplies her own white goods, carpets and curtains and the terms of this tenancy require the tenant to carry out internal decorations and a deduction must be made for these differences. The Tribunal has therefore made the following deductions from the starting point of £170.00 per week.

a. Decorating obligations

£5.00 b. Carpets/curtains

£9.00 c. White goods

£7.00 d. No central heating only electric local heating £6.00

Adjusted rent

£143.00 per week

16. We then considered the question of scarcity as referred to in paragraph 11 above and concluded that there should be no adjustment.

17. We therefore determined that the uncapped Fair Rent is £143.00 per week exclusive of council tax and water rates but inclusive of £1.40.per week for services.

18. As this amount is above the rent calculated in accordance with the Maximum Fair Rent Order details of which are shown on the rear of the Decision Notice we determine that the lower sum of £135.90 per week is registered as the fair rent with effect from 10 January 2019.

Chairman: [NAME]: 10 January 2019

PERMISSION TO APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) on a point of law must seek permission to do so by making written application to the First- tier Tribunal at the Regional office which has been dealing with the case.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

3. If the person wishing to appeal does not comply with the 28-day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.