Tribunal Sets Fair Rent for Shared Ownership Lease

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. LON/00AD/F77/2024/0011

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 90 [ADDRESS] , [POSTCODE]

[COMPANY]

Tenant Mr [APPELLANT]

1. The fair rent is £264.80 Per Calendar month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 14 March 2024.

3. The amount for services is £25.00 Per month

negligible/not applicable

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

N/a Per

negligible/not applicable

5. The rent is/ to be registered as variable.

6. The capping provisions of the Rent Acts (Maximum Fair Rent) Order 1999 do not apply because 1st registration

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

None, shared ownership lease. Leaseholder owns 75% equity share.

8. For information only:

(a) The fair rent to be registered is not limited by the Rent Acts (Maximum Fair Rent) Order 1999, because first registration.

[NAME]- [NAME] of decision 14 March 2024.

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X

PREVIOUS RPI FIGURE Y

X

Minus Y

= (A)

(A)

Divided by Y

= (B)

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)

Last registered rent*

Multiplied by (C) =

*(exclusive of any variable service charge)

Rounded up to nearest 50p =

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

MAXIMUM FAIR RENT = £ Per

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

: LON/00AD/F77/2024/0011

Property : [ADDRESS], Sidcup, Kent. [POSTCODE].

Tenant

: Mr. [APPELLANT]. W. [APPELLANT].

Landlord : [NAME].

Date of Objection : 4 December 2023.

Type of Application : Section 70, Rent Act 1977

Tribunal

: [NAME] of Summary Reasons

: 14 March 2024

_______________________________________________

DECISION

The sum of £264.80 will be registered as the fair rent with effect from 14 March 2024 being the date the Tribunal made the Decision. ____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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REASONS FOR THE DECISION

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. Neither party requested an inspection. The Tribunal did not inspect the property but considered this case on the basis of the papers provided by the parties.

Evidence 3. There were no written submissions from either party, with the exception of the letter of objection from the tenant in which he said that the rent was too high.

The Application 4. By an application (RR1) dated 19 September 2023, the landlord sought a first registration of Fair Rent for the subject property. The landlord suggested a rent of £131.84 based on a 75% equity share under a shared ownership lease. In addition, the landlord sought registration of a variable service charge of £25.00 per month to cover insurance and administration.

5. On 16 November 2023 the Rent Officer registered a Fair Rent of £240.95 per month inclusive of service charge of £18.33 per month. The tenant’s objection was received by the Valuation Office on 4 December 2023, where the tenant suggested that the rent set was too high.

Determination and Valuation 6. Having consideration of the tribunal’s own expert, general knowledge of rental values in the area, together with those of the Rent Officer Service we consider that the open market rent for the property in good tenantable condition would be in the region of 1,600.00 per calendar month. However, the rent has been adjusted in relation to:

• A deduction of 10% to reflect the absence of white goods, carpets and curtains that might be found in an open market letting. • A deduction of 15% to reflect the full repairing obligation of the leaseholder. • A deduction of 20% to reflect the element of ‘scarcity’ as defined in the Rent Act 1977. The tribunal was then required to apportion the resultant amount to reflect the equity share owned by the leaseholder, in this case 75%.

7. It should be noted that this is the first time that the rent for this property has been registered and therefore the capping mechanism under the Maximum Fair Rent Order 1999 do not apply.

8. The full valuation is shown below:

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Market Rent per calendar month:

£1,600.00

Less 10% for lack of white goods, carpets etc.

£ 160.00

£1,440.00 Less 15% to reflect fully repairing obligation of tenant £ 216.00

£1,224.00 Less service charge

£ 25.00

£1,199.00 Less scarcity @ 20%

£ 239.80 Gross rent:

£ 959.20 Apportioned for equity share x 25%

£ 239.80 Plus service charge

£ 25.00

Fair Rent:

£ 264.80

9. The Tribunal determines a rent of £264.80 per calendar month inclusive of a variable service charge of £25.00 the effective date is 14 March 2024. As already stated, this is a first registration and therefore the MFR does not apply. The amount registered as the Fair Rent is therefore £264.80 per calendar month.

Chairman: [NAME]: 14 March 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 request for full reasons should be made within a month. Any subsequent application for permission to appeal should be made on Form RP PTA