Tribunal Sets Fair Rent for Tenancy After Considering Property Condition

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. TR/LON/00AM/F77/2023/0302

Notice of the Tribunal [NAME] 1977 Schedule 11

Address of Premises The Tribunal members were 146 [ADDRESS], [POSTCODE]

Judge Professor H [NAME] MA MRICS

Landlord The [APPELLANT]

Tenant Mrs [APPELLANT]

1. The fair [NAME] is 1317.50 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 24 January 2024

3. The amount for services is

Per

not applicable

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

0.00 Per

not applicable

5. The [NAME] is/is not to be registered as variable.

6. The capping provisions of the [NAME] ([NAME]) Order 1999 apply (please see calculation overleaf).

7. Details (other than [NAME]) where different from [NAME] entry

N/A

8. For information only:

(a) The fair [NAME] to be registered is the maximum fair [NAME] as prescribed by the [NAME] ([NAME]) Order 1999. The [NAME] that would otherwise have been registered was £2040 per calendar month.

Chairman Judge Professor H Carr Date of decision 24 Jan 2024

FR24 [NAME] FIGURE X 379.0

PREVIOUS RPI FIGURE Y 305.5

X 379.0 Minus Y 305.5 = (A) 73.5

(A) 73.5 Divided by Y 305.50. = (B) 0.240589

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) 1.290589

Last registered [NAME]* 1020.50 Multiplied by (C) = 1317.05 *(exclusive of any variable service charge)

Rounded up to nearest 50p =

Variable service charge NO If YES add amount for services

[NAME] = £1317.50 Per Calendar month

Explanatory Note

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

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

(a) increasing the previous registered [NAME] 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 [NAME] determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the [NAME] is to be registered as variable under section 71(4) of the [NAME] 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 [NAME].

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case reference

: LON/00AM/F77/2023/0302

Property : 146 [ADDRESS] [POSTCODE]

Landlord

: [COMPANY]

Tenant

: Mrs [APPELLANT] of Application : [NAME] 1977

The Tribunal

: Judge H [NAME] of determination : 24th January 2024

Date of full reasons : 29th January 2024

DECISION

© CROWN COPYRIGHT 2015

MAN/00FA/F77/2015/0126 1

Decision 1. The fair [NAME] determined by the Tribunal is £1371.50per calendar month. The effective date is 24th January 2024.

Background 2. The property is a terraced house on the ground and first floor with central heating comprising five rooms a kitchen, bathroom/WC and a garden to the front and rear.

3. The [NAME] was previously registered on 27th July 2021 (effective from that date) at £1020..50 per calendar month.

4. The landlord applied to the [NAME] for a fresh registration of the [NAME] on 20th June 2023 and a [NAME] of £1308.50 per calendar month, was registered on 15th August 2023, effective from that date. It may be noted that this was a capped [NAME] and that [NAME] officer noted that the uncapped [NAME] was £2295.00 per calendar month. The landlord had in its application suggested a [NAME] of £1142,96 pcm.

5. The tenant appealed against the [NAME] registration on 31st August 2023 The basis for the appeal was that the increase in [NAME] was unjustified. The tenant provided photographs.

6. The tenant requested a hearing. She attended the hearing The landlord’s representative was Mr [COUNSEL].

The Hearing

7. Mrs [NAME] gave evidence as follows:

a. The [NAME] set by the [NAME] officer was higher than the [NAME] requested by the landlord. b. The tenant had installed the kitchen which had been only a shell with a kitchen sink when she had moved into the property. She had also installed the cupboard under the stairs as the property lacked storage. c. She provided white goods, carpeting and other flooring. d. The landlord had installed heating. e. The tenant said that there were cracks in the downstairs reception room ceiling. f. She provided no comparables but drew the attention of the tribunal to the lower rents paid by the tenants of the local authority properties opposite.

8. Mr [RESPONDENT] gave evidence as follows: 9. a. The landlord’s practice is to follow the [NAME] set by the [NAME] officer.

MAN/00FA/F77/2015/0126 2

b. The landlord has a maintenance service which responds quickly to concerns. c. The landlord fulfils its s.11 obligations.

Inspection 10. The Tribunal inspected the property on 24th January 2024 in the presence of the tenant and a representative of the landlord and its maintenance operative. In general the house was in good condition externally, other than the single glazed original windows and internally was in adequate condition.

11. The tribunal saw evidence of slight damp and noted the poor quality of the windows,

12. There is no provision of carpets, curtains and white goods as would be expected in a modern market [NAME] property.

The law 13. When determining a fair [NAME] the Tribunal, in accordance with the [NAME] 1977, section 70: (1) has regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property; (2) disregards the effect on the rental value of the property of (a) any relevant tenant improvements and (b) any disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy; (3) assumes (as required by s.70(2)) that, whatever might be the case, the demand for similar rented properties in the locality does not significantly exceed the supply of such properties for [NAME]. In other words that the effect of any such ‘scarcity’ on rental values is not reflected in the fair [NAME] of the subject property.

14. 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 that section 70 means (a) that ordinarily a fair [NAME] is the market [NAME] for the subject property discounted for ‘scarcity’ and (b) that for the purposes of determining the market [NAME], 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). Thus once the market [NAME] for the property has been determined by the exercise in (2) above that [NAME] must be adjusted, where necessary, for any scarcity.

MAN/00FA/F77/2015/0126 3

15. The [NAME] ([NAME]) Order 1999 (SI 1999/6) is applicable.

Determination The Tribunal determined, having regard to comparable properties available for letting at market rents in the area, that the open market [NAME] for the property in good condition was £3,400 per calendar month which matched the [NAME] officer’s determination.

16. It considered that further deductions of 25% (£850) should be made for the lack of double glazing. This 25% deduction also takes into account work undertaken at the tenant’s expense in relation to the kitchen and the evidence of damp.

17. The Tribunal also determined that there was scarcity in the area and made a further deduction of 20% (£ 510).

18. This gave an overall deduction £1360 from the open market [NAME] to arrive at a rounded fair [NAME] of £2040 per calendar month. This is the uncapped [NAME]. However, because of the applicability of the capping provisions the [NAME] was determined at £1317.50.