Tribunal Sets Fair Rent for Tenancy Considering Property Condition

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. GB/LON/00BK/F77/2024/0136

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME]

Landlord [APPELLANT]

Tenant Mrs [APPELLANT] [NAME]

1. The fair rent is £37440 Per annum (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 3 September 2024

3. The amount for services is 367.89 Per annum

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 £ ............................ per ................................... 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 £ 45367 ......... per annum ........ including £ 367.89 .............................. per annum ..................... for services (variable) prescribed by the Order.

[NAME] of decision 3 September 2024

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 387.50

PREVIOUS RPI FIGURE Y 320.2

X 387.5 Minus Y 320.2 = (A) 67.3

(A) 67.3 Divided by Y 320.2 = (B) 0.21018

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) 1.26018

Last registered rent* 36000 Multiplied by (C) = 45366.52 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 45367

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

MAXIMUM FAIR RENT = £45367 Per annum

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

: GB/LON/00BK/F77/2024/0136

Property : [ADDRESS], [POSTCODE]

Tenant

: Mrs [APPELLANT] [NAME]

Landlord : [RESPONDENT] of Objection : February 2024

Type of Application : Section 70, Rent Act 1977

Tribunal

: Mr [NAME] of Summary Reasons

: 3 September 2024

_______________________________________________

DECISION

The sum of £37,440 per annum will be registered as the fair rent with effect from 3 September 2024, being the date the Tribunal made the Decision. ____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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SUMMARY REASONS

Background 1. Following an objection from the Landlord 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 but considered this case on the basis of the papers provided by the parties.

Evidence 3. The Tribunal has considered of the written submissions provided by the Tenant. The Landlord did not make submissions.

Determination and Valuation 4. Having considered our own expert, general knowledge of rental values in the area, we consider that the open market rent for the property in good condition would be in the region of £78,000 per annum. From this level of rent we have made adjustments in relation to:

Poor kitchen without hot water Tenants’ white goods, carpets and curtains Broken and rotten windows and doors and floor defects Damp ingress Unmodernised WC and bathroom

5. The Tribunal has also made an adjustment for scarcity.

6. The full valuation is shown below:

per annum Market Rent

£78,000

Less Deductions for matters set out above )

) approx. 40% )

£31,200

£46,800

Less Scarcity

approx. 20%

£9,360

£37,440

3 7. The Tribunal determines a rent of £37,440 per annum.

Decision 8. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was ££37,440 per annum. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £45,367 per annum. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £37,440 per annum is to be registered as the fair rent or this property.

Chairman: [NAME]: 3 September 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

CROWN COPYRIGHT 2024

Case Reference

: GB/LON/00BK/F77/2024/0136

Property : [ADDRESS], [POSTCODE]

Tenant

: Mrs [APPELLANT] [NAME]

Landlord : [RESPONDENT] of Objection : 6 February 2024

Type of Application : Section 70, Rent Act 1977

Tribunal

: Mr [NAME] of Decision : 3 September 2024

Date of Reasons : 31 December 2024

_______________________________________________

REASONS ____________________________________

2 Background

1. On 9 November 2023, the landlord applied to the Rent Officer for registration of a fair rent of £47,001 per annum for the above property.

2. The rent payable at the time of the application was £692.30 per week which is equivalent to £36,000 per annum. The tenancy commenced on 1 January 1989.

3. On 17 January 2024 the Rent Officer conducted a consultation at the property in the presence of the tenant Mrs [APPELLANT] and her daughter [APPELLANT]. The landlord was not represented.

4. On 23 January 2024, the Rent Officer registered a fair rent of £37,206 per annum with effect from 2 February 2024. This included services at £367.89 per annum.

5. By email dated 6 February 2024, the landlord objected to the rent determined by the Rent Officer and the matter was referred to the Tribunal.

6. On 11 April 2024, the Tribunal issued directions setting the matter down for determination on the papers without a hearing or inspection unless requested by either party. The Tribunal supplied and directed the return of Reply Forms from each party. Neither party requested a hearing or inspection.

7. On 3 September 2024, the Tribunal found that the fair rent was £37,440 per annum. It issued a Notice of Decision with effect from that date and summary reasons. Subsequently, the landlord requested full reasons.

The Landlord’s Case

8. The landlord did not respond to the appeal.

The Tenant’s Case

9. The tenant provided an extensive submission and detailed photographs of the property. These were based on a previous submission made in 2021, subject to some clearly marked updates. The submissions may be summarised as follows. An increase in rent was not justified as the landlord had neglected repairs and not addressed a faulty water supply. The Landlords ignored the disrepair. In the front living room, most of the windows no longer opened. The same applied to the study. The sash cords in front hallway window were broken. The kitchen was unmodernised and in poor condition including the lino floor. The tenant has been without hot water since August 2023. The windows were rotten allowing damp ingress. In relation to the back hallway,

3 following an escape of water from the flat above in June 2022 there had been water damage which had not been made good. The floorboards were in poor condition. The back door and shutters were rotten and rusted and this obstructed a fire egress. The first WC was unmodernised with a window which did not open. There was damage by water ingress from the ceiling. The second WC number had a window which could not be opened, and the extractor fan was broken. The third bedroom window frame was rotten and there was damp ingress. The second bathroom did not have a bathroom installed and was used for storage. The main bedroom had two windows, one of which did not open. The second bedroom had windows in poor condition which did not open easily. The main bathroom was unmodernised; there was damp ingress via a rotten window frame and the extractor fan was broken. The cold-water supply was faulty and constantly interrupted. Energy bills were too high owing to poor insulation and the condition of the windows. The tenant could not obtain home insurance. The tenant paid the Crown Estate Paving Commission a charge of £759.80 per annum. The tenants had replaced all their white goods. The tenant did not refer to any comparables.

The Rent Officer consultation notes

10. The Rent Officer found that there were no changes from the 2017 inspection notes except for additional water damage to the hallway. This appeared to be causing damage to skirting board. There were also exposed electrical wires in the kitchen.

The Property

11. From the form RR11, the Rent Officer consultation notes, the rent register, the tenant’s submissions and Google maps, the Tribunal finds that the property is a large fourth floor flat in Harley House. This is a prestigious building set back from [ADDRESS] and close to Regent’s Park. The accommodation comprises five rooms, kitchen bathroom, two WC’s and a utility room. The property is unmodernised and suffers from significant issues with rotten windows, damp penetration and other defects. The floor area stated on the RR1 is 1654 sq. ft.

The Law

12. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, had regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property.

1 Application for rent registration

4 13. In [COMPANY] v Chairman of the Greater Manchester etc. Tribunal (1995) 28 HLR 107 and [NAME] v [NAME] Tribunal [1999] QB 92 the Court of Appeal emphasised 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 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).

14. In addition, the Tribunal is required to take into account the Rent Acts (Maximum Fair Rent) Order 1999.

Findings

15. The Tribunal first determined 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. It did this by having regard to the evidence provided by the Rent Officer and its own knowledge of rents in the Marylebone and Regent’s Park areas. The Tribunal found that the starting point rent adopted by the Rent Officer of £78,000 per annum was correct, had the property been in good condition.

16. The Tribunal then found that downward adjustments were required to reflect the following: poor kitchen without hot water; tenants’ white goods, carpets and curtains; broken and rotten windows and doors and floor defects; damp ingress (mainly from defective windows); unmodernised WC and bathroom and interruptions in the cold-water supply. The Tribunal assessed these matters as requiring an adjustment of 40% or £31,200 per annum. This left an adjusted rent of £46,800 per annum.

17. The Tribunal found that there was substantial scarcity in the locality of Greater London and therefore made a deduction of 20% (£9,360 per annum) from the adjusted market rent to reflect this element.

18. The uncapped fair rent determined by the Tribunal, for the purposes of section 70, was accordingly £37,440 per annum.

19. This rent was unaffected by the Rent Acts (Maximum Fair Rent) Order 1999 as it was below the maximum fair rent of £45,367 per annum. (Details are provided on the back of the decision form).

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20. Accordingly, the sum of £37,440 per annum was registered as the fair rent with effect from 3 September 2024, being the date of the Tribunal’s decision.

Name: [NAME]: 31 December 2024

ANNEX - RIGHTS OF APPEAL

• The Tribunal is required to set out rights of appeal against its decisions by virtue of the rule 36 (2)(c) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 and these are set out below.

• If a party wishes to appeal against 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.