Tribunal Sets Fair Rent for Tenancy Under Rent Act 1977

OUTCOME: Allowed

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Case Reference

: LON/00AW/F77/2024/0209

Property : Ground & [ADDRESS] [POSTCODE]

Tenant

: Mr [APPELLANT]

Landlord : [APPELLANT] of Objection : 12 April 2024

Type of Application : Section 70, Rent Act 1977

Tribunal

: [NAME] of Summary Reasons

: 19 September 2024

_______________________________________________

DECISION

The sum of £3,900 per quarter will be registered as the fair rent with effect from 19 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 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 and the Tribunal did not consider that one was necessary as there was sufficient evidence provided by the parties together with the Rent Officer’s inspection notes to make a determination in this case.

Evidence 3. The Tribunal has consideration of the written submissions provided by the Tenant and the Landlord.

Determination and Valuation 4. Having consideration of the comparable evidence provided by the Tenant and our own expert, general knowledge of rental values in the area, we consider that the open market rent for the property in good tenantable condition would be in the region of £2,500 per calendar month. From this level of rent we have made the adjustments as shown below.

6. The full valuation is shown below:

per calendar month Market Rent

£2,500

Less No White Goods

) 3% No floor coverings / curtains

) 4% Tenant’s decoration liability

) 3% No central heating

) 5% Unmodernised kitchen

) 10% Unmodernised bathroom

) 10%

£875

£1,625

Less Scarcity

approx. 20%

£325

£1,300

7. The Tribunal determines a rent of £1,300 per month and this equates to £3,900 per quarter.

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Decision 8. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was £3,900 per quarter. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £4,244.50 per quarter. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £3,900 per quarter is to be registered as the fair rent or this property.

Chairman: [NAME]: 19 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 request for full reasons should be made within a month. Any subsequent application for permission to appeal should be made on Form RP PTA

FR27 First-tier Tribunal – Property Chamber File Ref No. TR/LON/00AW/F77/2024/0209

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME]

Landlord [NAME] and [APPELLANT]

Tenant Mr [APPELLANT]

1. The fair rent is £3,900 Per quarter (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 19 September 2024

3. The amount for services is - Per -

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 £ 4,245 .......... per quarter ....... including £ n/a .................................... per n/a ............................ for services (variable) prescribed by the Order.

[NAME] of decision 19 September 2024

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 389.9

PREVIOUS RPI FIGURE Y 323.5

X 389.9 Minus Y 323.5 = (A) 66.4

(A) 66.4 Divided by Y 323.5 = (B) 0.205255023

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) 1.255255023

Last registered rent* 3381 Multiplied by (C) = 4244.02 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £4,244.50

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

MAXIMUM FAIR RENT = £4,244.50 Per quarter

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

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/00AW/F77/2024/0209 Property : Ground & [ADDRESS] [POSTCODE] Tenant : Mr [APPELLANT] Landlord : [APPELLANT] of Application : Determination of a fair rent under section 70 of the Rent Act 1977 Tribunal Members : Mrs [NAME] of Decision : 19 September 2024 Date of Reasons : 20 January 2025

REASONS

Background

1. On 16 January 2024, the landlord applied to the Rent Officer for registration of a fair rent of £1,524.45 per month for the above property. The rent payable at the time of the application was £1,127 per month. On 20 February 2024, the rent officer registered a fair rent of £4,130.50 per quarter (£1,376.83 per month) with effect from 22 March 2024. By an email dated 9 April 2024, the tenant objected to the rent determined by the Rent Officer and the matter was referred to the Tribunal.

2. On 16 July 2024 the Tribunal issued directions setting the matter down for determination by written representations, unless either party requested a hearing which neither did. The parties were each directed to return a proforma Reply form to the Tribunal and each other. Neither party provided the completed proforma Reply form.

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Inspection and the property

3. The Tribunal did not feel an inspection of the property was necessary and that the matter could be decided on the papers. Neither party requested an inspection.

4. The property is a circa 19th century two bedroom mainsonette with two rooms in the basement together with a bathroom and WC whilst the ground floor comprises two rooms and a kitchen. The property also benefits from a rear garden. There is no central heating.

5. The Rent Officer’s inspection note makes reference to the kitchen being a good size but unmodernsied. The sash window in the kitchen was replaced by the landlord with a new double glazed sash wondow and that the boiler has also been replaced by the landlord.

6. Whilst areas of the property have been carpeted this has been done by the tenant several years ago. A large newly renovated bay window lights up the front room.

7. The bathroom is small and unmodernised.

8. At basement level damp proofing works have been undertaken by the landlord together with replacement onf skirting on trated walls and the replacement of the wooden double doors leading to the garden with a new double glazed set of doors.

9. The landlord has also undertaken levelling works to the rear garden and renewal of the gully surround.

Evidence

The Landlord’s Case

10. The landlord provided submissions in relation to the works that had been undertaken by the landlord and that assessment of the property should be done on the current condition of the property rather than on historic condition.

The Tenant’s Case

11. The tenant’s submissions related on the whole to comments on why the property had the second most expensive rent in the SW10 area. A copy of the current EPC Certificate for the property was also provided. Clarification was also provided in the form of an email from the tenant as to their tenancy commencement date being prior to 31 December 1976.

Rent Officer

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12. The Tribunal was supplied with documents sent to the rent officer with the application for registration including rental levels in the area and notes relating to the inspection of the property undertaken by the rent officer.

The Law

13. 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.

14. 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).

Valuation

15. As neither party had provided any rental comparables it was necessary for the Tribunal to rely on its own knowledge and experience. Whilst the tenant provided information relating to the registered rent for properties in the local area, the Tribunal would not consider these for the purposes of establishing the market rent as per the requirements set out in paragraphs 13 and 14 above.

16. The Tribunal considered that the subject property would command a rent of approximately £2,500 per month if it had been in the condition considered usual for a modern letting at a market rent. However, the subject property is not in such a condition and must also be valued as if the tenants’ improvements have not been carried out.

17. Therefore, it was necessary to adjust that hypothetical rent of £2,500 per month to allow for the differences between the condition considered usual for such a letting and the condition of the actual property as noted by the evidence provided. The Tribunal considered that adjustments from that rent are required as follows:

No White Goods

) 3% No floor coverings / curtains

) 4% Tenant’s decoration liability

) 3% No central heating

) 5%

4 Unmodernised kitchen

) 10% Unmodernised bathroom

) 10%

This gave rise to a total adjustment of 35% or £875 per month.

18. This leaves an adjusted market rent for the subject property of £1,625 per month.

19. The Tribunal found that there was substantial scarcity in the locality of Greater London and therefore made a deduction of 20% (£325 per month) from the adjusted market rent to reflect this element.

20. It follows that the Tribunal found that the uncapped fair rent was £2,500 per month less £1,200 per month and this equates to £1,300 per month or £3,900 per quarter.

Effect of the Rent Acts (Maximum Fair Rent) Order 1999 (“The Order”)

21. The property is subject to capping under the above Order. The calculations are included in the Notice of Decision. The capped rent is £4,244.50 per quarter.

Services

22. There were no services that were part of the rental calculation that needed to be considered as part of this decision.

Decision

23. The fair rent determined by the Tribunal, for the purposes of section 70, was accordingly £3,900 per quarter, with effect from 19 September 2024 being the date of the Tribunal’s decision.

[NAME]

20 January 2025

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

5 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.