Tribunal Sets Fair Rent for Tenant's Property

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00BK/F77/2021/0107

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME] Mr [APPELLANT]

Landlord [APPELLANT]

Tenant [NAME]

1. The fair rent is £17760 Per annum (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 5 August 2021

3. The amount for services is £2306 Per annum

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 not 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

Property is post WWII

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 below the maximum fair rent of £17760 ..................... per annum including £ 2306 ................................. per annum ..................... for services (variable) prescribed by the Order.

[NAME] of decision 5 August 2021

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 304

PREVIOUS RPI FIGURE Y 281.7

X 304 Minus Y 281.7 = (A) 22.3

(A) 22.3 Divided by Y 281.7 = (B) 0.0791622

First [NAME] for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1291622

Last registered rent* 20800 Multiplied by (C) = 23486.57 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 23487

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

MAXIMUM FAIR RENT = £23487 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 [NAME] was the first since 1 February 1999) or 5% (if it is a second or subsequent [NAME] 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 [NAME] of the formula is ascertained the service charge is then added to that sum in order to produce the maximum fair rent.

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00BK/F77/2021/0107 Property : [ADDRESS] [POSTCODE] Applicant : [redacted] : Mrs [COUNSEL] at the hearing; [COUNSEL], Solicitors (no attendance at the hearing) Respondent : [redacted] : None Type of [NAME] : Section 70 Rent Act 1977 Tribunal member :

[NAME] [NAME] of hearing and venue : 5 August 2021, at 10 [ADDRESS] [POSTCODE] Date of decision : 5 August 2021 Date of Reasons : 21 September 2021

REASONS

Background

1. On 6 August 2020, the landlord applied to the Rent Officer for registration of a fair rent of £23,000 per annum for the above property. A schedule landlord’s services were provided.

2. The rent payable at the time of the [NAME] was £20,800 per annum.

3. On 12 November 2020, the Rent Officer registered a fair rent of £22,707.50 with effect from the same date.

4. By letter dated 26 November 2020, the tenant objected to the rent determined by the Rent Officer and the matter was referred to the Tribunal.

5. On 18 March 2021, the Tribunal issued directions setting the matter down for determination by written submissions, unless either party requested a remote video hearing, which neither did. On 10 May 2021 the Tribunal determined a fair rent of £22,962.50 per annum. At that point the Tribunal had received no documentation from the applicant other than the letter of appeal. A request was made to set aside that decision on the grounds that the applicant had not been notified of the hearing date, she wished to present her case in person at a hearing and that the applicant had a serious sight problem amounting to a disability. The Tribunal set aside the decision of 10 May 2021 and issued further directions. The matter was directed to be determined following a face-to-face hearing. The landlord was directed to complete a reply form and provide submissions and evidence by 18 June 2021. The tenant was directed to do likewise by 2 July 2021. The landlord was given permission to provide a brief response by 9 July 2021.

6. The case was heard at a face-to-face hearing on 5 August 2021 at [ADDRESS]. The applicant appeared in person and was also represented by Mrs [RESPONDENT]. The landlord did not appear and was not represented, having previously notified the Tribunal of that intention. The Tribunal made its determination on 5 August 2021 and the tenant subsequently requested reasons.

The Property

7. The Tribunal viewed internal and external photographs of the property supplied by the tenant and considered all documents supplied by the parties. The Tribunal accepts the description of the subject flat as set out by the applicant in a clear and helpful written submission. The flat is on the fifth floor, within the mansard roof of the building thereby having a degree of restricted height. The floor area is approximately 794 ft², which the tenant had taken from service charge information supplied by the landlord. The flat is unmodernised. The lift extends only to the fourth floor, and this requires use of one and a half flights of stairs to gain access to the subject flat. The property has no central heating but there are three Economy 7 [night storage] heaters within the flat most of which were said not to work. There is an electric immersion heater. There is a wall mounted fan heater in the bathroom. The kitchen is basic and installed prior to the applicant moving to the property on 2 June 2000. The landlord supplied an electric integrated hob and cooker, washer dryer and integrated extractor hood. There

was a leak which damaged the fridge freezer. The bathroom has not been modernised. It comprises basic mismatched fittings and the shower is poor. The extractor fan does not work, and condensation builds up. The windows are metal single glazed and in very poor condition. The building is a seven story purpose- built block of flats on the east side of Wimpole St overlooking [ADDRESS], W1. The block appears to date from the 1950s. The Tribunal accepts the applicant’s evidence that it contains 14 flats which are predominantly used as [NAME].

Evidence

The Landlord’s Case

8. The landlord did not respond to the appeal save for stating that it would not be attending the hearing.

The Tenant’s Case

9. The tenant referred to three comparables, full agents’ details of which were provided. A two-bedroom flat in [ADDRESS] W1 was available at £2383 per calendar month. This had two bedrooms, reception room kitchen and two bathrooms, both ensuite, plus guest cloakroom and also access to a private patio. It was managed by [NAME]. It was modernised throughout and considerably larger than the subject flat at 1267 ft². A two-bedroom flat at [ADDRESS] St, W1G was available at £2535 per calendar month. From the agents’ details, this was a garden flat in good decorative order with two double bedrooms, reception room, modern fitted kitchen and bathroom and with direct access to a secluded communal garden. The building was portered. A two-bedroom flat 8 Copperfield House, 52 Marylebone High St, W1U was available at £2492 per calendar month. This was a spacious first floor flat with live two bedrooms, two bathrooms, reception room kitchen and lift. It was finished to a high standard with a modern fitted kitchen and bathroom and was larger than the subject property at 886 ft². The tenant also supplied a letter from the rent officer dated 22 July 2021 in which the rent officer set out his calculations which were as follows:

Open market value £38,220 per annum Less Adjustments £11,465 per annum Scarcity

£2140 per annum Fair Rent

£24,615 per annum

The Law

10. 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. (See Appendix below).

11. 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

12. The Tribunal accepted the evidence of the applicant in relation to her comparables as being the best guide to value and the only direct evidence before the tribunal. The Tribunal did not accept the approach to fair rent adopted by the Rent Officer. The average of these comparables was £29,600 per annum which the Tribunal adopted as a starting point, had the property been in a condition usual for a modern letting on an assured shorthold tenancy. From this, the Tribunal considered that the following downward adjustments were needed:

Evidence of damp and condition of windows 10% No central heating

10% Condition of bathroom

5%

This aggregated to 25% or £7,400 per annum, leaving an adjusted market rent of £22,200 per annum.

13. The Tribunal found that there was substantial scarcity in the locality of Greater London. It took judicial notice of long local authority and social housing waiting lists in arriving at this decision. It therefore made a deduction of 20% (£4,400 per annum) from the adjusted market rent to reflect this element.

14. It follows that the Tribunal found that the fair rent was £17,760 per annum subject to [NAME] of the Rent Acts (Maximum Fair Rent) Order 1999.

15. However, this amount was not limited by the Rent Acts (Maximum Fair Rent) Order 1999, which prescribed a higher maximum fair rent of £23,487, per annum the calculations for which were supplied with the Notice of the Tribunal’s Decision. Having considered the schedule of services, the Tribunal accepted the Rent Officer’s attribution of rent to services of £2,084 per annum.

16. Accordingly, the sum of £17,760 per annum was determined as the fair rent with effect from 5 August 2021, being the date of the Tribunal’s decision.

Mr [NAME] 21 September 2021

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 [NAME] for permission must be made to the First-tier Tribunal at the Regional office which has been dealing with the case.

• The [NAME] for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the [NAME].

• If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed despite not being within the time limit.

• The [NAME] 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 [NAME] the [NAME] is seeking.

Appendix

Rent Act 1977

Section 70 Determination of fair rent.

(1)In determining, for the purposes of this Part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwelling-house, regard shall be had to all the circumstances (other than personal circumstances) and in particular to—

(a)the age, character, locality and state of repair of the dwelling-house, . . . F1

(b)if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture [F2, and]

[F2(c)any premium, or sum in the nature of a premium, which has been or may be lawfully required or received on the grant, renewal, continuance or assignment of the tenancy.]

(2)For the purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwelling-houses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially

greater than the number of such dwelling-houses in the locality which are available for letting on such terms.

(3)There shall be disregarded—

(a)any disrepair or other defect attributable to a failure by the tenant under the regulated tenancy or any [NAME] to comply with any terms thereof;

(b)any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any [NAME];

(c)(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F3

(e)if any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the tenant under the regulated tenancy or any [NAME] or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the tenant, any person residing or lodging with him, or any sub-tenant of his.

F4[(3A)In any case where under Part I of the Local Government Finance Act 1992 the landlord or a superior landlord is liable to pay council tax in respect of a hereditament (“the relevant hereditament”) of which the dwelling-house forms part, regard shall also be had to the amount of council tax which, as at the date on which the [NAME] to the rent officer was made, was set by the billing authority—

(a)for the financial year in which that [NAME] was made, and

(b)for the category of dwellings within which the relevant hereditament fell on that date,

but any discount or other reduction affecting the amount of council tax payable shall be disregarded.

(3B)In subsection (3A) above—

(a)“hereditament” means a dwelling within the meaning of Part I of the Local Government Finance Act 1992,

(b)“billing authority” has the same meaning as in that Part of that Act, and

(c)“category of dwellings” has the same meaning as in section 30(1) and (2) of that Act.]

(4)In this section “improvement” includes the replacement of any fixture or fitting.

[F5(4A)In this section “premium” has the same meaning as in Part IX of this Act, and “sum in the nature of a premium” means—

(a)any such loan as is mentioned in section 119 or 120 of this Act,

(b)any such excess over the reasonable price of furniture as is mentioned in section 123 of this Act, and

(c)any such advance payment of rent as is mentioned in section 126 of this Act.]

(5). . . . . . . . . . . . . . . . . .

(emphasis added)