Tribunal Sets Fair Rent for Tenant's Property Considering Condition and Scarcity

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00BD/F77/2019/0076

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were Flat 3 St. [ADDRESS], [POSTCODE]

Mr [NAME] Lawyer Mr [RESPONDENT] [COMPANY]

[APPELLANT] [NAME]

1. The fair rent is 620.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 31 May 2019

3. The amount for services is £25.27 Per Calendar Month

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

N/A Per

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

None

8. For information only:

(a) 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 £620.00 per Calendar Month including £25.27 per Month for services prescribed by the Order.

Chairman Mr [NAME] Lawyer Date of decision 31st May 2019

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 285.1

PREVIOUS RPI FIGURE Y 269.3

X 285.1 Minus Y 269.3 = (A) 15.8

(A) 15.8 Divided by Y 269.3 = (B) 0.058617

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.108671

Last registered rent* 638.50 Multiplied by (C) = 707.89 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 708.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £708.00 Per Calendar Month

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.

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : KA/LON/00BD/F77/2019/0076 Property : [ADDRESS], [POSTCODE] Applicant: [redacted] Respondent : [redacted] Representative : None Type of application : Section 70 of the Rent Act 1977 Tribunal members : Mr [NAME] Mr [NAME]. [NAME] : 10 [ADDRESS] [POSTCODE] Inspection The Tribunal inspected the property on 31 May 2019 in the company of the [APPELLANT], [NAME] and the landlord's representative, Mr [COUNSEL].

The property is a self-contained unmodernised flat on the 1st floor of a large 4 storey semi-detached house.

It consists of an entrance hall, 2 rooms, kitchen and a bathroom/WC. The kitchen and bathroom are very old, there is no heating provided apart from that of the [APPELLANT] and there is considerable disrepair within the flat. The timber casement windows are in poor condition and in some instances do not close properly. There are also signs in all of the rooms of settlement and plaster having lost its key.

All carpets, curtains and white goods are the [APPELLANT]’s own. The general external repair and decorations had been carried out recently but not to a particularly good standard.

Determination and Valuation

In the first instance the Tribunal 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. The Tribunal considered the market in and around the area where the property is situated from its own general knowledge, rather than any specific knowledge of market rent levels in the area. Comparables were provided by the landlord of lettings in the adjacent semidetached house which he also owned. The Tribunal relied upon their expert knowledge and experience. The Tribunal concluded that an open market rent for 2 roomed flats in the vicinity would be in the region of £1290.00 pcm. This level of rent assumes a property in a refurbished condition.

We need to consider any deduction to reflect terms and conditions, [APPELLANT]’s own carpets, curtains and white goods, the lack of a modern kitchen and bathroom and the disrepair which we consider would have an adverse effect on the open market rent level. Taking these matters into account we consider that a reduction in the open market rent of 40%, or £516.00, fairly reflects these issues. This therefore reduces the open market rent to £774.00 pcm.

Next we need to consider the issue of scarcity. We were not provided with any specific evidence on this issue. However, the issue of scarcity is considered on the basis of the number of properties available to let and also considering the demand for such properties and over a really large area. Therefore, using our general, rather than any specific knowledge and experience, we consider that in the wide geographical area being the area around Greater London, there is an imbalance between supply and demand and this impacts upon rental values.

Accordingly, we make a deduction of approximately 20% for scarcity. The full valuation is shown below.

Market Rent

£1290.00 Less 40% for the reasons itemised above

£ 516.00

£ 774.00 Scarcity 20%

£ 154.00 Fair rent

£ 620.00