Tribunal Sets Fair Rent Using RPI

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. GB/LON/00BJ/F77/2024/0081

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 43a [ADDRESS], [POSTCODE]

[NAME] [NAME]

[RESPONDENT] [NAME]

[APPELLANT] [NAME] [APPELLANT] & [NAME]

1. The fair rent is 255.50 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 30 May 2024

3. The amount for services is £4.43 Per Week

negligible/not applicable

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

not applicable 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

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).

Chairman [NAME] of decision 30th April 2024

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 383.00

PREVIOUS RPI FIGURE Y 292.60

X 383.00 Minus Y 292.60 = (A) 90.40

(A) 90.40 Divided by Y 292.60 = (B) . 3089542

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) 1.3589542

Last registered rent* £188.00 Multiplied by (C) = 1.3589542 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £255.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £ 255.50 Per WEEK

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/00BJ/F77/2024/0081

Hearing Type : [ADDRESS] of Written Representation

Property : 43A [ADDRESS], [POSTCODE]

Applicant: [redacted]

Respondent: [redacted] : Referral of a Registration of Fair Rent under the Rent Act 1977

Tribunal Member : [NAME], FIRPM

Valuer Chairman

Date of Decision : 30 April 2024

FULL REASONS

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REASONS

Background

1. By way of an RR1 [NAME] dated 2 November 2023, the [RESPONDENT] made an [NAME] for rent re-registration of a fair rent to the Rent Officer. The previous rent was determined by the Rent Officer on 19 March 2020 at £188.00 per week.

2. On 2 January 2024, the Rent Officer registered a fair rent of £256.43 per week with effect from 2 January 2024.

3. By an email dated 5 January 2024, the [APPELLANT] wrote to the Valuation Officer objecting to that rent. The [APPELLANT] was concerned at the level of increase and specifically pointed out that improvements had been undertaken to the kitchen and bathroom areas by the [APPELLANT] and that these matters had not been addressed in the [RESPONDENT]’s [NAME].

4. On 4 March 2024 the Tribunal issued Directions to the parties requiring them to produce any evidence on which they wished to rely in support of their respective cases, including by way of a reply form. The matter was set down for a determination on the papers, unless either party requested a Hearing, which neither did. The [RESPONDENT] was directed to return a reply form with any other documents upon which it wished to rely by 18 March 2024. The [APPELLANT] was directed to do likewise by 1 April 2024 with the [RESPONDENT] given the opportunity to respond by 8 April 2024. Neither party complied with the Directions.

5. On 30 April 2024 on the basis of papers and without Hearing, the Tribunal determined the fair rent of the above property at £255.50 per week.

The Law

6. When determining a fair rent, the Tribunal, in accordance with the Rent Act 1977, Section 70, had regard to all circumstances (other than personal circumstances) including the age, location and state of repair of the property. Section 70 is set out in the Appendix below.

7. 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

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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 purpose of determining the market rent, assured tenancy (market) rents are usually appropriate comparable (these rents may have to be adjusted where necessary to reflect any relevant differences between those comparables and the subject property).

The Property

8. From Google Maps and information included on the Rent Register, the Tribunal found as follows:

The property comprises a self-contained split-level flat on the first and top floor of a converted three storey house believed to have been constructed circa 1900.

The property in a typical suburban London location and is fairly well placed for transport and shopping facilities.

The accommodation comprises lounge, two bedrooms, kitchen / diner, bathroom / WC and garden.

The property is understood to be fully centrally heated.

Valuation

9. From [COMPANY] v Chairman of the Greater Manchester etc Tribunal other registered rents are not relevant as a starting point because they are not market rents.

10. The Tribunal must first determine the market rent for a property of this size, in this location and in its current condition. It must also disregard the personal circumstances of either party. The Tribunal notes that the Rent Officer adopted a starting point of £460.00 per week . The tribunal is of the opinion that the open market rent of the property should be £575.00 per week.

11. However, all white goods, carpets and curtains are presumed to be the property of the [APPELLANT]. In addition, a [APPELLANT] of a Rent Act property has more onerous repairing obligations than those under an assured shorthold tenancy.

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12. The Tribunal, therefore, made the following deductions from the market rent of £575.00 per week to reflect those differences plus [APPELLANT]’s improvements which are understood to have taken place:

Market Rent:

£575.00 per week

• Section 11 of the [RESPONDENT] & [APPELLANT] 1985 repairing obligations – 5%. • The provision of carpets and curtains by [APPELLANT] – 4%. • The provisions of white goods by [APPELLANT] – 2.5%. • The modernisation of the kitchen – 7%. • The modernisation of the bathroom by the [APPELLANT] – 5%.

Total: 23.5%

£135.12 per week

Adjusted rent:

£439.88 per week

Scarcity – 20%

£ 87.98 per week

Fair rent determination

£351.90 per week.

13. The Tribunal must register the lower of the adjusted market rent or maximum fair rent as the fair rent for the property. In this instance, the maximum fair rent produces a lower figure and the Tribunal, therefore, registered the rent at £255.50 per week for this property with effect from 30 April 2024 being the date of the Tribunal Decision.

Name: Mr [NAME] [NAME]: 30 April 2024

ANNEX – RIGHTS OF APPEAL

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By Rule 36(2) of the Tribunal procedure, (First-tier Tribunal) (Property Chamber) Rules 2013 the Tribunal is required to notify the parties about any right of appeal they might have.

If a party wishes to appeal 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 this 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. Any appeal in respect of the Housing Act 1988 should be on a point of law.

If the Tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).

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APPENDIX

Rent Act 1977

Section 70 Determination of Fair Rent

(1) In determining, for the purpose of this part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwellinghouse, 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 dwellinghouse…F1

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

(c) (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 purpose 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 [APPELLANT] under the regulated tenancy or any [NAME] to comply with any terms thereof;

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

(c) (d)………………………………………………………………………F3

(d) If any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the [APPELLANT] under the regulated tenancy or any [NAME] in [NAME] of theirs or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the [APPELLANT], any person residing or lodging with them, or any sub-[APPELLANT] of theirs.

(e) F4 [(3a) in any case where under Part 1 of the Local Government Finance Act 1992 the [RESPONDENT] or a superior [RESPONDENT] 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 dwelling 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 –

“hereditament” means a dwelling within the meaning of Part 1 of the Local Government Finance Act 1992.

“billing authority” has the same meaning as in that part of the Act, and

“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.

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[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 or rent as is mentioned in Section 126 of this Act.]

(5) ………………………………………………………………………………….