Tribunal Sets Market Rent for Property After Adjustments

OUTCOME: Allowed in Part

MR22 First-tier Tribunal – Property Chamber File Ref No. LON/00BK/MNR/2024/0338

Notice of the Tribunal Decision and Register of Rents under Assured Periodic Tenancies (Section 14 Determination)

Housing Act 1988 Section 14

Address of Premises The Tribunal members were 69 [ADDRESS] [POSTCODE]

[NAME] Mrs [RESPONDENT] [NAME]

Landlord [RESPONDENT] [RESPONDENT] [ADDRESS] [POSTCODE]

Tenant Mr [APPELLANT]

1. The rent is: £ 5,200 Per month (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 24 June 2024

*3. The amount included for services is/is

negligible/not applicable - Per -

*4. Service charges are variable and are not included

5. Date assured tenancy commenced 5 April 2006

6. Length of the term or rental period Monthly

7. Allocation of liability for repairs As per the agreement

8. Furniture provided by landlord or [NAME]

9. Description of premises Brick built terraced property comprising 5 bedrooms, 1 living-dining room, 1 kitchen, 1 downstairs toilet, 1 bathroom with WC, 1 shower room with WC, a garden to the rear and off road parking to the front.

[NAME] of Decision 29 January 2025

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Case Reference

: LON/00BK/MNR/2024/0338

Property : 69 [ADDRESS] [POSTCODE]

Tenant

: [APPELLANT]

Landlord : [APPELLANT] represented by [RESPONDENT] of Objection : 14 June 2024

Type of Application : Determination of a Market Rent Sections 13 & 14 of the Housing Act 1988

Tribunal

: [NAME] [NAME] [NAME] Member

Date of Reasons : 29 January 2025

_______________________________________________

DECISION

The Tribunal determines a rent of £5,200 per month with effect from 24 June 2024.

____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 FULL REASONS

Background

1. By an application dated 14 June 2024, Mr [APPELLANT] of [NAME], the Tenant’s Agent, on behalf of the Tenant, [APPELLANT] of 69 [ADDRESS] [POSTCODE] (the subject property) referred to the First-tier Tribunal (the Tribunal) a notice of increase of rent served by the Landlord under section 13 of the Housing Act 1988 (the 1988 Act).

2. The Landlord’s Agent, [RESPONDENT], served a notice proposing an increase in the rent on behalf of the Landlord, [RESPONDENT]. The notice proposed an increase in the rent from £2,000 per month to £5,850 per month. The notice was dated 20 March 2024 and proposed a starting date for the new rent of 24 June 2024.

3. The Tribunal issued Directions on 29 November 2024 instructing the parties to provide all relevant information and submissions they wished to make in this application.

4. Following receipt of a request from the Tenant’s representative an inspection of the property was made and subsequently arranged for 27 January 2025.

The Law

5. In accordance with the terms of section 14 of the 1988 Act, the Tribunal proceeded to determine the rent at which it considered that the subject property might reasonably be expected to be let on the open market by a willing landlord under an assured tenancy.

6. In so doing the Tribunal, as required by section 14(2), ignored the effect on the rental value of the property of any relevant tenant's improvements as defined in sections 14(2) and (3) and any reduction in the value caused by a failure by the tenant to comply with any terms of the tenancy. Section 14 is reproduced at the end of these reasons.

7. In respect of this case section 16 of the 1988 Act is also relevant and this states:

“It shall be an implied term of every assured tenancy that the tenant shall afford to the landlord access to the dwelling-house let on the tenancy and all reasonable facilities for executing therein any repairs which the landlord is entitled to execute.”

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Evidence

Tenant’s Submissions

1. The Tenant provided written submissions via the Reply Form contained within the Directions and a supporting witness statement. This related to the condition of the property, repairs that the tenant had undertaken and the original refurbishment he had undertaken as part of the original agreement between himself and the Landlord.

2. The refurbishment works undertaken by the Tenant, as per his agreement with the Landlord included: • Installation of a new kitchen. • Redecoration throughout. • Fixing the roof. • Repair rotten windows. • Retiling of the bathroom.

Landlords’ Submissions

3. The Landlord provided written submissions via the Reply Form contained within the Directions together with additional documentation relating to comparable information for the purpose of demonstrating the open market rent.

Inspection

4. The Tribunal inspected the property on 27 January 2025. The property is a five-bedroom terraced house (despite the application stating it was a detached property) in an affluent part of London with excellent transport links and amenities close by.

5. As per written submissions received by the Landlord, the Tenant had vacated the property in December 2024.

6. There is central heating throughout the property. The windows on the front side of the property are double glazed sashed windows whereas the windows to the rear, the front door and rear doors appear to be wooden framed with single glazing.

7. Above the front door on the ceiling there appeared to have been signs of a water leak, possibly from the bathroom directly above this area. Nevertheless, the leak had appeared to stop, and these were historic signs of an issue.

8. On the ground floor there is an entrance hall with wooden flooring off of which is a downstairs toilet and a large living-dining room. The downstairs

4 toilet is small and which the Tribunal has doubts over its functionality due to the size. The living-dining room has wooden parquet flooring, a fireplace (with no active fire at present) and where the room then leads out into the rear garden via a set of French wooden framed doors.

9. At the end of the hall is the kitchen which is small in comparison but of a good condition with a number of cabinets, a washing machine, fridge freezer, cooker and hob all being present. The boiler is also located in the kitchen within one of the cupboards. There are however some small repairs required in the kitchen including cupboards and splash backs.

10. A large amount of storage space is present under the stairs together with the water tank which is also housed there. The carpeted stairs then lead up to the first and second floors.

11. On the first floor of the property there are three double bedrooms and a family bathroom. The bedrooms were all of good size being able to house double beds with wooden flooring and either built-in wardrobes or ample room for furniture. Curtains or blinds were present in all of the rooms.

12. The bathroom comprised a sink, toilet and bath with a shower head. There was also a towel radiator present. Minor signs of damp were present in the room, but this could have been as a result of the property remaining vacant for a period.

13. On the second floor, there are two further double bedrooms. One is of a double bed size and the other a single bed. These too had curtains or blinds present. There is also a shower room on the second floor comprising a sink, toilet and shower unit.

14. Throughout the property, the electrics appeared to be dated with a number of extension leads being used to provide sufficient sockets for the property.

15. To the rear of the property there was a small garden for the Tenant’s use. To front was a space for off road parking.

Determination and Valuation

16. The Tribunal initially needs to determine 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. In doing this, the Tribunal will consider the rental value of the property and will not consider the personal circumstances of the Tenant, as that is not a factor envisaged by the Act.

17. The Landlord provided comparable evidence which was of particular use given that two of the four evidence properties provided were located on [ADDRESS]. Although the comparables were for four-bedroom properties and the subject property is a five-bedroom property the

5 comparables had other benefits (e.g., gated community) that would offset the benefit of not having the fifth bedroom.

18. The Tribunal have therefore applied a market rent of £6,500 per calendar month for the subject property.

19. However, there are elements in the subject property that need to be taken in to account and reflected via adjustments to the market rent. This includes dated electrics and the property being only partly double-glazed. The full valuation is shown below:

£/month Market Rent

6,500

Less Rear windows, rear doors & front door not double glazed ) 5% Dated electrics throughout

) 10% Downstairs toilet functionality

) 2.5% Disrepair to kitchen

) 2.5%

1,300

£5,200

Decision

20. The Tribunal determine that the market rent for the subject property is £5,200 per calendar month.

Chairman: [NAME]: 29 January 2025

6 APPEAL PROVISIONS

If either party is dissatisfied with this decision, they may apply for permission to appeal to the Upper Tribunal (Lands Chamber). Any such application must be made within 28 days of this decision (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rule 2013. Any appeal in respect of the Housing Act 1988 should be on a point of law.

ANNEXE

Housing Act 1988

14.— Determination of rent by tribunal. (1) Where, under subsection (4)(a) of section 13 above, a tenant refers to the appropriate tribunal a notice under subsection (2) of that section, the appropriate tribunal shall determine the rent at which, subject to subsections (2) and (4) below, the appropriate tribunal consider that the dwelling-house concerned might reasonably be expected to be let in the open market by a willing landlord under an assured tenancy— (a) which is a periodic tenancy having the same periods as those of the tenancy to which the notice relates; (b) which begins at the beginning of the new period specified in the notice; (c) the terms of which (other than relating to the amount of the rent) are the same as those of the tenancy to which the notice relates; and (d) in respect of which the same notices, if any, have been given under any of Grounds 1 to 5 of Schedule 2 to this Act, as have been given (or have effect as if given) in relation to the tenancy to which the notice relates. (2) In making a determination under this section, there shall be disregarded— (a) any effect on the rent attributable to the granting of a tenancy to a [NAME]; (b) any increase in the value of the dwelling-house attributable to a relevant improvement carried out by a person who at the time it was carried out was the tenant, if the improvement— (i) was carried out otherwise than in pursuance of an obligation to his immediate landlord, or (ii) was carried out pursuant to an obligation to his immediate landlord being an obligation which did not relate to the specific improvement concerned but arose by reference to consent given to the carrying out of that improvement; and (c) any reduction in the value of the dwelling-house attributable to a failure by the tenant to comply with any terms of the tenancy. (3) For the purposes of subsection (2)(b) above, in relation to a notice which is referred by a tenant as mentioned in subsection (1) above, an improvement is a relevant improvement if either it was carried out during the tenancy to which the notice relates or the following conditions are satisfied, namely— (a) that it was carried out not more than twenty-one years before the date of service of the notice; and (b) that, at all times during the period beginning when the improvement was carried out and ending on the date of service of the notice, the dwelling-house has been let under an assured tenancy; and (c) that, on the coming to an end of an assured tenancy at any time during that period, the tenant (or, in the case of [NAME], at least one of them) did not quit. (3A) In making a determination under this section in any case where under Part I of the Local Government Finance Act 1992 the landlord or a [NAME] is liable

7 to pay council tax in respect of a hereditament (“the relevant hereditament”) of which the dwelling-house forms part, the [appropriate tribunal] 5 shall have regard to the amount of council tax which, as at the date on which the notice under section 13(2) above was served, was set by the billing authority— (a) for the financial year in which that notice was served, 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 “rent” does not include any service charge, within the meaning of section 18 of the Landlord and Tenant Act 1985 , but, subject to that, includes any sums payable by the tenant to the landlord on account of the use of furniture [, in respect of council tax] 6 or for any of the matters referred to in subsection (1)(a) of that section, whether or not those sums are separate from the sums payable for the occupation of the dwelling-house concerned or are payable under separate agreements. (5) Where any rates in respect of the dwelling-house concerned are borne by the landlord or a [NAME], the [appropriate tribunal] 7 shall make their determination under this section as if the rates were not so borne. (6) In any case where— (a) the appropriate tribunal have before them at the same time the reference of a notice under section 6(2) above relating to a tenancy (in this subsection referred to as “the section 6 reference”) and the reference of a notice under section 13(2) above relating to the same tenancy (in this subsection referred to as “the section 13 reference”), and (b) the date specified in the notice under section 6(2) above is not later than the first day of the new period specified in the notice under section 13(2) above, and (c) the appropriate tribunal propose to hear the two references together, the appropriate tribunal shall make a determination in relation to the section 6 reference before making their determination in relation to the section 13 reference and, accordingly, in such a case the reference in subsection (1)(c) above to the terms of the tenancy to which the notice relates shall be construed as a reference to those terms as varied by virtue of the determination made in relation to the section 6 reference. (7) Where a notice under section 13(2) above has been referred to the appropriate tribunal, then, unless the landlord and the tenant otherwise agree, the rent determined by the appropriate tribunal (subject, in a case where subsection (5) above applies, to the addition of the appropriate amount in respect of rates) shall be the rent under the tenancy with effect from the beginning of the new period specified in the notice or, if it appears to the appropriate tribunal that that would cause undue hardship to the tenant, with effect from such later date (not being later than the date the rent is determined) as the committee may direct. (8) Nothing in this section requires the appropriate tribunal to continue with their determination of a rent for a dwelling-house if the landlord and tenant give notice in writing that they no longer require such a determination or if the tenancy has come to an end. (9) This section shall apply in relation to an assured shorthold tenancy as if in subsection (1) the reference to an assured tenancy were a reference to an assured shorthold tenancy.

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