Tribunal Sets Market Rent for Tenancy Dispute

OUTCOME: Allowed

MR22 First-tier Tribunal – Property Chamber File Ref No. FR/LON/00BC/MNR/2025/0624

Notice of the Tribunal Decision and Register of Rents under Assured Periodic Tenancies (Section 14 Determination or Section 22 Determination)

Housing Act 1988 Section 14

Address of Premises The Tribunal members were 2 [ADDRESS], [POSTCODE]

Mr O [NAME] Mr [RESPONDENT]

Landlord [NAME] [APPELLANT] & Mrs [APPELLANT] [NAME]

Tenant [NAME] [APPELLANT] & Mr [APPELLANT]

1. The rent is: £ 2,375 Per Cal Month (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 1 January 2025

3. The amount included for services is not applicable N/A Per

4. Date assured tenancy commenced 1 July 2022

5. Length of the term or rental period Monthly

6. Allocation of liability for repairs Landlord

7. Furniture provided by landlord or superior landlord Single bed, study tables, white goods & various items of fitted furniture including wardrobes and bookcases.

8. Description of premises Circa 1930s (with an apparently later partial side and front extension) two storey, semi- detached house with driveway in the north-western part of Ilford. Private garden with ‘summerhouse.

Chairman Mr O [NAME] of Decision 28 April 2025

1

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : FR/LON/00BC/MNR/2025/0624 Property : 2 [ADDRESS], [POSTCODE] Tenants : [NAME] [NAME] & Mr [NAME] Landlords : [NAME] [NAME] & Mrs [NAME] [NAME] of application : 10 December 2024 Type of application : Application for determination of market rent following a Notice of Increase served pursuant to Section 13 of the Housing Act 1988. Tribunal member(s) :

Mr O [NAME] Mr L Packer Venue : 10 [ADDRESS], [POSTCODE] Date of decision : 28 April 2025 Date of reasons : 13 June 2025

REASONS FOR DECISION

© CROWN COPYRIGHT 2025

2

Background 1. The tenant lives in the property under a monthly, periodic assured tenancy. The landlord served on the tenant a Notice of Increase, dated 5 November 2024, proposing to increase the rent at the property from £2,175 per month to £2,600 per month with effect from 1 January 2025.

2. On 10 December 2024 the Tribunal received an application from the tenant, dated that day, referring the landlord’s Notice of Increase to the tribunal, challenging the increase and seeking a determination of the market rent.

3. The Tribunal issued directions on 25 February 2025. The Tribunal’s directions invited the parties to provide a reply form and make any other submissions they wished to make. Both parties provided a reply form accompanied by further submissions, and the landlord provided a reply to the tenant’s reply form and submissions as the directions provided for.

4. The tenant indicated, in their reply form, that they wished the Tribunal to inspect the property and hold a hearing. Accordingly, we arranged a hearing in this matter on 28 April 2025, to be followed by an inspection later that day.

The Hearing

5. The hearing was conducted by video due to the unavailability of the parties for a face to face one. Both the tenants attended that hearing in person (albeit [NAME] [NAME] joined later, having found an opportunity to do so during her working hours as a hospital doctor) as did both of the landlords.

6. That hearing was an entirely cordial affair. This is not a situation where there is a background of poor relations between the parties, or in fact any animosity at all. Instead, it is a simple and straightforward disagreement about the amount of the proposed rental increase.

7. Mr [NAME], speaking on behalf of the tenants, felt that the increase was too high, and spoke to their personal circumstances – though these are, as we said at the hearing, something we have to disregard in making our determination under the provisions of Section 14 of the Housing Act 1988.

8. In terms of value, the tenants did not have a precise opinion – but said that the asking rents provided in evidence averaged to around £2,200. Even around 10% more than that would only be £2,400.

9. For the landlords’ part, [NAME] [NAME] said that the property was in a better condition than would usually be expected in the rental market as it had

3

originally been fitted out with the intention of their own occupation. Rental values in Redbridge were higher than other areas of London, the landlord averred, and they felt the value they had proposed in the notice was below what the property might fetch in the market.

10. The tenant also discussed their personal circumstances as regards the potential for hardship, which we cover as an issue of itself later in these reasons.

The inspection

11. The property is a solid-brick built, circa 1930s (with an apparently later partial side and front extension) two storey, semi-detached house in the north-western part of Ilford – in-between Cranbrook Primary School and the Redbridge roundabout (and thereby close to Redbridge Underground station). The property benefits from a driveway large enough for one car.

12. On the ground floor, the property offers an entrance room from which a bathroom (featuring a ‘wet-room’ style shower, toilet and hand basin), a living room and the kitchen is accessed – as well as storage cupboards. The kitchen is modern, and is of a good standard. There is a dining area to the rear, from which an additional medium sized living area (currently used as a ’tv room’) is accessed.

13. The ground floor of the property is generally in a good condition, however we did observe that there appeared to be minor damp issues around the rear kitchen window closest to the washing machine – with bubbling paintwork above the window and apparent damp staining below it.

14. The property benefits from a private garden, and has a cavity brick built ‘summerhouse’ outbuilding with a flat roof, which is presently used for storage. Our inspection of that outbuilding was therefore a little restricted, however we noted that there was a large crack in the plasterwork to the left hand side – which, on looking at the garden from the upstairs bedroom window, appears to be in close proximity to a tree.

15. Upstairs the property offers two double bedrooms, a single bedroom and a bathroom. Decoratively, the upstairs is worse than the downstairs – and it is in fact rather tired (save the bathroom, which is in a good modern condition). There are chip marks to the skirting boards in places, and the painted walls and gloss-work are faded in part. There is a mark on the ceiling in the front (double) bedroom from apparent water ingress damage.

The law

16. The way in which the Tribunal is to determine a market rent in this circumstance is set out in Section 14 of the Housing Act 1988. That

4

section is too lengthy to quote in its entirety in these reasons. In brief, the tribunal is to determine the rent at which the property might reasonably be expected to let in the open market, on the proposed rental increase date, by a willing landlord under an assured tenancy, subject to disregards in relation to the nature of the tenancy (i.e. it being granted to a “[NAME]”) and any increase or reduction in the value due to the tenant’s carrying out improvements which they were not obliged to carry out by the lease or their failure to comply with the terms of the tenancy.

Valuation

17. The evidence of value provided by the parties comprised brief details of asking rents from property search websites. The landlord provided very limited details (comprising a summary of the listing on the search websites rather than even the particulars themselves) for 7 asking rents for 3 bed properties in the Ilford area. Those asking rents ranged from £2,100 to £2,800 per calendar month (pcm) – and some were from as far away as [ADDRESS] – on the opposite side of Ilford and around 2 miles away from the subject property. The tenant provided similarly limited details of a further 4 asking rents. Those asking rents had a tighter range, from £2,100pcm to £2,250pcm, but again included a comparable from [ADDRESS] – and in fact other ones from what would be considered to be [ADDRESS] rather than Ilford proper.

18. Asking rents carry very little evidential weight in any case. In the specific case, we were presented with asking rents with a large range in values and from a wide area. In addition, we were provided with minimal information regarding those asking rents, which made proper examination of any of them impossible on what was offered to us in evidence. This is particularly important here, because the property has 2 double bedrooms and a single bedroom – whereas we do not know if the two asking rents located closest to the subject (those located on [ADDRESS] for £2,600pcm and £2,700pcm respectively) have 3 doubles or not. The only hint we can really get regarding those two properties is that one of them is described as ‘spacious’, and the other as ‘newly refurbished’; though even that does not assist particularly as those are expressions with ambiguous meanings which are often used by letting agents in a wide variety of circumstances.

19. We therefore applied very little weight to the asking rent evidence provided by the parties.

20. The landlord also referred to ONS data to support the rental increase – and both parties referred to (borough and London wide) average rental values (and increases) and other similar things. ONS data, increases and indeed any index can only provide a general picture of market trends. We are grateful for the parties’ submissions concerning those market trends, which we considered, though as an

5

expert Tribunal we are already aware of market rental trends in the area.

21. As regards the specific valuation itself, we are reluctant to say that indexation (in particular) might never play a role in a rental valuation exercise, particularly concerning unusual properties or ones located in (usually rural) areas where there is a very limited rental market - but that is not the case here, and we find as a fact that there is an active transactional market for similar properties to the subject in the area. There is therefore no need to rely upon indexation as a means of establishing a market rental value; as it can be discerned directly from actual values in the market. We therefore applied very little weight to the ONS data provided, as well as the other submissions regarding average increases.

22. The landlord had observed at the hearing that they believed the property was better than the standard condition of rental properties on the market, and that it was therefore hard to find like for like evidence of value to refer to. We are sympathetic to that argument, but in fact the difficulty struck upon seems to us – and this is meant with no disrespect to the landlords or the tenants, both of whom represented themselves more than adequately under stressful circumstances – to be that the valuation of property is an area of professional skill, and the landlord is not a qualified valuer. Similarly, having seen the property ourselves and as an expert Tribunal, we do not agree that it is markedly above the standard that would be expected in the market; and in fact, given the decorative condition of the upstairs, we find as a fact that it is actually a little below it.

23.

Accordingly, and in light of our above observations concerning the valuation evidence we were provided, we considered the value of the property in line with the submissions of the parties and our own knowledge of rental values in the area as an expert Tribunal. We consider that the property would have let for around £2,500pcm were it let on the market in a good condition and on the terms considered usual for such a letting, with the furniture provided by the landlord, at the proposed rental increase date 1 January 2025.

24. We deducted 5% from that level to reflect the fact that the property is tired decoratively upstairs, and the other more minor defects at the property we have noted in the inspection section above.

25. We therefore arrived at a market rent of £2,375pcm, as shown in the valuation below.

Market Rent £2,500 Per Month LESS 5% Condition -£125

Total £2,375 Per Month

6

Effective Date

26. As set out in Section 14(7) of the Housing Act 1988, the effective date of a Tribunal determination under that section is the rent increase date that was provided in the landlord’s Notice of Increase – unless it appears to the Tribunal that this would cause the tenant undue hardship. In those circumstances, the Tribunal may adopt a later effective date for its determination, being not later than the date on which the determination is made.

27. Mr [NAME], speaking for the tenants, did refer to hardship, indicating that his wife was the only person working at present and the need to support their children. He also said there was a reason he could not work, though he did not wish to explain that to us. As we said at the hearing, and the tenant indicated he understood, that is his right – but of course means we cannot really take that into account.

28. Based on what we heard, and the submissions of the parties, we did not consider that the tenant had shown they would suffer undue hardship if the rental increase took effect from the date proposed in the notice. Accordingly, we determined that the rental increase should take effect from that date – 1 January 2025.

Decision 29. Pursuant to the considerations above, we determined a rent of £2,375 per calendar month in this matter, such rent to take effect from 1 January 2025.

Valuer Chairman: [NAME]: 13 June 2025

7

ANNEX - RIGHTS OF APPEAL

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 may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First- tier Tribunal at the Regional Office which has been dealing with the case. The application should be made on Form RP PTA available at https://www.gov.uk/government/publications/form-rp-pta-application-for- permission-to-appeal-a-decision-to-the-upper-tribunal-lands-chamber 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. Please note that if you are seeking permission to appeal against a decision made by the Tribunal under the Rent Act 1977, the Housing Act 1988 or the Local Government and Housing Act 1989, this can only be on a point of law. If the Tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).