62 The Boundary, Oldbrook, Milton Keynes, MK6 2 HT CAM/00MG/MNR/2024/0007
DECISION
The Tribunal determined a market rent of £1,500 per month effective from 7 December 2023.REASONS
[1]The Landlord served a notice dated 13 October 2023 pursuant to section 13 (2) of the Housing Act 1988 which stated an increase in the passing rent from £875 per month to £1,500 per month with effect from 7 December 2023.[2]This rent is stated to be exclusive of Council Tax, Water Charges, and fixed service charges.[3]The Tenant made an application on 7 December 2023 to the Tribunal in reliance on section 13 (4) of the Housing Act 1988.[4]The Tribunal issued directions on 7 February 2024 inviting the Parties to submit any further representations (including any photographs and details of rentals for similar properties) they wished the Tribunal to consider. The Property[5]The Tribunal inspected the Property on 15 April 2024. The Landlord did not attend.[6]The Property comprises a link detached house of brick and tile construction providing lounge, kitchen, utility room and WC at ground floor level and four bedrooms with a bathroom at first floor level.[7]There is a link garage, UPVC double glazing and central heating albeit this appears to be limited in its effectiveness.[8]The Property is tired and in need of repair and decoration throughout together with the replacement of carpets and updating of the kitchen and bathroom. The Tenancy[9]The Tenant took occupation pursuant to an Assured Shorthold Tenancy dated 7 February 2021 commencing the same date for a term of 12 months at an initial rent of £875 per month.[10]The lease states that the Property was let “part furnished”.[11]Clause 4.1 of the Tenancy requires the Tenant: “To keep the interior of the Property and the Fixtures & Fittings in the same decorative order and Condition throughout the Term as at the start of the Tenancy, as noted in the Inventory and Schedule of Condition, and to make good or repair or replace with articles of a similar kind and equal value such of the furniture and effects as shall be destroyed, broken and damaged. The Tenant is not responsible for the following: fair wear and tear, any damage caused by fire… …repairs for which the Landlord has responsibility… …damage covered by the Landlord’s insurance policy.”[12]Clause 5.8 of the Tenancy requires the Tenant to: “Not to decorate or make any alterations or additions to or in the Property without the prior written consent of the Landlord.”[13]Clause 18.4 of the Tenancy requires the Landlord: “To keep in good repair and working order all appliances, plumbing, mechanical and electrical equipment belonging to the Landlord and forming part of the Fixtures and Fittings and to maintain the same in such condition at his own expense during the term of the Tenancy…”[14]Whilst not expressly stated, the Landlord is also subject to section 11 of the Landlord and Tenant Act 1985 which is set out at paragraph 19 below. The Law[15]Section 5 (3) of the Act provides that the periodic tenancy arising on expiry of the Assured Shorthold Tenancy is one: “(a) taking effect in possession immediately on the coming to an end of the fixed term tenancy; (b) deemed to have been granted by the person who was the landlord under the fixed term tenancy immediately before it came to an end to the person who was then the tenant under that tenancy; (c) under which the premises which are let are the same dwelling-house as was let under the fixed term tenancy; (d) under which the periods of the tenancy are the same as those for which rent was last payable under the fixed term tenancy; and (e) under which, subject to the following provisions of this Part of this Act, the other terms are the same as those of the fixed term tenancy immediately before it came to an end, except that any term which makes provision for determination by the landlord or the tenant shall not have effect while the tenancy remains an assured tenancy”[16]Section 14 of the 1988 Act provides that the Tribunal is required to determine the rent at which the Property might reasonably be expected to let in the open market by a willing landlord under an assured tenancy:• “having the same periods as those of the tenancy to which the notice relates;• which begins at the beginning of the new period specified in the notice;• the terms of which (other than relating to the amount of rent) are the same as those of the existing tenancy.”[17]Section 14 (2) of the 1988 Act requires the Tribunal to disregard:• “Any effect on the rent attributable to the granting of a tenancy to a sitting tenant;• Any increase in the value of the dwelling-house attributable to a relevant improvement (as defined by section 14 (3) of the Act) otherwise than as an obligation;• Any reduction in the value of the dwelling-house attributable to a failure by the tenant to comply with any terms of the tenancy.”[18]Examples of a tenant’s failure to comply with the terms of the lease may include, for example, a lack of redecoration.[19]Section 11 of the Landlord and Tenant Act 1985 (the 1985 Act), provides that the Tribunal is to imply a covenant by the Landlord:a. “to keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes),b. to keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity), andc. to keep in repair and proper working order the installations in the dwelling-house for space heating and heating water.”[20]Section 14 (7) of the 1988 Act states: “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 appropriate tribunal may direct.” Representations – The Tenant[21]The Tenant raised a number of issues which primarily concerned the condition of the Property and deterioration thereof since the Tenancy was entered into. Representations – The Landlord[22]The Landlord provided evidence of three properties advertised to let at rents of £1,750 per month to £1,775 per month.[23]The Landlord also referred to the LHA rate for the financial year 2024/25 which it stated was £1,490.88 per month. Determination[24]In determining the market rent in respect of the Property, the Tribunal has regard to prevailing levels of rent in the general locality and achieved rental values in respect of other properties of comparable accommodation and provision that would be likely to be considered by a prospective tenant. The current rent and the period that has passed since that rent was agreed or determined is not relevant.[25]The legislation requires the Tribunal to have regard to market demand assuming that the landlord is willing. The Tribunal is therefore unable to have any regard to the personal circumstances or identities of the actual landlord and tenant in assessing the level of rent. Similarly, the Tribunal is also unable to take into account the Tenant’s ability to pay the rent in assessing the amount to be paid or the Landlord’s need to achieve a certain income in order to, for example, cover their mortgage payments.[26]In addition, historic matters between the actual landlord and tenant are not relevant to the rent likely to be offered by a prospective tenant. The Tribunal can therefore only have regard to the Property as it exists on the relevant date of the proposed rent review having regard to the statutory assumptions.[27]As set out above, section 14 of the 1988 Act requires the Tribunal to determine the rent at which the Property might reasonably be expected to let with effect from the date specified for commencement of the new rent as set out in the section 13(2) Notice.[28]In this regard, the Tribunal considers that the Property is not in a state of repair and decoration commensurate with market expectations and the comparable properties cited by the Landlord. It is tired and worn and repairs have been carried out on a patch basis. In addition, the fixtures and fittings, including the carpets, are poor quality and worn.[29]However, whilst unattractive, the Property is not such a state that it would not be capable of attracting a Tenant prepared to compromise on such matters.[30]The Tribunal therefore directs that the rent shall be increased from £875 per month to the lower of £1,500 per month or such other rent as the Landlord may decide, with effect from 7 December 2023.[31]The Tribunal appreciates that this may appear to be a relatively large increase when compared to the current passing rent of £875 per month. However, the Parties should bear in mind that the rent has not been increased since 7 February 2021 (i.e., 3 years and 10 months ago) since when rents have increased significantly.[32]The fact that the rent has not been increased in the meantime is not relevant to these proceedings but hopefully this explanation is helpful in setting out the context. Name: Peter Roberts FRICS CEnv Date: 17 May 2024 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 either party is dissatisfied with this decision, they may apply for permission to appeal to the Upper Tribunal (Lands Chamber) on any point of law arising from this Decision. Prior to making such an appeal, an application must be made, in writing, to this Tribunal for permission to appeal. Any such application must be made within 28 days of the issue of this decision to the person making the application (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rule 2013). 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. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).