Mr & Mrs E Cela FrontanApplicantMountview Estates PLCRespondentMr & Mrs E Cela FrontanTenantMountview Estates PLCLandlord
Before
Mr R Waterhouse BSc (Hons) MA LLMDate 2 February 2023Property: 2nd Floor Flat, 225 Portnall Road, London, W9 3BL
REASONS
[1]The decision of the tribunal is that a fair rent of £272.78 per week inclusive of £23.67 per week of services, is determined with an effective date of 2nd February 2024. Background[2]An application was made to re-register a fair rent, dated 6th June 2023, by the landlord of the property Mountview Estates PLC. Prior to the application to re- register a fair rent, the Rent Officer had registered a rent of £211.00 per week with £22.96 per week for services, included in afore going rent, with effect from 23rd November 2020.[3]Subsequently the Rent Officer registered a fair rent of £280.00 per week with £23.67 per week included in the foregoing rent, attributed to services with effect from 2nd February 2024.[4]In a letter undated the tenant objected to the rent registered and the matter was referred to the First –tier Tribunal (Property Chamber) (Residential Property).[5]Directions were issued by the Tribunal on the 21st September 2023. Thereafter, the Directions made provision for the filing with the Tribunal of the parties’ respective written submissions and, in particular, for the completion of a reply form giving details of the Property and including any further comments the parties wished the Tribunal to take into account in making its determination. The tenancy is a statutory (protected) periodic tenancy. The tenancy (not being for a fixed tenancy of 7 years or more) is subject to section 11 of the Landlord and Tenant Act 1985 which sets out the landlords statutory repairing obligations; the tenant is responsible for internal decorations. The Property[6]The property is a second floor, self-contained converted flat, full central heating, three rooms, one kitchen and a bath/WC. The Inspection[7]The tribunal inspected the property on 2nd February 2024, the flat is contained within a late Victorian converted mid-terrace house. Access to the flat is via a communal ground floor entrance with remote entry intercom. The communal parts are tidy, and the subject flat is reached from a communal passage on the first floor. The entrance door to the flat opens onto a set of state that leads to the second floor.[8]At the top of the stairs at the rear of the building is a bedroom with sash window. The flooring, laminate, is installed by the tenant and there is a single double electrical socket. The window is single glazed rotten in places and draughty. There is a radiator.[9]The kitchen contains a new boiler installed by the landlord. The piping for which runs at ceiling height. These carry hot and cold water; condensation sometimes gathers on the pipes and drips into the kitchen. The base units are provided by the landlord but the cupboards by the tenant as with the white goods. The oven is provided by the landlord and is in poor condition. The flooring to the kitchen is plastic tiles and has disintegrated.[10]The bathroom has a bath, WC and basin. The bathroom has a defective extractor fan,[11]The second bedroom room contains a radiator and electrical socket. Laminate, flooring provided by the tenant.[12]The living room faces the front of the house and has electrical sockets and laminate flooring provided by the tenant. The windows are very rotten with one the glass is poorly secured. Relevant Law[13]Provisions in respect of the jurisdiction of the Tribunal and the determination of a fair rent are found in Schedule 11, Part 1, paragraph 9(1) to the Rent Act 1977, as amended by paragraph 34 of the Transfer of Tribunal Functions Order 2013, and section 70 of the Rent Act 1977. Rent Act 1977 Schedule 11, Part 1, paragraph 9 (as amended) “Outcome of determination of fair rent by appropriate tribunal[9](1) The appropriate tribunal shall- (a) if it appears to them that the rent registered or confirmed by the rent officer is a fair rent, confirm that rent; (b) if it does not appear to them that that rent is a fair rent, determine a fair rent for the dwelling house.” Section 70: Determination of fair rent (as amended) “(1) In determining, for the purposes of the Part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwelling house, 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 dwelling-house, … (b) if any furniture is provided for the use under the tenancy, the quantity, quality and condition of the furniture [, and (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 purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwelling-houses in 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 tenant under the regulated tenancy or any predecessor in title of his to comply with any terms thereof; (b) any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any predecessor in title of his; (c), (d) …[repealed] (e) if any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the tenant under the regulated tenancy or any predecessor of his or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the tenant, any person residing or lodging with him, or any sub-tenant of his.”[14]Consequently, when determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, has regard to all the circumstances including the age, location and state of repair of the Property. It also disregards the effect of(a) any relevant Tenant’s improvements and(b) the effect of any disrepair or defect attributed to the Tenant of any predecessor in title under the regulated tenancy, on the rental value of the Property. In Spath Holme Ltd v Chairman of the Greater Manchester etc. Committee (1995) 28 HLR 107 and Curtis v London Rent Assessment Committee [1999] QB 92 the Court of Appeal emphasised: (a) that ordinarily a fair rent is the market rent for 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 terms- other than as to rent- to that of the regulated tenancy) and (b) that for the purposes of determining the market rent, assured tenancy (market rents) are usually appropriate comparables. (The rents may have to be adjusted where necessary to reflect any differences between the comparables and the subject property).[15]In considering scarcity under section 70 (2), the Tribunal recognises that:(a) there are considerable variations in the level of a scarcity in different parts of the country and that there is no general guidance or “rule of thumb” to indicate what adjustments should be made; the Tribunal, therefore, considers the case on its merits;(b) terms relating to rents are to be excluded. A lack of demand at a particular rent is not necessarily evidence of scarcity; it may be evidence that the prospective tenants are not prepared to pay that particular rent. Fair rents are subject to a capping procedure under the Rent Acts (Maximum Fair Rent) Order 1999 which limits increases by a formula based on the proportional increase in the Retail Price Index since last registration. The only exception to this restriction on a fair rent is provided under paragraph 7 of the Order where a landlord carries out repairs or improvements which increase the rent by 15% or more of the previous registered rent. Submissions Landlord[16]No submissions from the landlord were received, other than the objection to the rent registered Tenant[17]The objection noted; “1. The property has not been maintained internally and is in a terrible state of disrepair due to natural wear and tear over the course of the last 34 years. The landlord does not maintain any internal decor with flooring disintegrating as well a tiles, bath panels and entire kitchen damp patches carrying through. Original sash single glazed window one filled or cracked and the frame which causes terrible draughts and no[2]Please clarify which services £23.67 per week is for as the communal area is not. I clean it myself.[3]The increase of £65 per week is not affordable for me. Photographs are also included showing flooring and internal decoration. Additionally, the tenant completed a Reply Form. It is noted that the landlord provided the central heating, with a new boiler installed 2016/7, while the tenants supplied white goods. Under the section titled “Disrepair” Original single glazed sash windows is terrible disrepair causing drafts and noise issues. Picture 1 – living room window that doesn't close Picture 2-living room window that doesn't open Picture 3-living room window glass no longer attached to frame Picture 4 – Bedroom 1 window cracking in frame causing defects Large cracks in walls and ceiling -exposed pipes in kitchen causes condensation and dripping in winter plus hole in ceiling that I’ve covered with tape. Kitchen counters and cupboards falling apart Bath panels and bathroom fixing have water damage Damp and crumbling paint in bedroom 2 All doors and doors frames cracked and worn The Determination[18]The property was inspected on 2nd February 2024. Reasons for Decision[19]The rent to be determined must reflect the condition found on the date of the hearing disregarding all tenants' improvements.[20]The process for determining a fair rent is the application of Rent Act 1977 section 70 on the subject property and then comparison with the maximum rent permitted under the Maximum Fair Rent Order 1999. This means that comparison with other properties the subject of Fair Rent is not material.[21]Initially 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. Considering evidence submitted and the Tribunal acting in its capacity as an expert tribunal and using its general knowledge of market levels in the area, concluded that the rent was £485.00 per week if let on a contemporary assured shorthold basis.[22]The Property is not in the condition considered usual for a modern letting at a market rent, therefore, it is necessary to adjust the above hypothetical rent, a deduction of 25% is made. In addition, the Tribunal determined that there should be a further deduction of 10% to reflect the fact the terms and conditions and goods supplied under the tenancy would differ from those of a contemporary assured shorthold tenancy, from which the rental comparables are derived. Thereafter the Tribunal considered the question of scarcity in section 70 (2) of the Rent Act 1977. A figure of 20% was adopted. The calculation[23]The rent of £485.00 per week is on the basis of an assured shorthold tenancy where the tenant would not be responsible for the service charge. The protected tenant is in this case liable for the service charge of £ 23.67 per week. Prior therefore to any adjustments for condition, tenancy terms and scarcity a deduction of the service charge is made giving £461.33.[24]The rent prior to adjustment for condition, terms and scarcity, but adjusted for service charge is: £461.33 per week Less 25% condition £115.33 per week ---------------------- £345.99 per week ---------------------- Less 10% for terms and supplied goods inc white goods £34.60 per week ---------------------- £311. 39 per week Less 20% for scarcity £62.28 per week ---------------------- £249.11 per week[25]The rent after this final adjustment was £249.11 per week. Add back the weekly service charge £23.67 per week, giving £272.78 per week including service charge. Rent Acts (Maximum Fair Rent) Order 1999[26]The rent to be registered is not limited by the Rent Acts (Maximum Fair Rent Order) 1999. The rent calculated in accordance with the Order is £283.50 per week with £23.67 per week included within it attributable for services. This figure is higher than the figure calculated by reference to the market rent with adjustments, of £272.78 per week with £23.67 per week attributed for services.[27]Accordingly, the sum of £272.78 per week including a service charge of £23.67 per week will be registered as the fair rent with effect from 2nd February 2024, being the date of the Tribunal’s decision. Valuer Chair: Richard Waterhouse FRICS Mr C Piarroux JP Decision Date: 2nd February 2024 Extended reasons: 2nd February 2024 Appeal to the Upper Tribunal A person wishing to appeal this decision to the Upper Tribunal (Property Chamber) on a point of law must seek permission to do so by making a written application to the First-tier Tribunal at the Regional Office which has been dealing with the case which application must:a. be received by the said office within 28 days after the Tribunal sends to the person making the application written reasons for the decision.b. identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking. If the application is not received within the 28–day time limit, it must include a request for an extension of time and the reason for it not complying with the 28-day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.