Section A2: Working for us:

Appendix A2.3i

Determination and application of fair rents

1. Regulated tenancies

Most residential lettings which began before 15 January 1989 are regulated tenancies under the Rent Act 1977. Any letting created before that date will continue as a regulated tenancy until the tenancy is properly terminated by either the landlord establishment or the member of staff.

2. Fair rents

Establishments will apply a fair rent, as determined under section 70 of the Rent Act 1977 (as amended) or under section 42 of the Rent (Scotland) Act 1971 (as amended), to a regulated tenancy. A fair rent reflects such factors as the age, character and locality of the dwelling, its state of repair, any services or furniture provided by the landlord and the respective responsibilities of the landlord and the tenant for maintenance, internal decoration, etc. Improvements carried out voluntarily by the tenant are disregarded. The fair rent determination is exclusive of rates.

Fair Rents will be based on assessments made at 2 yearly intervals in England and Wales (3 yearly intervals in Scotland) by the landlord's own valuers, the Property Services Agency or the District Valuers of the Inland Revenue. Except when improvements are made paragraph 4, a fair rent in England and Wales will remain in effect for 2 years and in Scotland for 3 years, even though a new tenancy may arise during that period. In England and Wales where the assessed fair rent is higher than the rent currently payable, the increase charged to sitting tenants will be phased as explained in paragraph 3).

3. Phasing of fair rent increases

3.1 The Rent (Relief from Phasing) Order, Statutory Instrument 1987 No 264, removed the requirements for the phasing of fair rent increases for regulated tenancies under the Rent Act 1977 and for statutory tenancies under the Rent (Agriculture) Act 1976. Under the Order, fair rent increases in England and Wales which are registered and effective on or after 4 May 1987 are not to be phased. However, the Order does not affect the phasing of any fair rent increase which came into effect before 4 May 1987, even if it was subsequently the subject of an appeal to a Rent Assessment Committee and Committee's decision was taken on or after 4 May 1987. The Order also does not affect a fair rent increase for a former controlled tenancy in connection with the first application for registration paragraph 6 nor has the Order any effect on housing association rents. Rent increases which are not affected by the Order will continue to be phased. Under the Tenants' Rights Etc (Scotland) Act 1980, rent increases for the properties in Scotland are not phased. The maximum increase payable is £104 a year or 25% of the existing rent, whichever is the greater.

3.2 In England and Wales, where a rent increase continues to be subject to the general phasing provisions of the Housing Act 1980, half of the increase over the previous rent becomes payable on the effective date shown on the Notice of Increase (which will not be backdated more than 4 weeks). The full rent will be charged during the second year. For each increase a Notice will be given but both may be combined on the same Notice of Increase.

3.3 Where services are provided and their cost represents at least 5% of the overall fair rent figure, that element of the fair rent which is attributable to the cost of providing them will be excluded from both the current rent and the fair rent in making the phasing calculation. The amount for services is then charged in full, immediately, on top of the phased increase.

4. Increases of rent for improvements

An "improvement", as defined in section 75 of the Rent Act 1977 and section 47(1) of the Rent (Scotland) Act 1971, includes any structural alteration, extension or addition to the property, and provision of additional fixtures or fittings. It does not include any thing done by way of decoration or repair. Replacement of existing fitments with fitments of a modern style is not necessarily regarded as an improvement.

If an improvement is made to a property a new fair rent will be assessed which will then remain in effect for 2 years in England and Wales and for 3 years in Scotland and may be subject to the phasing arrangements set out in paragraph 3.

5. Initial calculation of fair rents

5.1 Properties in England and Wales for which a fair rent is charged for the first time or which are occupied by a new tenant will be dealt with as follows:

a) The rents of newly constructed properties being occupied for the first time will be assessed at current fair value rent values.  The fair rent will remain in effect for 2 years.

b) Newly acquired secondhand properties which are occupied by sitting tenants will be dealt with as follows:

i. Where a fair rent in the statutory sense has been registered with the Rent Officer this will continue to be charged until the end of the registration period (normally 2 years from the effective date of the current registration), at which time a revised fair rent will be assessed on current values.

ii. In all other cases a fair rent will be assessed on current values.

c) Newly acquired secondhand properties which have been empty will be dealt with as follows:

i. Where a fair rent in the statutory sense has been registered with the Rent Officer the new tenant will be charged the full fair rent until the end of the registration period, at which time a revised fair rent will be assessed on current values.

ii. Where no fair rent has been registered a rent will be assessed at current fair rent values. It will remain in effect for 2 years.

d) Subject to (e) below, where there is a change of tenant of properties already in ownership the full fair rent where already determined will be charged until the end of the 2 year cycle. Where no fair rent has been determined, a rent will be assessed at current rent fair values; it will remain in effect for 2 years.

e) If an employee occupies a different official dwelling as a result of a permanent transfer, or if he/she moves at the establishment’s request from one official dwelling to another whilst remaining at the same station, the fair rent already determined for the new dwelling will remain in effect as if he/she had been the tenant at the time the fair rent was determined.

The above applies also to properties in Scotland except that fair rents remain in effect for 3 years and the limits at paragraph 3.1 apply.

6. Properties coming out of "control"

Under the Housing Act 1980 and the Tenants' Rights Etc (Scotland) Act 1980, "controlled" tenancies have been brought to an end and have become regulated tenancies for which the Rent Officer can fix a fair rent. In consequence, rents of former "control" properties will be reassessed at current fair rent values and will remain in effect for 2 years in England and Wales and for 3 years in Scotland. If there is no change of tenancy the fair rent for the former controlled tenancy will be phased as at paragraph 3. If in England and Wales there is a change of tenant the full fair rent will be charged without phasing even if it is the first application for a rent increase of a former controlled tenancy which is to be registered on or after 4 May 1987.

7. Notice of new fair rent and notice to quit

7.1 Where increases are allowed under the terms of contract, the increases will be implemented up to a new rent in accordance with those terms.  In cases where the existing contract is for a periodic tenancy, without provision for an increase, tenants will be offered new agreements with a rent review or a rent increase clause, starting at the rent level currently proposed.  In the event that the periodic tenant does not accept the new agreement, action will be taken to terminate the tenancy by serving notice to quit.

7.2 Tenants will be notified of the proposal to offer a new agreement at an increased rent at least two and a half months before the commencement of the first rental period at the new rent, unless a longer period is specified in the contract. This period will allow time for the implementation, where necessary, of the appeals procedure paragraph 8.

7.3 In England and Wales, the Notices to Quit (Prescribed Information) Regulations provide for a notice to quit of any premises let as a dwelling to carry the following information:

a) If the tenant does not leave the dwelling, the landlord must get an order for possession from the court before the tenant can lawfully be evicted. The landlord cannot apply for such an order before the notice to quit has run out.

b) A tenant who does not know if he has any right to remain in possession after a notice to quit runs out or is otherwise unsure of his/her rights, can obtain advice from a solicitor. Help with all or part of the cost of legal advice and assistance may be available under the Legal Aid scheme. He/she should also be able to obtain information from a Citizens' Advice Bureau, a Housing Aid Centre, a Rent Officer or a Rent Tribunal Office.

7.4 In Scotland, where the Notices to Quit (Prescribed Information) (Protected Tenancies and part VII Contracts) (Scotland) Regulations 1980 apply and the legislation still only applies to protected tenancies and furnished lettings, the notice to quit must contain the following statements:-

a) Even after the notice to quit has run out, before the tenant can lawfully be evicted, the landlord must get an order for possession, that is to say a decree of removing or warrant of ejection, from the court.

b) If the tenant does not know the nature of his tenancy or is otherwise unsure of his/her rights, advice can be obtained from a solicitor. Help with all or part of the cost of legal advice and assistance may be available under the Legal Aid Scheme. He/she can also seek information from a Rent Officer, Citizen' Advice Bureau or a Housing Aid Centre.

7.5 In serving a notice to quit, the establishment will make it clear to the tenant that he/she is being offered a new tenancy at the revised rent decided by the Rent Assessment Committee with effect from the day immediately following the date of termination of the existing contractual tenancy and that re-possession of the property will be sought only if he/she still declines to enter into the new agreement.

8. Appeals against a fair rent assessment

It is to be hoped that differences of views over the appropriate level of fair rent will normally be reconciled informally between the tenant and the valuer acting for the establishment. However, if agreement cannot be reached, the tenant is entitled to submit a written appeal, which the establishment will refer to a Rent Assessment Committee for decision. The decision of the Rent Assessment Committee is final.

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