Q: We own a property occupied by two regulated tenants, who share a bathroom. We would like to extend a derelict external lavatory into a modern bathroom so that each property is self-contained, but the tenants have refused our offer. Can the tenants (who regularly complain to the rent officer that their property is unmodernised) prevent us from providing them with a modern bathroom?

A: Regulated tenancies are residential tenancies that began before January 15, 1989. They are governed by the Rent Acts, which were generally favourable to tenants. Most modern private-sector tenancies are assured shortholds, which are governed by the more landlord-friendly Housing Act 1988. A feature of the regulated tenancy is that the landlord can charge only the “fair” rent for the property registered by the local rent officer.

To arrive at the fair rent, the rent officer starts by working out the market rent for the property in its original condition. Since regulated tenancies are typically of older style or unimproved properties, the market rent is often quite low. The rent officer next makes various discounts required by Section 70 of the Rent Act 1977 before arriving at the fair rent figure. However, even that can be further limited by the Rent Acts (Maximum Fair Rent) Order 1999, which imposes a cap on the rent increase that the rent officer may register.

The result of all of this is that a registered rent is generally far below the rent a landlord would expect to get from a modern assured shorthold tenancy. One way a landlord can increase the registered rent to something closer to modern levels is to carry out improvements. Although Section 70 says that the rent officer must ignore tenants' improvements, he must take into account any works carried out by the landlord. Furthermore, significant landlord improvements will often remove the cap imposed by the 1999 Order.

The problem is that the tenants probably cannot be forced to agree to the new bathroom and that they prefer to keep the lower rent. No matter how unreasonable it seems, the tenants can essentially choose between a new bathroom and a lower rent.

The writer is a barrister at Tanfield Chambers. E-mail your questions to: property.consumer@thetimes.co.uk

Explore Property

• Buying & Selling

• New Homes

• Overseas

• Interiors

• Investment

• Gardens

• Cool In Your Code

• Specials

Times recommends

• Analysis: frustration for everyone - except investors
• Spanish property: why it's crunch time on the Costa del Sol
• Buy-to-let: professional investors cash in on the credit crunch