(1)For the purposes of this Chapter the “annual value” of living accommodation is the rent which might reasonably be expected to be obtained on a letting from year to year if—
(a)the tenant undertook to pay all taxes, rates and charges usually paid by a tenant, and
(b)the landlord undertook to bear the costs of the repairs and insurance and the other expenses (if any) necessary for maintaining the property in a state to command that rent.
(2)For the purposes of subsection (1) that rent—
(a)is to be taken to be the amount that might reasonably be expected to be so obtained in respect of the letting of the accommodation, and
(b)is to be calculated on the basis that the only amounts that may be deducted in respect of services provided by the landlord are amounts in respect of the cost to the landlord of providing any relevant services.
(3)If living accommodation is of a kind that might reasonably be expected to be let on terms under which—
(a)the landlord is to provide any services which are either—
(i)relevant services, or
(ii)the repair, insurance or maintenance of any premises which do not form part of the accommodation but belong to or are occupied by the landlord, and
(b)amounts are payable in respect of the services in addition to the rent,
the rent to be established under subsection (1) in respect of the accommodation is to be increased under subsection (4).
(4)That rent is to include—
(a)where the services are relevant services, so much of the additional amounts as exceeds the cost to the landlord of providing the services;
(b)where the services are within subsection (3)(a)(ii), the whole of the additional amounts.
(5)In this section “relevant service” means a service other than the repair, insurance or maintenance of the accommodation or of any other premises.