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Rent increases and Section 13

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last updated: 18 Aug 2016 report a problem

rights fair and unfair rent increases

Introduction

Tenants shouldn’t believe that their rent is set in stone. Property prices and rent prices are dependent on the on going economy that surrounds them. In the UK, property markets often experience stress periods when prices swing up and down in an uncontrollable motion. Where some areas may be in turmoil, others can remain stable for years without much change.

While it’s normal to predict that your rent will stay the same for the next 6 or 12 months, property prices often require adjustment every couple of years.

Tenants must be prepared that their rent is not going to stay the same forever and often rent increases are a fair way of adjusting to the current market.

That said, rent increases must be fair and reasonable and we’ll show you how to negotiate for a fair rent price with your landlord.

Rent increase in Regulated tenancies

Before 1989, there were special types of tenancies, whose tenants were protected from rent increases. However, the laws governing those tenancies were abolished in 1988.

One such tenancy is the regulated tenancy. To be a regulated tenant, you must be renting your property since before 15 January 1989. Regulated tenancies, have maximum chargeable rent. That maximum amount is set by the Valuation Office Agency and is subjected to a review every two years to keep up with the property market, mortgage rates in the UK and the property’s condition. During that two year span, the landlord cannot charge more than the maximum rent.

Note that a review doesn’t necessarily means increase. Property markets go up and down, so your rent may even go down. Additionally, the condition of the property may also deteriorate, causing the review to reduce the maximum rent.

Rent increase in Assured Shorthold Tenancies

As an assured shorthold tenant, you are protected from rent increases during your fixed term. Assured shorthold tenancies usually start with a fixed term for 6 or 12 months. During the fixed term the tenancy agreement will remain the same and changes can only be made if both the tenant and the landlord agree. During this time the landlord cannot increase your rent, evict you from the property, reduce your rights or assign you any new responsibilities which you didn’t have before.

Once the fixed term has ended your landlord can either renew your tenancy for another fixed term with the rent price updated. The rent needs to be clearly described in your new tenancy agreement. Your landlord will likely notify you of the rent increase when you negotiate the tenancy renewal.

Your landlord doesn’t need your agreement to increase the rent after your fixed term has ended. You can reject the increase and continue to pay your rent as before, but the landlord may begin proceedings to evict you.

If you believe your rent needs to remain the same and your landlord is unfair in their proposed increase, try to negotiate with them about the term of the increase.

If you pay the increased rent only once, this would mean that you have accepted the rent.

Periodic tenancies run on a monthly or a weekly basis. They are more flexible for tenants and landlords. This flexibility gives your landlord the right to increase your rent arbitrarily. They must use the right procedure and you have a chance to defend your case, but if the rent increase is fair, the landlord will eventually succeed.

Rent increase clause in the tenancy agreement

Some tenancy agreement might feature a special clause regarding rent increase. Usually, this clause will allow a rent review at the middle of the fixed term. For example, if you have a standard 12 month fixed term, the rent increase clause will allow the landlord to review the rent at the 6 month mark.

If you think the rent increase clause is stripping you away of your rights, or it’s unfair check the Unfair Terms in Consumer Contracts Regulations 1999.

Rent increase in periodic tenancies

The law which governs rent increase is defined in Section 13 of the Housing Act 1988. Under this section, the landlord can increase rent with an arbitrary value.

The landlord must serve a notice of rent increase, in the right form. The notice must give the tenants a respectable period of time before taking effect. If your tenancy period is one month, the notice period is also one month. If you pay rent annually, the notice period is 6 months.

You have a right to complain within the notice period. You must apply with the correct form to the rent assessment committee, which is part of the Residential Property Tribunal Service.

The rent assessment committee will review your case and decide if the rent increase is fair, and if not what is a fair rent. Their decision will be final and you will both have to accept the result.

If you allow the notice period to expire without taking action, the rent increase will go into effect. If you pay the new rent even once, it will be seen as accepted and you will have no argument to pursue.

What if you don’t accept the rent increase

Of course, you can simply not pay the new rent. If you do that, you better prepare to receive a Section 21 notice of eviction. The landlord needs to give you two months of time to arrange your leave.

If you have not moved out of the property by the time the Section 21 expires, the landlord will serve you with a Section 8 notice – seeking possession. The landlord will have to apply to the county court and obtain a possession order. At the end, the council bailiffs will physically evict you from the property. If you chose to go by this route, you must acknowledge that you may become homeless.

You have to arrange an accommodation for yourself and your family if in the end you get evicted from the property.

Negotiate with your landlord about rent increase

When you receive notice that your rent is going up check that it coincides with the end of the fixed term, whether this is the initial period of an AST during a further fixed period of a renewed agreement. Then consider whether the amount is fair and affordable. Landlords would prefer their properties to be occupied rather than have possible periods of vacancy, so they may be open to negotiation.

In this instance write a polite letter and offer to compromise on the amount of the increase, or ask for the rent to be gradually increased over a period of time.

If you believe the current rent is just right for the property, try to research the local property market and send your landlord with examples of similar properties that are marketed for the same or smaller rent than what you pay.

Also remind them of the cost of marketing a property, finding new tenants and enduring void months. The cost of changing tenants can often outweigh the combined increase in 12 monthly payments, so your landlord might agree to put off the rent increase for another year.

If you’re confident that the rent price should not be increased and find sufficient evidence from the property market to back you up, stand strong and defend your cause. You will have a chance to appeal before an external committee until the new rent goes in effect.

If you find the amount is fair but seems unaffordable, be sure that the annual increase in rent outweighs the cost of moving; you may find you would be better off accepting the increase for another 12 months given how time-consuming and expensive it is to move.

This article is provided as a guide. The Tenants’ Voice is NOT a legal advice specialist site and our content authors are NOT housing law specialists.

The Tenants’ Voice advises tenants to act courteously and reasonably in all communications and dealings with regard to their tenancy. If you suspect an infringement of your rights then seek advice and support from a regulated professional. The Tenants’ Voice recommends Shelter https://www.shelter.org.uk/ 0808 800 4444

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