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Raising the rent

There are three basic ways to increase the rent in an assured shorthold tenancy:
• By way of a rent review clause in the tenancy agreement
• By agreement  with the tenant and
• By notice under Section 13 of the Housing Act 1988.

>> Rent review clauses in the tenancy agreement

If the landlord wishes to be entitled to increase the rent during the fixed term of the tenancy this must be done by way of a properly drafted rent review clause. The clause can also be effective to increase the rent after the fixed term has ended. The clause must comply with the provisions of the Unfair Terms in Consumer Contracts Regulations and be fair. Clauses allowing the landlord
to increase the rent as he sees fit will be void - the increase must be referable to someone or something independent,  such as the retail price index. Note also that clauses which  provide for very large increases (i.e. increases which  the tenant would be unable to pay) will normally also be void.

Most standard tenancy agreements do not include rent review clauses as most rent is increased by the tenant signing a new agreement.

>> Rent increases by agreement

The vast majority of rent increases are done by the tenant signing a new fixed term tenancy agreement giving the new rent. This is the best method of increasing the rent as it cannot be challenged by the tenant. You can also increase the rent by getting the tenant to sign a document  (such as a copy letter sent to the tenant suggesting a new rent) confirming his agreement. If you wish to do this, perhaps speak to your tenant first to see that they are happy with the proposed increase. Then send a formal letter to them in duplicate proposing the new rent, asking them to sign and date one copy and return it to you to confirm their agreement. However if they fail to return the letter or to pay the increase then the rent will not have been validly increased.

Note however that you cannot increase the rent unilaterally by just sending a letter to the tenant telling them that their rent will be increased from a specific date. If the tenant agrees to this and starts paying the rent, well and good, the increase is agreed, but if the tenant does not agree he is entitled to refuse to pay the increase.

>> Notice under Section 13 of the Housing Act 1988

If the tenancy is an assured or assured shorthold tenancy the landlord can use a formal procedure in section 13 of the Housing Act 1988 to propose a rent increase. To do this you need to use a special form, which is obtainable from Law Stationers, some landlord associations, and some of the online services for landlords on the internet. The form must be completed fully, and served on the tenant.

At least one months notice must be given to the tenant. If the tenant does nothing during this period, then the rent increase will take effect. However if the tenant feels the rent increase is too high then he can refer it to the Rent Assessment Committee  for review. The application must be made not later than the last day of the month period or it will be invalid and the increased rent will stand. If the rent is challenged the matter will be considered by the Rent Assessment Committee who, if they consider the rent is not a market rent, will substitute what they consider is a market rent for the rent proposed.  This is not always in the tenant’s favour as it is not unknown for them to consider that the proposed rent is too low!

The rent can only be increased by section 13 after the fixed term has ended and can only be used once every 12 months.

>> Rent increases in fixed term tenancies

Normally it is not possible to increase the rent during the fixed term of the tenancy unless either there is a valid rent review clause, or the tenant agrees to the increase. If the tenant agrees this should be recorded, perhaps by getting the tenant to sign a new tenancy agreement.

>> Rent increases in contractual periodic tenancies

Rent can only be increased in contractual periodic tenancies by: 

  • A rent review clause in the tenancy agreement
  • Agreement with the tenant or
  • Alternatively if the tenancy is an assured or assured shorthold tenancy by the procedure in section 13 of the Housing Act 1988

>> Rent increases in statutory periodic tenancies

If the tenancy agreement was initially for a fixed period as above, but the tenant has continued to live in the property after this period with the landlord’s consent and it becomes a statutory periodic tenancy the landlord can either agree a rent with the tenant or use the formal procedure under Section 13 of the Housing Act 1988 as discussed above. [See Rent Assessment Committees]

>> Rent Act regulated tenancies

Regulated tenancies are tenancies governed by the provisions of the Rent Act 1977. They will all have been created prior to 15 January 1989. The Rent Act provides for the tenant (or the landlord) to apply to have a ‘fair rent’ registered for the property and once this has been done the fair rent is the only rent the landlord can charge. These are rents fixed by the local office of the Rent Service.

The Rent Service does not take account of the impact of scarcity on the market value of rented accommodation. You or the tenant may apply to register a fair rent. Contact details for the local Rent Service can be obtained from your council’s Housing Advice Service or the Rent Service website:

If a fair rent has been registered, a new registration cannot be made less than two years after the date the existing registration came into effect (three years if the existing registration was made before 28 November 1980) unless:

  • You and the tenant apply jointly
  • There has been a change of circumstances, for example, major repairs, improvements or changes in the terms of the tenancy

Note that it is in your interest to ensure that you apply promptly for the rent increases every two years. The reason being that the amount of increase is capped under a complicated calculation set out under regulations - The Rent Acts (Maximum Fair Rent) Order 1999

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