The cost-of-living crisis is hitting the UK’s landlords hard, with soaring inflation, interest rates and energy prices all exponentially adding to the cost of renting out property.
As a landlord, you may be tempted to simply bump up the rent for all your tenants to cover your rising costs, but there are rules and restrictions involved in doing this and the consequences of getting it wrong can be harsh.
Tilly Bailey & Irvine’s property team outline the circumstances in which you can increase a tenant’s rent, describes your options if disputes arise in doing so, and explains how you go about terminating a tenancy if required.
Unfortunately for cash-strapped landlords, you cannot just arbitrarily raise a tenant’s rent whenever you feel like it. Unless you can obtain the tenant’s express agreement in writing to a rent rise, you can only raise their rent in accordance with the terms of their tenancy agreement.
The tenancy agreement will set out the procedure regarding how and when the rent will be reviewed, and this will vary depending on what type of tenancy is involved. All tenancies require you to get a tenant’s permission to increase the rent by more than previously agreed, and the rent increase must be fair and in keeping with average rents in the local area.
If your tenant has a periodic tenancy (rolling on a week-by-week or month-by-month basis) you can only ordinarily raise the rent once a year unless your tenant agrees to an earlier increase.
For regulated tenancies (usually those that started before 15 January 1989), you can only increase the rent up to the registered rent – the legal maximum outlined by a rent officer from the Valuation Office Agency. You or your tenant can ask the Valuation Office Agency to review the rent, so it remains fair. This will usually be every two years, though you can request it sooner if there is a significant change to the home (such as major repairs or improvements).
If the tenancy is for a fixed term (that is, runs for an agreed period of time) unless you can procure your tenant’s written consent, you can only increase the rent at the end of the fixed period. This would involve renewing the tenancy agreement at the end of the fixed term with an increased rent or using a ‘Landlord’s notice proposing a new rent’ form which raises the rent after the fixed term has concluded.
If your tenant pays rent on a weekly or monthly basis, you must give them at least one month’s notice. If they have a yearly tenancy, you must give them six months’ notice.
Even if you follow the required rent review procedure, disputes over rent increases can and do arise. The tenant may feel the new rent you are proposing is too high; they may object to paying a higher rent because you have not carried out required repairs or maintenance; or they simply may not be able to afford to pay the new rent levels you need.
It is always better to try to resolve a dispute informally of course, but sometimes an agreement cannot be reached. If your tenant has an assured or assured shorthold tenancy, either you or your tenant can apply to the First-Tier Tribunal (Property Chamber – Residential Property).
This allows you to ask the tribunal to decide new rental terms when you renew your tenancy. The tribunal will come to a decision having considered evidence from both sides. You need to pay a fee to apply for a tribunal hearing and we can help you to produce documentary evidence to support your case.
You can request a paper hearing or an oral hearing – the latter will take place either by phone, via video link or in person and you may be asked questions by the other party’s legal representatives, as well as the tribunal hearing your case. You will usually get a decision within six weeks whichever type of hearing you opt for.
If you are unhappy with the decision the tribunal reaches, you can ask it for permission to appeal to the Upper Tribunal (Lands Chamber) within 28 days of the tribunal’s ruling.
In these difficult financial times, it may be the case that your tenants simply cannot afford to pay the rent that you are already charging them – let alone the new rent that you are proposing – and have fallen into arrears. If this is the case, you may want to consider eviction proceedings.
Under Section 8 of the Housing Act 1988, you can usually start possession proceedings if your tenant is more than two months behind in their rent payments within two months (if they pay monthly); eight weeks (if they pay weekly); or three months (if they pay quarterly or yearly). You must serve a notice seeking possession on your tenant before applying to the court for a possession order. If the order is granted, the tenant will usually be given at least 14 days to leave.
If you prefer to reclaim your property on a ‘no-fault’ basis you can do so at the end of a fixed term tenancy (or earlier if the tenancy agreement has a break clause), using the Section 21 notice eviction process. You do not have to give a reason for taking possession, but you must give at least two months’ notice before you want your tenants to leave the property. Notice must be provided on Form 6A.
Handling rent reviews and tenant disputes can be stressful and a legal minefield for landlords, so it is a good idea to get professional help from the outset. Our property dispute experts can advise you on all the procedures you need to follow, negotiate with your tenants, and ensure that any required paperwork is properly filled out.
We will prepare for and represent you in any tribunal case that may arise and, if possession proceedings do become necessary, serve all the required notices on your tenants, and handle all the subsequent court proceedings.
For further information, please contact our property litigation team on 01740 646000 or fill in an online enquiry form and someone will be in touch.
Call: 01740 646000