How can Landlords and Tenants deal with rent increases?
Rent increases can be an awkward conversation for both tenants and landlords. Never more so than right now. With the cost of living increasing by 7% in the UK, we are all feeling the pinch.
It is so easy for landlords to be painted as the greedy bad guys, and for them to be used in the narrative to fulfil other agendas. The fact remains, they have every right to charge a fair market rent for their rental properties and are in many instances providing much needed compliant homes for our communities. For landlords to keep their properties compliant and in a good rental condition, they need to charge an appropriate fair rent. From my experience, most landlords do not have a bottomless pit of cash to spend on the upkeep of their rentals and rely on the rents to cover their expenses. Afterall, like any business transaction, the numbers must work for any hope of sustainability.
It could also be argued that landlords cannot be held accountable for a tenant’s potential inability to pay the market rent. Is there not a much bigger issue here? One that cannot be left at the landlord’s door.
On the flip side, I really do not hold much praise for the landlords who charge high rents and invest very little back in their property to maintain it going forward and to keep it in a legally compliant condition. https://www.gov.uk/government/publications/homes-fitness-for-human-habitation-act-2018/guide-for-landlords-homes-fitness-for-human-habitation-act-2018
Landlords are faced with a forever changing economic environment, often the very same ones that tenants are facing too.
There are many reasons why a landlord will increase their rental prices:
- To match market rents – a must in my view
- To pay for property maintenance or improvements - a must in my view
- To accommodate tax increases - unavoidable
- To pay agent fees – whether paying agents fees or managing the property themselves, the cost is similar if done properly. Time/effort/knowledge etc
- To increase their profits – to cover their own cost of living expenses (may have become a single parent/ their own home may have a mortgage increase, may have lost their job etc)
Tenants and Landlords - Things to do and look out for:
Section 13 notice
Section 13 of the Housing Act 1988 is a formal notice informing tenants of a rent increase.
The landlord must issue a section 13 notice if they wish to increase the rental price of their property.
A tenant can only receive a section 13 if they have an assured tenancy or an assured shorthold tenancy.
Negotiation
If both parties are unhappy with each other’s proposed rent, it would be ideal to attempt to come to an agreement before evictions are issued and tenancies are broken down.
It would be ideal as the landlord and/ or tenant to look at similar properties in the same location and compare your new rental price to them. This will allow the landlord to consider if their new asking price is reasonable and discover the tenants’ other options if they were to disagree with the increase.
A landlord does not want to lose a good tenant, who pays their rent on time and acts in a tenant like manner.
The Tenancy
If a tenant is in within a long-term tenancy that began before January 15th, 1989, landlords can only raise the rent every two years and must apply to the Valuation Office Agency.
Rents after the above date can increase up to once a year.
However, a landlord can give a new tenancy agreement after 6 months with a new level of rent.
If the tenancy agreement sets out a procedure for increasing rent, the landlord must stick to it.
Different tenancies:
Periodic tenancy – the landlord cannot normally increase the rent more than once a year without the tenant’s agreement.
Fixed-term tenancy – the landlord can only increase the rent if the tenant agrees. If the tenant does not agree, the rent can only be increased when the fixed term ends. (Source: GOV.UK)
Help to pay rent
If the tenant is on low income or gets benefits, they may be able to get Housing Benefit or housing cost payments via Universal Credit.
If the landlord wants to keep their current tenant, they will give tenants as much advise as possible to assist with the increase.
Evictions
If a tenant is unable to prevent the rent increase and fails to reach an agreement, they must still pay the new rent level to the landlord. If the tenant does not pay the extra rent, they can fall into rent arrears. A compliant landlord can use this as a reason to evict them.
The tenant cannot challenge the increased amount if they have already paid the new price. (Source: Citizens Advice)
Permission
For any tenancy the landlord must get permission from the tenant if they want to increase the rent by more than previously agreed. The rent increase must be fair and realistic, which means in line with average local rents. (Source: GOV.UK)
Notice
The landlord must give the tenant a minimum of one month’s notice for a tenancy that is paid weekly or monthly (periodic tenancy). A 6-month notice is required for a tenancy that is paid yearly (fixed-term tenancy).
Tribunal
If a landlord does not agree to lower the rent, the tenant can appeal for free to a tribunal for rent complaints. They can ask the tribunal to decide new rental terms when the tenancy is renewed.
Conclusion
It is important for landlords to be fair and thoughtful when putting forward a new rental price for their property. Negotiating and maintaining rapport is vital as a landlord does not want to unsettle or lose a good tenant.
