Does Rent Increase Create new Tenancy?

As a rule of thumb, any tenancy term can be varied by agreement with the tenant, including the rent term. The mere fact that there is a procedure for increasing the rent of an assured shorthold tenancy under section 13 Housing Act 1988 does not mean that the landlord must follow that procedure where the variation in the rent is agreed upon by both landlord and tenant [s.13(5) Housing Act 1988].

(5) Nothing in this section (or in section 14 below) affects the right of the landlord and the tenant under an assured tenancy to vary by agreement any term of the tenancy (including a term relating to rent).

Certain variations will operate as a surrender and re-grant of a tenancy which includes:

• Where the extent of the demise is increased [Well Barn Farming v Backhouse [2005] 3 E.G.L.R. 109]
• Where the length of the term is increased [ibid]
• Substituting one suite of rooms for another operates as a surrender and re-grant. [Giles v Spencer (1857) 3 C.B.N.S. 244]

  However, terms that do not operate as a surrender and re-grant but instead are a simple continuation of the existing tenancy include:

• A mere increase in rent does not operate as a surrender and re-grant [Doe d. Monk v Geekie (1844) 5 Q.B. 841; Jenkin R. Lewis v Kerman [1971] Ch. 477; Friends Provident Life Office v British Railways Board [1996] 1 All E.R. 336]

I would hold ... In the absence of an increase in the extent of the premises demised or of the term for which they are to be held, both of which would change the legal estate, I can see no reason why the lessor and assignee could not achieve the changes they desired in the terms of the lease without the law implying its surrender and a regrant for the remainder of the term of the lease. [Beldam L.J. Friends Provident Life Office v British Railways Board [1996] 1 All E.R. 336]

• A reduction in rent is no surrender [Crowley v Vitty (1852) 7 Exch. 319; Buttery v Pickard (1946) 174 L.T. 144.]