We get many questions all year round, as would be expected. If we notice a similar question repeated, we will make a note to write an article if it’s not already covered on the website Today we comment on a couple of rent increase questions we’ve particularly seen during 2021.
Rent Increase Clause In Tenancy Agreement
Our assured shorthold tenancy agreement doesn’t contain a rent increase by default (on purpose) and it’s sometimes asked why by customers.
As a general rule, we don’t like rent increase clauses because they can be very restrictive in the amount of increase, which is often linked to inflation or some other index (which doesn’t always follow rents). In addition, a rent increase clause can limit specific dates when an increase can take effect, meaning if missed another full year may have to be waited before it can be done.
A new rent can be agreed anytime or, the Housing Act 1988 has a specific procedure for increasing the rent which can be done very simply anytime after 12 months from commencement and thereafter anytime as long as not within 12 months from the last increase. There are no limits as to how much the rent can be increased using this procedure (but see the page linked below if rent increased significantly above market rent).
However, if you really want an increase clause in the tenancy agreement, it can be added using the “additional terms” box on the last page of the Builder. Below is a sample which we have taken from our contractual tenancy:
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Subscribers can use our integrated section 13 notice to create and print a rent increase notice.
Increase Rent During Possession
Another common question noticed during 2021 was if it’s possible to increase the rent whilst a possession notice is being served and possession being sought.
Although this is technically and legally possible, we have seen others who have done this get into problems later.
If a rent increase is issued after a possession notice, we’ve seen tenants argue that the act of increasing the rent was an act indicating that they may now remain at the property (at the new increased rent) and that the possession notice has been withdrawn. They argue the two notices are incompatible.
Although this argument is wrong in our view and the two pieces of legislation are entirely independent of one another, doing this could cause delays in possession if the tenant were to raise this argument (or some other variant).
Ultimately, you would likely be successful in defending such an argument, but the delays caused could be extensive, with court hearings needed to determine the result.
Our advice therefore is, if seeking possession, the rent shouldn’t be increased during the process.