There are three ways to increase the rent for an assured shorthold tenancy:
- clause in the tenancy agreement or
- agreement with the tenant or
- by notice under section 13 of the Housing Act 1988.
At the bottom of this article is detailed information for completing a section 13 form.
Clauses in the tenancy agreement
Normally, it is not possible to review the rent during the fixed term of a tenancy unless there is a valid rent review clause, or the tenant agrees to an increase.
A clause can be incorporated that fixes the rent from one period of the fixed term to another and then at a different rate for the remainder of the fixed term. For example the tenancy could contain a clause where the rent is set at £600.00pcm from 15 January to 14 July and then increase to £650.00pcm for 15 July to 14 January the following year (using a 12 month fixed term as an example).
A clause can also be included to increase the rent after the fixed term has ended although it has been held that where the tenancy goes statutory periodic, such clauses are not carried into the new statutory periodic tenancy. Where there is a clause in a contractual periodic tenancy, the clause must comply with the provisions of The Unfair Terms in Consumer Contracts Regulations 1999 and be fair. Clauses allowing the landlord to review (and particularly to increase) the rent as he sees fit are likely to be unenforceable. Any increase upon a valid rent review is more likely to be enforceable if it can be justified by a recognised/established factor (such as significant improvements to the property or general cost increases reflected in the Retail Prices Index).
Clauses which provide for very large increases will normally be void. (for example where the rent increase is not to achieve a fair rent for the property but to increase the rent to a level where the tenant might be forced to leave or artificially raising it over £100,000 to cease the tenancy from being assured shorthold). A rent review clause could also be challenged by referring it to the rent assessment committee.
Rent increase by agreement
It is also possible to change the rent by seeking the tenant’s agreement and asking them to sign a document (such as a copy letter to the tenant proposing the new rent) which confirms agreement. Landlords wishing to do this are encouraged to speak to the tenant first to gauge whether or not they are content with the proposed new rent.
Once agreement has been reached, the landlord should send a formal duplicate letter proposing the new rent and asking the tenant to sign, date and return one copy to confirm their agreement. If the tenant fails to return the letter or fails to pay the new rent, then the rent will not have been validly reviewed.
It is not possible to increase the rent unilaterally by simply 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, the new increased rent will have been agreed but if the tenant does not agree they can refuse to pay the increase.
Rent increase by 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 a prescribed form (section 13 notice) needs to be completed available for free to members on our website. There are different forms for when the property is in England or Wales.
The form must be completed in full (see below), and served on the tenant. At least one month’s notice must be given to the tenant. If the tenant does nothing during this period, then the rent increase will take effect. The start of the new rent increase must always be from a rent day.
When can the notice be served?
When serving the section 13 rent increase notice, strict rules apply as to when the notice can be first served.
The notice cannot be served during a fixed term and as a minimum should be served during a periodic (roll on) element of the tenancy (but see below). For the first time the notice is being used for a tenancy:
- If the tenancy is one of our tenancy agreements from late 2013 onwards which continues as a contractual periodic tenancy, the section 13 cannot be served until at least 52 weeks after the tenancy began (as long as the fixed term has also ended).
- If the tenancy is not one of our agreements and instead a statutory periodic tenancy arises at the end of the fixed term, the notice can be given anytime after the end of the fixed term (even if it was just a 6 month fixed term for example).
- If the tenancy is a verbal tenancy (no written agreement) it cannot be served for the first 52 weeks from when the tenancy began.
Once a section 13 notice has been used in connection with an assured shorthold tenancy, it can only be used again once every 12 months since the last section 13 notice was served.
First-Tier Tribunal (Property Chamber – Residential Property)
If the tenant feels the rent increase is too high then they can refer it to the First-Tier Tribunal (Property Chamber – Residential Property) (for England). The application must be made no later than the last day of the notice 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, they will substitute what they consider is a market rent. The First-Tier Tribunal’s view is not always in the tenant’s favour and it is not unknown for them to consider that the proposed rent may be too low.