With the hot topic at the moment being the implications surrounding the Tenant Fee Bill, and the likely impact this will have on the industry there is talk about one solution for both Agents and Landlords and that is to increase the rent to make up the shortfall, but is that wise and should you consider it, how should you go about it?
Officially rent increases form part of the Housing Act 1988 section 13(2), as amended by the Regulatory Reform (Assured Periodic Tenancies) (Rent Increases) Order 2003, Form 4!
Firstly check your existing agreement, does it contain a term allowing rent increases, or do you have some other basis such as a separate agreement with your tenant for raising the rent, which is clear and precise in setting out the details of how much and when the rent will increase by and by how often? No thought not!
In which case you will require to set out the terms of the increase in a prescribed form under Section 13 called a Form 4. However there are certain requirements that you must meet beforehand remember you cannot charge more than the “fair rent”.
- Minimum period of
notice must be given before the proposed new rent can take effect
- One month for a tenancy which is monthly or for a lesser period i.e. weekly or fortnightly
- Six months for a yearly tenancy.
- In all other cases, a period equal to the length of the period of the tenancy e.g. Three months in the case of a quarterly tenancy.
- The starting date for the proposed new rent must not be earlier than 52 weeks after the date on which the rent was last increased, or if the tenancy is new, the date on which it started. If that would result in an increase date falling one week or more before the anniversary, in which case the starting date must not be earlier than 53 weeks from the date on which the rent was last increased.
- In all cases the proposed new rent must start at the beginning of a period of the tenancy, e.g. if the tenancy is monthly and started on the 15th of the month, rent will be payable on that day of the month, and a new rent must begin then. If the tenancy is weekly and started on a Monday, the new rent must begin on a Monday.
All sounds straight forward right?
Treat this form as you would any other notice allow time for delivery and ensure delivery doesn’t reduce the notice you have to give to tenants.
Just because you have made the decision to increase the rent doesn’t mean that your tenant will roll over and accept it! If they pay the increase rent at the rate proposed then you can deem that they have accepted your increase for the year and happy days, however they are within their rights to not accept the proposed increase and refer the matter to the tribunal to conclude if the rent represents “fair rent” and have one month to appeal.
If all that seems like too much to take in, give us a call and we can help.