MAY DAY MONDAY 27TH MAY CLOSED

Landlords, so you think you know how to increase the rent on your property?

I was chatting to a friend of mine recently who had received an email from her landlord explaining that from the next month her rent would be going up by £30 per month and she should expect it to go up again in the next 6 months. She was understandably very worried at not only the prospect of it going up now (this represented a 5% increase on her current rent), but it increasing by an untold amount again in 6 months, it was causing her sleepless nights and she was thinking of going to the doctor because of the anxiety.

It’s a really good job she did mention it to me, as I was able to explain to her that her landlord was unable to carry out his 6-month threat. I explained the process he should have followed and the errors in his throw away comment about it going up again in 6 months. This calmed her down, stopped her from frantically looking at other places to live and even managed to negate the doctors’ visit. The thought struck me of how many other landlords are out there instigating rent increases on their properties incorrectly and causing stress to their tenants who also do not know the rules.

So how should it be done properly?

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. 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 in full and served on the tenant. At least one month’s notice must be given to the tenant and if they do nothing during this period, then the rent increase will take effect. The start of the new rent increase must always be from a rent due day.

The form documents when the last rent increase was issued which is important when you consider my friends landlords comments about it going up again in 6 months.

The bit her landlord got wrong...

Apart from not using the correct template, under Section 13 of the Housing Act 1988, a rent increase to a tenant can only be issued once every 12 months. Her landlord should not have indicated it would go up again in 6 months as he isn’t able to do this as per this legislation. I have seen many landlords set their diary to the exact day of the 12 months, but once a year it is and so this stress to his tenant, her comments that she was already starting to look for somewhere else to live and a possible doctors visit could all have been stopped should he have known the legislation properly. This adds further fuel to the fire that many landlords are self-managing and have no idea of the extent of legislation they are contracted and legally obliged to uphold.

Ah this seems complicated, should landlords bother with rent increases?

Yes, in a word. It is important you keep the rent on your properties at market value. If you don’t and you wish to sell the property as an investment in the future, the valuation of it as an investment won’t stack up to any investors. If your property should be achieving £750 rent per month and you haven’t done a rent increase in the last ten years and its still on £450 pcm, any investor is going to understand that its not a safe bet and move in. What’s more, you won’t be able to jack the rent up by £100-£200 a month in one go, not only will this scare your tenant off and collapse its investment appeal but it could be deemed as unfair and your tenants could challenge it by appealing to the Rent Assessment Committee.

I would always advise you increase the rent by small amounts regularly, to keep it in line with market value but away from being such a large shock to your tenant that they have to leave. Good reliable rent paying tenants should be looked after and increasing their rent so much as to cause them anxiety and the stress for you both of them leaving and you finding another tenant should be avoided at all costs.

For any advice on rent increases, from either a landlord or tenant perspective, please get in contact.

Angharad Trueman – Managing Director

Found this useful? Watch this video on self managing landlords HERE.

 


Posted on Monday, 7 January, 2019