Rent Reviews, Increases and Disputes
Latest landlord News by: Madalena Penny.
Landlords raising rents without taking due care of legislation are not working within the bounds of the Housing Act 1988, warned letting specialists, ‘Legal 4 Landlords’.
With the current surge in tenant-demand and rental market values rising phenomenally, landlords are increasing rents and in some cases in an unethical and illegal way. Under the Housing Act 1988, rent reviews and increases are procedural platforms that comply depending on the nature of the tenancy agreement.
Whether it’s a periodic tenancy or a fixed term, as most are, the agreement should state what the rent will be for the fixed term or if it will be reviewed and how it will be reviewed. Most periodic tenancies occur when the fixed term tenancy has expired its length and automatically becomes a periodic tenancy. However, a periodic tenancy which, was agreed by landlord and tenant from the outset is called a contractual periodic tenancy, when it has been created by the automatic expiry of the fixed term, it is known as a statuary periodic tenancy.
If the tenancy does not state any rent reviews, the reviews are referred and fall under the Housing Act 1988. If it’s still under a fixed term, landlords can only raise the rent if the tenant agrees, (most landlords use a 6 month AST) but once it falls into periodic tenancy territory, any rent increases must first be introduced by issuing the tenant with a notice 13 at least one month before the proposed rent increase is due to kick in.
If the tenant doesn’t agree to the increase, they can appeal to the rent assessment committee, but they must do so before the date of the first payment is due under the rent increase. The Rent Assessment Committee fall under the RPTS (Residential Property Tribunal Service) a quasi-judicial body formed to assess rental values imposed on tenants in the private rented sector. The committee is comprised of 2-3 people, usually a housing lawyer, a valuer and a layperson.
If the tenancy is still working within a fixed term or AST, the tenant will ask the committee to set a fair rent if they believe the rent to be above market values, however if the tenancy’s fixed term has ran over it’s expiry it will be classed as a periodic tenancy.
The committee will decide under either tenancy if the new rent increase, which the landlord has set, is on par with the current market values based on similar properties and rents in that particular area. It doesn’t matter to the committee if the property is in better or lesser condition due to landlord or tenant improvements. The committee may even visit the premises or similar properties in that area but once the committee decides on a fair rent, that would be the maximum a landlord could charge. Landlords are allowed unless otherwise stated in the tenancy to review rental values every 12 months.
