The 4 Legal Ways to Increase Rent in an Assured Shorthold Tenancy

Raising rent in an Assured Shorthold Tenancy (AST) isn’t as simple as sending a letter or updating a standing order. In England and Wales, landlords must follow strict legal routes when increasing rent, whether the tenancy is fixed-term or periodic. There are four main lawful methods to do this:

1. Mutual Agreement Between Landlord and Tenant

2. Increased Rent in a New Tenancy

3. Rent Review Clause in the Tenancy Agreement

4. Section 13 Notice Under the Housing Act 1988

Each method has its own process and legal implications. Here’s how they work in practice.

1. Mutual Agreement Between Landlord and Tenant

The simplest and most cooperative method of increasing rent is by mutual agreement. If both parties agree to a rent increase, it can be implemented at any time, whether during a fixed term or in a periodic tenancy.

There are no formal requirements, but to avoid future disputes:

• The agreement should be in writing.
• Both parties should sign it.
• The new rent and date it takes effect should be clearly stated.

Key Point: This method relies entirely on the tenant’s consent. A landlord cannot unilaterally impose a rent increase this way.

2. Increased Rent in a New Tenancy

A landlord can lawfully raise the rent when a new tenancy begins. This often happens after the original fixed-term AST ends and a new fixed-term agreement is signed. The new tenancy agreement can set any rent the landlord believes is appropriate, assuming the tenant agrees.

Even if a tenant has been living at the property for years, if they agree to start a new fixed-term tenancy, the rent can be renegotiated from scratch. This gives the landlord a clean legal slate to increase rent to current market levels.

Note: The tenant has the right to refuse the new terms. In that case, the landlord may choose to end the current agreement by following proper eviction procedures (e.g., serving a Section 21 notice).

3. Rent Review Clause

Many tenancy agreements include a rent review clause that allows the landlord to increase the rent during a fixed-term AST. These clauses must be:

• Clear and specific about how and when the rent can be reviewed.
• Fair, in line with the Consumer Rights Act 2015.
• A vague or open-ended rent review clause could be challenged as unfair and deemed unenforceable.
• Common elements in a valid clause include:
• A set date or time frame for the review (e.g., annually)
• A formula or benchmark for calculating the increase (e.g., linked to inflation or local market rates).
• The requirement to give written notice (usually at least one month).

Warning: A landlord cannot use a rent review clause to drastically hike rent midway through a tenancy without following the clause exactly.

4. Section 13 Notice – Housing Act 1988

For periodic tenancies (where the fixed term has ended and the tenancy runs month-to-month), landlords can use a Section 13 Notice to propose a rent increase.

This method requires:

• Use of the prescribed Form 4.
• At least one month’s notice for monthly or weekly tenancies.
• Rent increases to occur no more than once per year.
• Section 13 is only valid for periodic tenancies. It cannot be used during the fixed term of an AST unless the agreement allows it.

Tenants’ Rights: Apply to the First-Tier Tribunal

Tenants who believe the proposed rent is too high can challenge it by applying to the First-Tier Tribunal (Property Chamber – Residential Property) within the notice period.

The tribunal has the power to:

• Assess whether the proposed rent reflects the open market rate.
• Determine a fair rent based on local comparable properties.
• Set a new rent, which becomes binding on both landlord and tenant for at least 12 months.

Importantly, the tribunal will not consider the tenant’s ability to pay or any improvements made by the tenant. Its focus is strictly on what the property could command on the open market.

Final Thoughts

Rent increases in ASTs must be carried out legally and fairly. For landlords, failing to follow the correct procedure could result in unenforceable rent hikes or even legal penalties. For tenants, understanding your rights can help prevent being pressured into unfair increases.

Here’s a quick recap:

If you require advice or assistance with increasing rent, contact our legal team now on 020 3903 2000 or complete our online enquiry form here.