Landlord Advice UK Tenant Eviction Service For Landlords

Rent increases for statutory tenancies, such as assured shorthold tenancies (ASTs), must follow specific legal procedures set out in legislation or be agreed mutually by both the landlord and tenant. Failure to adhere to the correct process can render the rent increase invalid and unenforceable, leaving tenants entitled to continue paying rent at the existing rate.

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How Rent Increases Must Be Conducted

Landlords can increase rent only by:

• Following the statutory procedure outlined in the Housing Act 1988, such as serving a valid Section 13 Notice for periodic tenancies.
• Relying on a rent review clause in the tenancy agreement, provided it is operated strictly as agreed.
• Reaching a mutual agreement with the tenant for a new rent.

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Consequences of Failing to Follow Proper Procedures

If a landlord fails to follow the correct procedure, such as:

• Not providing a valid notice of rent increase, or
• Failing to operate a rent review clause correctly,

the rent increase will not be legally enforceable. The tenant is entitled to continue paying the rent at the previous level.

However, landlords should note the following exceptions:

1. Tenant Acceptance Through Payment:

   • If a tenant starts paying the increased rent without objection, the landlord may argue that this constitutes implied agreement to the new rent, making it binding.
   • This does not apply if the rent was previously set by the First-tier Tribunal (Property Chamber) under Section 22 of the Housing Act 1988. In such cases, the landlord must use the Section 13 procedure to propose an increase.

2. Payments Without Prejudice:

   • Tenants can avoid implied agreement by explicitly stating that increased payments are made “without prejudice” while the dispute is being clarified.

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Disputes Over Rent Increases

When disputes arise about rent increases or the validity of notices:

1. First-tier Tribunal (Property Chamber):

   • The tribunal can determine whether a proposed rent increase is valid.
   • It can only hear applications if the correct statutory notice (e.g., a Section 13 Notice) has been served [1].

2. County Court Applications:

   • Tenants or landlords can apply to the County Court for a declaration to determine whether a rent increase is legally valid [2].

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Key Considerations for Landlords

1. Serve Correct Notices: Ensure all rent increase notices comply with statutory requirements. For periodic tenancies, a Section 13 Notice must include:

   • The proposed new rent.
   • The date the new rent is intended to take effect (at least one month after service for monthly tenancies).
   • The tenant’s right to challenge the proposed rent at the First-tier Tribunal.

2. Check Rent Review Clauses: If relying on a rent review clause, ensure it is strictly followed, including timelines and mechanisms for determining the new rent.

3. Monitor Tenant Actions: If tenants start paying increased rent, document whether they have agreed or objected. Lack of objection may imply acceptance.

4. Avoid Assumptions: Do not assume a rent increase is valid unless proper notice has been served or mutual agreement has been reached.

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Key Takeaways for Tenants

1. Challenge Invalid Increases: Tenants can dispute increases through the First-tier Tribunal or the County Court if notices or procedures are incorrect.
2. Avoid Implied Consent: To avoid unintentionally agreeing to a rent increase, explicitly state that payments are made “without prejudice” until the matter is resolved.
3. Understand Your Rights: Tenants cannot be forced to pay increased rent without proper legal process or agreement.

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Common Scenarios

• Periodic Tenancies: Rent can only be increased via mutual agreement or by serving a Section 13 Notice. Failure to serve the notice renders the increase unenforceable.
• Fixed-Term Tenancies: Rent cannot be increased during the term unless a rent review clause is included in the agreement and correctly followed.
• Post-Tribunal Decisions: If the First-tier Tribunal sets the rent, further increases must follow the Section 13 procedure.

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Conclusion

Landlords must follow strict legal procedures to increase rent for statutory tenancies. Failing to serve valid notices or operate rent review clauses correctly can render increases unenforceable. Tenants should be proactive in disputing invalid increases and ensuring they do not inadvertently agree by paying increased rent without objection. Both landlords and tenants should seek professional advice or engage the tribunal or court system for disputes.

Contact our legal term for advice and assistance with rental increases.

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[1] s.14(1) Housing Act 1988.
[2] s.40 Housing Act 1988.