Can a landlord increase the rent?
Landlords are entitled to increase the rent they charge, as long as they follow the correct procedures and the proposed rent increase is not excessive or unfair. The Tenancy agreement should include clauses for how and when the rent will be reviewed. The general rules for rent increases are that:
the landlord must get the tenant's permission if they want to increase the rent by more than what was previously agreed
the rent increase cannot be unrealistic or unfair (ie the landlord should only increase rent in line with similar properties in the area)
If you have received a section 13 notice and the proposed rent increase is excessive or unfair, you can apply to the tribunal to challenge it and get a fair rent determination. See below for further information.
When can a landlord increase the rent?
If the tenant is on a fixed-term tenancy (where the tenant will live in the property for a set period of time), the landlord cannot increase the rent until the fixed-term ends. If the landlord wants to increase the rent during the fixed-term, the tenant must agree to an increase or there must be a clause in the tenancy agreement which allows them to do this. The landlord can also choose to increase the rent if the tenant continues to live at the property after the fixed-term ends by signing a new Tenancy agreement.
If the tenant is on a periodic tenancy (a tenancy that runs from payment period to payment period) the landlord cannot increase the rent more than once a year unless the tenant agrees to it.
How can a landlord increase the rent?
There are several ways a landlord can increase the rent. They can:
renew the tenancy agreement at the end of the fixed-term setting out the increased rent
mutually agree a rent increase with the tenant and record this in a rent increase agreement
use a rent increase clause in the tenancy agreement, if one exists
use a 'Landlord's notice proposing new rent' form 4 (also known as a ‘section 13 notice’)
1. Renewing the tenancy
The simplest way to increase rent is to wait until the fixed term of a tenancy has expired. A landlord can then make a new tenancy agreement with the new proposed rent clearly stated.
2. Mutual agreement
If a tenancy agreement doesn't contain clauses related to rent increases and a landlord wants to increase the rent without serving formal notices, the landlord can see if the tenant will mutually agree to an increase. If agreeable this should be recorded in a rent increase agreement.
3. Using a rent increase clause
If the tenancy agreement contains a rent review clause (ie a clause that allows the landlord to review the rent mid-tenancy and propose an increase), the landlord should notify the tenant by written notice with the new amount and when the increased rent will begin. The recommended notice is 2 months.
The notice should be returned to the landlord with the tenant's name and signature to prove that they have acknowledged and accepted the rent increase.
4. Using a section 13 notice
If there is no mention of a rent increase in the agreement and the tenant is unwilling to agree to a rent increase then the landlord can issue a section 13 notice.
Section 13 notices
What is a section 13 notice?
A section 13 notice is used when a landlord is proposing a new rent under an assured shorthold periodic tenancy. This can only be done after the initial fixed-term has elapsed. Use Form 4 to propose a new rent to a tenant located in England.
If the fixed-term of the tenancy has ended and no new agreement has been signed, then the tenancy automatically becomes a periodic tenancy. If the tenancy agreement doesn't provide any information or procedure on a rent increase, then the landlord can only increase the rent by getting mutual agreement with the tenant or by serving a section 13 notice.
How much notice should be given?
For weekly, fortnightly or monthly periodic tenancies, at least 1 months’ notice is required. For yearly tenancy, 6 months’ notice is required. The notice period runs from the date of service of the section 13 notice. This is normally the day that the rent is due. For example, if the tenant pays rent on the 10th day of the month, the date of the rent increase on the section 13 notice must be on the 10th day of the month.
What happens after the section 13 notice has been served?
Once the notice has been served, the tenant has until the date of the rent increase to make a decision. If the tenant doesn't do anything, then the rent will automatically increase and the tenant cannot dispute the rent increase. If the tenant wants to dispute the level of the rent increase, they will need to apply to the First-tier Tribunal (Property Chamber).
The tribunal or committee must receive the application before the rent increase date given on the section 13 notice. Rent must be paid at the previously agreed rate until the tribunal or committee makes a decision. The tribunal can decide that the tenant has accepted the rent increase if they pay the increased rent rate.
Negotiating an increase
It may not be beneficial for the landlord to impose an increase in rent. The tenant may no longer want to rent the property, in which case, the landlord will have to spend time and expense re-letting the property. It may also be an inconvenience for the landlord to find suitable replacement tenants, especially if there was a good relationship with the previous tenants.
The tenant will want to either have the rent stay the same, or have a minimal increase in the rent. Therefore, it could be advantageous to negotiate the rent increase, for example, to include a rent increase both parties are happy with or to roll out the rent increase in incremental stages over a period of time (eg an increase of £25 in the first 6 months and then an increase of £50 for 6 months after that).