Rent reviews (England)
Contents
Introduction
This guidance applies to tenancies let as an assured periodic tenancy.
A tenancy agreement must state the amount of rent to be paid, when it's due, how it should be paid, and what it covers (for example, whether it includes an amount for any utilities or services).
Ways to change the rent
The Renters' Rights Act states that rent increases can only be done once a year and up to the open market rate.
The previous rules allowing rent increases to be agreed between the landlord and tenant without using an official form, are now banned. Changes to the rent can now only be done by either:
- A landlord serving a written notice on the tenant to propose a rent increase, under section 13 of the Housing Act 1988.
- A tenant applying to the First-tier Tribunal for a rent review within the first 6 months of a tenancy on the basis the rent is excessive, under section 22 of the Housing Act 1988.
Section 13 notice
If you want to increase the rent, you must give the tenant a written notice called a Landlord's notice proposing a new rent under an Assured Periodic Tenancy of premises situated in England (otherwise known as a notice under section 13 of the Housing Act 1988 - referred to here as a section 13 notice).
The notice will state the new rent and when it will start, which must be at least 2 months after you have served the section 13 notice on the tenant.
If your notice is accepted by the tenant, nothing else needs to be done and the proposed rent increase will start on the date stated in the notice. The new rent should start on the first day of a rental period. This will usually be the day when the rent is paid (although you and the tenant might have agreed to a different rent payment date).
However, you can't serve a section notice within 52 weeks of:
- The start of a new tenancy; or
- The date on which a previous rent increase took effect.
Rent increases by any other means – such as rent review clauses in a tenancy agreement or by verbal or written agreement with the tenant, are unlawful.
If the tenant doesn't agree to the rent increase, they can apply to the First-tier tribunal to set the rent (see below).
How to serve a section 13 notice on the tenant
Serving notice is the formal legal way of describing giving or sending the notice to the tenant.
As a section 13 notice is a notice served under legislation (i.e. the Housing Act), it is called a statutory notice.
If the tenancy agreement has a paragraph about serving notices
If the tenancy agreement says anything about serving notices, you must be sure that it also includes serving statutory notices. Not all tenancy agreements state this specifically.
Some tenancy agreements include a paragraph stating that notices must be served using 'Section 196 of the Law of Property Act 1925'. This states that notices:
- must be in writing;
- must be addressed to the tenant;
- can be served by:
- leaving it at the last known address where the tenant lives; or
- sending it by recorded or special delivery at the last known address where the tenant lives so long as it is not returned by the postal operator (so you won't have to prove that it was delivered to the tenant).
Again, it must also clearly state that this includes service of statutory notices as well.
If statutory notices are mentioned, then you should serve the section 13 notice in the way set out in the tenancy agreement. If the tenancy agreement allows you to serve it by email, keep in mind that it can be harder to prove that the tenant received it.
If the tenancy agreement contains a paragraph about how to serve notices, but it is unclear whether it applies to statutory notices, you should seek legal advice. Otherwise, if the correct procedure is not followed, the section 13 notice could be served incorrectly and be invalid.
If the tenancy agreement doesn't have a paragraph about serving notices
If the tenancy agreement doesn't say how notices must be served, you can do it personally or by post.
The best way to serve the notice is by personally serving it on the tenant. You should include a covering letter, and serve each tenant with a copy of the notice. You're recommended to print an extra copy of the notice for each tenant to sign and date to keep for your records.
Otherwise, serve the notice by post, making sure that it and any covering letter is properly addressed to the tenant and pre-paid. Since you will have to prove that it was delivered, it's recommended to use Royal Mail Signed For or Special Delivery (or some other form of trackable postal service).
If you use ordinary post, get proof of posting from the postal service and follow it up by contacting the tenant to confirm receipt.
When a tenant can challenge a section 13 notice
If a tenant believes the proposed rent increase exceeds the open market rate, they can dispute it by applying to the First-tier tribunal (FTT), free of charge.
The tenant must apply before the date stated in the section 13 notice for the new rent to take effect.
The FTT will determine what the rent should be. Hearings at the FTT usually have a lawyer or property valuer, and one or 2 'lay' people.
The FTT can make a decision by considering the papers submitted to it, or you or the tenant can also ask for an informal hearing, which you can both attend.
How the FTT decides the rent
The FTT will consider what rent you could reasonably expect to get for the property let on the open market under a new tenancy on the same tenancy terms (disregarding any improvements carried out by the tenant and any disrepair that's the tenant's responsibility).
They'll then either agree to your proposed increase, or set a lower (or higher) rent.
Effect of the outcome
The rent set by the FTT is the legal maximum you can charge.
The new rent takes effect from the date of the FTT's decision and will not be backdated (giving tenants an incentive to challenge any rent increases).
However, the parties can agree in writing to set a rent that's less than the rent decided by the FTT after receiving its decision.
Note that the tenant can also apply to the to dispute the rent being charged within the first 6 months of a new assured tenancy, if they feel the rent is above the open market rate.
Appealing the decision
The decision of the FTT is binding on you and the tenant. However, either of you can appeal to the Upper Tribunal, but only in relation to a legal issue and not a factual dispute.
You must get permission to appeal from the FTT that made the decision, or from the Upper Tribunal. The appeal should be made within 28 days of receiving the full reasons for the decision.
You could also seek permission from the High Court to challenge the decision by judicial review if you think there's been a breach of the rules of natural justice (but get legal advice before you do this).