Sophie Bell, housing partner at Hodge Jones & Allen, explains how tenants can challenge a rent increase in light of the cost-of-living crisis if they believe their landlord hasn’t followed the correct procedures.
Unfortunately, there is no cap on how much a landlord can charge but Government guidance says that for existing tenants, rent rises must be “fair and realistic” and in line with “average local rents”.
If a tenant is residing in a fixed-term tenancy (one that lasts for a set duration of time), a landlord can only increase the rent if the tenant agrees, while if the rise is rejected the rent can only go up once the agreed tenancy period has come to an end.
However, if the lease contains a ‘rent review clause’ the landlord must give sufficient notice before the rent increase comes into force, usually being at least six months for a yearlong tenancy. To be enforceable, a rent review clause does not need to be very specific. It does not even need to specify by how much and when the rent will increase necessarily, as long as it outlines the process of the rent review the landlord will undertake. However, it must not be deemed ‘unfair’ under consumer protection law.
If a tenant is involved in a periodic tenancy (one that is paid on a rolling week-by-week or month-by-month basis), then landlords cannot increase the rent more than once a year without consent, and only if at least one month’s notice is provided. The landlord may also serve a section 13 notice, where on expiry of the notice period the increased rent will take effect unless the tenant refers the increase to the tribunal or a different rent is agreed.
If tenants believe that their landlord has not followed the rules, here are four steps that tenants can take:
Negotiate
If you think your landlord has failed to follow the rules the best thing you can do is to seek to negotiate with them to try and reach an agreement to pay a lower rent. You should write to them and set out a rent that you think is fair and you would be willing to pay.
Appeal to a tribunal
If an agreement with your landlord can’t be reached and you believe that the rent increase is unfair or your landlord hasn’t followed the rules, you can appeal to a tribunal. This is free to do, but you’ll need to make sure you act before your rent is due to go up. The tribunal will decide whether the increase is reasonable based on the rate of rent of similar properties in the area.
Their decision is final, so if they decide the increase is reasonable, you’ll have to accept it or decide to leave the property. If they decide it is unfair, then they may decide it should be left as it is or set at a higher rate. You should be aware that the tribunal can set the rent at a level even higher than that the landlord was seeking if this is in line with local rents. Therefore, you should only appeal where the rent being sought by the landlord is clearly above local levels.
Don’t pay the increased rent if you wish to challenge it
The rent increase demanded by your landlord will not be payable if they fail to give the correct notice or operate a rent review clause in accordance with the agreement. In this case, you will be entitled to continue paying rent at the existing rate.
If you were to pay the increased rent, (even once!) the landlord may be able to argue that you have agreed to the increase, in which case it will be binding. This is the case, even if nothing has explicitly been said between you both.
Continue to pay the current rate of rent
You must not stop paying your current rent, even if you intend to challenge the increase. If you get into rent arrears, it could give rise to your landlord bringing possession proceedings against you and you could face eviction from the property.
Further information can be found here
