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Increasing rent

Contents

England, Wales and Northern Ireland

The following applies to assured and assured shorthold tenancies in England and Wales and all tenancy agreements in Northern Ireland. See below for Scotland.

How often can I raise the rent?

The frequency of any rent reviews depends on whether this has been incorporated in the terms of the tenancy agreement.

Details of the arrangements for paying and, if you wish, for reviewing, the rent should be agreed, before the tenancy begins and included as part of the terms of the tenancy agreement.

  • If the tenancy is for a fixed term, the agreement should say that the rent will be fixed for the length of the term or, that it will be reviewed at regular intervals and how it will be reviewed.
  • If the tenancy is a contractual periodic tenancy, the tenancy agreement should say how often the rent will be reviewed and how it will be reviewed.

What is the difference between a fixed-term and periodic tenancy?

  • A fixed-term tenancy is created for a specified length of time, for example, 12 months. If the tenants remain in the property after the fixed term has ended, but do not enter into a new fixed-term agreement, then their tenancy will automatically become periodic.
  • A periodic tenancy is automatically renewed on a specific period, such as month to month or quarter to quarter. This arrangement may have been specified at the start of the tenancy or may have naturally arisen by the expiry of a fixed-term tenancy. A periodic tenancy formed by an agreement is known as a contractual periodic tenancy. A periodic tenancy formed at the expiry of a fixed term is known as a statutory periodic tenancy.

If the agreement doesn't state when the rent should be reviewed

England & Wales

If the tenancy agreement does not state when rent reviews will take place then the frequency of the reviews will be determined by the Housing Act 1988.

  • If the tenancy is a fixed-term tenancy, you can only increase the rent if the tenant agrees. Otherwise you will have to wait until the fixed term ends before you can raise the rent. Once the fixed term ends and the tenancy lapses into a statutory periodic tenancy, you can either agree a rent increase with the tenant or you follow a formal procedure set out by the Housing Act 1988 to propose a rent increase to be payable as soon as the statutory tenancy starts. You can then propose further increases at yearly intervals after the first increase.
  • If the tenancy is a contractual periodic tenancy, then you can increase the rent if the tenant agrees. Otherwise you can follow a formal procedure set out by the Housing Act 1988 (see below) to propose a rent increase to be payable a year after the tenancy began. You can then propose further increases at yearly intervals after the first increase.

What is the procedure in the Housing Act 1988 for proposing a rent increase where this is not covered in the tenancy agreement?

You must notify the tenant by sending them one of 2 special forms entitled 'Landlord's notice proposing a new rent under an Assured Periodic Tenancy of premises situated in England' or 'Landlord's notice proposing a new rent under an Assured Periodic Tenancy of premises situated in Wales'.

You must give at least a month's notice of the proposed increase if the rent is paid on a weekly or monthly basis.

If the tenant agrees with the proposed rent increase, he or she should simply pay it from the date given in the notice.

If the tenant does not agree with the proposed increase, he or she must apply to a rent assessment committee to decide what the rent should be. The tenant must do so before the date on which the new rent is due to begin.

Northern Ireland

In Northern Ireland, the landlord can only increase the rent by more than was stated in the tenancy agreement if the tenant agrees.

If the tenancy agreement is silent on rent review then the landlord has to get the consent of the tenant to increase the rent during the tenancy. If the tenancy is for a fixed term, then the landlord can increase the rent at the end of the fixed term and where the tenancy is a periodic tenancy the landlord can increase the rent at the end of any rental period.

Where the tenancy is controlled, the landlord can only increase the rent by applying to the Rent Officer.

For more information on the Rent Officer for Northern Ireland, please visit the NI Direct website.

For fixed-term tenancies, as a rent increase is classed as a change to the terms of the tenancy, once this is agreed with the tenant, the landlord notify the tenant of the changes in writing at least 28 days before they are due to take place. For periodic tenancies, the terms can be changed at the end of any rental period.

Rent assessment committees

England & Wales

A rent assessment committee is a tribunal made up of 2 or 3 people - usually a lawyer or a property valuer and 1 or 2 lay people. They are generally appointed by government ministers. Each committee is part of an umbrella organization called the Residential Property Tribunal Service (RPTS) which has 5 regional offices (called 'rent assessment panels') in England and Wales. The committees are independent of both central and local government.

What does it cost and is there a hearing?

There is no charge for a committee decision. The committee may make a decision by just considering the relevant papers although you or the tenant can ask for an informal hearing, which you may both attend.

When can a tenant with an assured or an assured shorthold tenancy apply to a rent assessment committee?

  • Assured and assured shorthold tenants can ask a committee to set a rent under a contractual periodic or statutory periodic tenancy if you have given notice of an increase
  • Assured shorthold tenants can ask a committee to set a rent if they apply within the first 6 months of the tenancy if they feel the rent is significantly higher than rents for comparable tenancies. An application cannot be made if the original tenancy has ended and been replaced and more than 6 months have elapsed since the date the original tenancy started.

How does the rent assessment committee decide on a rent for a periodic tenancy?

When settling disputes on rent, the committee decides what rent you could reasonably expect for the property if you were letting it on the open market under a new tenancy on the same terms. It does not take into account any increase in the value of the property due to voluntary improvements by the tenant or any reduction in the value of the property caused by the tenant not looking after the property.

The committee may agree the proposed rent or set a higher or lower rent.

The rent fixed by the committee is the legal maximum you can charge. The new rent will be payable from the date specified in your notice unless the committee considers this would cause the tenant undue hardship in which case it may specify a later date.

How does the committee decide on a rent for an assured shorthold tenancy?

The committee will only fix a rent if it considers the rent to be significantly high compared with rents for similar properties let on assured or shorthold tenancies in the local area. It will not make a decision if there are not enough comparable properties. It will decide the amount of rent you could reasonably expect to get for the shorthold tenancy, taking into account those other rents.

The rent fixed by the committee is the legal maximum you can charge. The new rent will be payable from the date specified by the committee which cannot be earlier than the date the tenant applied to it for a decision.

Can I propose a further rent increase after the committee has made a decision?

You can propose that the rent is increased a year after the date on which the rent decided by the committee was payable, unless the tenant agrees that you can put the rent up earlier. The tenant must apply to a rent assessment committee to decide what the rent should be if he or she does not agree with the amount of the proposed increase.

Northern Ireland

In Northern Ireland the rent assessment committee is a body that the landlord can apply to, in order to increase the rent on controlled tenancies, i.e. properties where a notice of unfitness has been issued.

See the section on How to set up a tenancy under the Certificate of fitness (Northern Ireland only) heading for more information.

What if I want to change the terms of the tenancy?

If the tenancy is a fixed-term or contractual periodic tenancy, you can only change the terms of the tenancy if the tenant agrees. In England and Wales it is best to agree any changes in writing. In Northern Ireland, these changes must be confirmed in writing and the tenant must be given at least 28 days' notice prior to the changes taking effect.

However, if the fixed term of an assured or an assured shorthold tenancy or a tenancy agreement in Northern Ireland has ended and the tenancy has automatically run on as a periodic tenancy, it will continue on the same terms unless you, or the tenant, propose new terms.

In England and Wales, you or the tenant may propose new terms, and any consequent change to the rent, within a year of the statutory periodic tenancy starting, using a special procedure under the Housing Act 1988. You both have the right to apply for an independent decision by a rent assessment committee if you cannot agree new terms.

In Northern Ireland, you must agree any changes with the tenant and written confirmation of the changes, once agreed, must be forwarded to the tenant at least 28 days before the changes are due to take effect.

How does this procedure work in England and Wales?

In England and Wales, you, or the tenant, must propose the new terms, and any consequent change to the rent, on a special form called 'Notice proposing different terms for a Statutory Periodic Tenancy'. If you both agree the new terms, they can be included in the agreement.

If the terms are not agreed, you or the tenant must apply to a rent assessment committee to settle the terms and any consequent change to the rent. You, or the tenant, must apply to the committee within 3 months of receiving the notice proposing changes, using a special form called 'Application referring a notice proposing different terms for a Statutory Periodic Tenancy to a Rent Assessment Committee'.

How does the committee fix the terms?

The committee decides whether the proposed new terms are reasonable for the tenancy or whether other terms are more appropriate. The committee may adjust the rent up or down to reflect the new terms, whether or not you or the tenant proposed a new rent to match the new terms.

The new terms and the new rent, if the committee decides that the rent should be changed, will apply from the date stated by the committee, but the committee cannot apply the new rent before the date proposed in the notice.

If the committee sets new terms, can I propose further changes?

You can only make further changes to the terms of the statutory periodic tenancy if the tenant agrees.

What can I do if I do not like the committee's decision?

The committee's decision is binding on the parties but you have a right to appeal against a committee's decision although only on a point of law. The appeal should be made to the High Court within 28 days of the receipt of the committee's full reasons for their decision.

Alternatively, if you consider that there has been a breach of the rules of natural justice, you could seek leave from the High Court to challenge the decision by judicial review.

Scotland

In Scotland there are 3 main types of residential tenancy:

1. Protected/Regulated Tenancies

2. Assured Tenancies

3. Short Assured Tenancies

How often can I raise the rent?

The frequency of any rent reviews depends on whether this has been incorporated under the terms of the tenancy agreement. A landlord cannot seek a review of a rent during the period for which either the rent is fixed under the terms of the tenancy or there is a specified mechanism for calculating the rent. Dealing which each of the 3 types of tenancy in turn:

Protected/Regulated Tenancies

Protected/regulated tenancies are dealt with under the Rent (Scotland) Act 1984. If the landlord and tenant cannot agree a rent between them, then either party can apply to the Rent Registration Service to have the tenancy registered and a Certificate of Fair Rent issued. A rent officer will visit the property and decide a fair rent for the property, based on the rent officer's knowledge of the area and taking into account similar properties in the area. When assessing the fair rent, the rent officer will disregard any improvement works carried out by the tenant and any disrepair that is the responsibility of the tenant.

The rent officer may reduce the fair rent by using the concept of 'scarcity'. The concept of scarcity is designed to protect tenants under protected/regulated tenancies from increases in rent caused by there being a high demand for properties in their area that causes rents to rise.

Once a rent has been registered it is set for 3 years. The parties can agree future rent increases between themselves or can again apply to the rent officer. It is not always the case that the rent can be increased straight away to the level specified by the rent officer.

Increases are limited in each year up to the level of the fair rent to the greater of:

  • £104 a year
  • One quarter of the rent payable before the decision
  • One half of the difference between the rent payable immediately before the decision and the Fair Rent

Both landlords and tenants have a right of appeal against the decision of a rent officer. The appeal is made to the Private Rented Housing Panel.

Assured Tenancies

Rents for assured tenancies are dealt with under the Housing (Scotland) Act 1988. In the majority of cases landlords and tenants simply agree the rent to be paid between themselves. In the event that they cannot agree, the landlord must serve a notice advising the tenant of the proposed rent he intends to charge. Normally, the tenant must receive 6 months' notice of this proposed change. If the tenant does nothing, the rent specified in the notice will become the rent payable.

If the tenant wishes they can refer the matter to the Private Rented Housing Panel, who will appoint a committee to consider the matter. The committee will decide what, in their view, the property might reasonably be expected to be let for by a willing landlord under an assured tenancy on similar terms. There is no deduction for the concept of 'scarcity' available to the tenant.

Any new rent cannot come in to effect sooner than the first anniversary of the coming into effect of the previous rent.

Short Assured Tenancies

Rents for Short Assured Tenancies are also dealt with the Housing (Scotland) Act 1988. Again, in the vast majority of cases rents are agreed between the landlord and tenant. However, a disgruntled tenant can again refer to the Private Rented Housing Panel to appoint a Committee to determine what, in the Committee's opinion, the landlord might reasonably be expected to obtain under the tenancy. Referrals to the Panel are rare. The Act provides that the Panel shall only make a determination on the rent where the rent sought is significantly higher than the landlord might reasonably be expected to obtain. When referrals are made to the Panel it is unusual for the Committee appointed to make a determination as a result of this qualification, as rents sought by landlords are not normally 'significantly' higher.

Can I vary the terms of the lease?

It is always open to both parties to vary the terms or rent under a lease by agreement. Terms cannot normally be varied by one party alone.