There are 4 different ways when rent may be increased:
- mutual agreement of changing rent payment
- changing rent within fixed term contract
- increasing rent after fixed term contract ended
- increasing rent for periodic tenancy(statutory or contractual)
1. Mutual agreement:
In this case rent increase is approved by both party and changes take affect in agreed period. If there are no writing "Rent Increase Agreement" then starting paying the new agreed rent means that tenant accepted new increased payment.
2. Within fixed term contract period:
In case of fixed term AST Tenancy(usually it 6 or 12 month contract) landlord has right to increase a rental payment if there is a “rent review” clause in the original tenancy agreement. This clause must clearly contain wording when or how much the increase will be. Within fixed term period landlord couldn’t change a rental payment unless mutual agreement was made.
3. After fixed tem contract ended:
When fixed term AST tenancy ended and statutory periodic tenancy(or contractual periodic tenancy) follows automatically(when new fixed term contract wasn’t signed) the rent may reviewed according:
a) the clause of original tenancy specifying conditions of reviewing rental payments
b) section 13 of Housing Act 1988 and rent may be change once a year and served with a Section 13 Notice.
If the fixed term tenancy ended landlord may suggest to sign a new fixed term contract with upgraded rent. Tenant has two option:
- sign the new fixed contract with increased rent
- refuse it and get a statutory periodic tenancy according section 5 of the Housing Act 1988.
In last case, landlord may enforce Section 21 notice and end tenancy with 2 minimum two month notice.
4.Periodic tenancy:
In case of statutory periodic tenancy (monthly, weekly, quarterly payment basis) rent may be changed once a year and no earlier then after the 52 weeks since the first period began according Section 13.2 (b) of Housing Act 1988:
(b)except in the case of a statutory periodic [F1 tenancy—
(i)in the case of an assured agricultural occupancy, the first anniversary of the date on which the first period of the tenancy began;
(ii)in any other case, on the date that falls 52 weeks after the date on which the first period of the tenancy began; and]
Any periodic tenancy that has no "rent review" clause in their terms must be complied with Section 13 notice when rent payments matter is raised. But interesting law case London District Properties Management Ltd v. Goolamy demostrated the situaton when landlord could enforce section 13 notice despite the fact that periodic tenancy includes a rent review clause.
Section 13 notice for rent increase
Section 13 notice is used when:
- periodic tenancy has no rent review clause(but there is possible exclusion, see the court case London District Properties Management Ltd v. Goolamy), and
- no earlier then 52 week after begin original tenancy
If the rental property is located in England, then landlord must use Section 13 (2) - Form 4B to serve the rent increase letter.
If the property is located in Wales, you then Form 4D must be served.
Minimun notice period - 1 month.
How to assess rent increase
Amount of increase should be considered in relation to the rental charges for other similar properties in the same area. Tenants may apply for the rent to be assessed by a Rent Assessment Committee if he presume that unfair rent increase take a place. If the Committee supervised a rental payment and orders a lower/higher amount then landlord is bound to this figure for 1 year. There are no fee for the requesting assessment decision.
Rent limit or fair rent
How much landlord could increase a rent depends on legal maximum limit set by Valuation Office Agence(VOA). VOA has a service where the maximum rent limits are registered. Tenant or landlord may request a rent evaluation that remains fair within 2 year after assessment. Also landlord could request it sooner if any significant changes or renovations were made.
Rent limit may be reconsidered over the appealing to the Residential Property Tribunal(First-Tier Tribunal).