Procedure for increasing rents in England and Wales

During a tenancy, the landlord may wish to increase the rent paid by the tenant. It is easiest for the landlord and tenant to come to an agreement as to the new rent to be paid, but if this is not possible section 13 Housing Act 1988 (HA 1988) provides a statutory procedure for rent increases.  This factsheet describes the procedure for increasing rent on an assured or assured shorthold tenancy under the Housing Act 1988, and will not apply to other forms of residential tenancy such as a common law tenancy.

Methods to Increase Rent: 

If a landlord wishes to increase the rent payable under an assured tenancy or assured shorthold tenancy, depending on the circumstances several options may be open to him.

• RENT INCREASE PROVISION IN TENANCY AGREEMENT - The landlord will be contractually entitled to increase the rent during the term in accordance with any provision in the tenancy agreement allowing for this. Such a provision should set out exactly what the landlord wants to be able to do, and should state the basis on which it will be assessed and the occasions on which such a review will occur. If the tenancy agreement does include such a term, the statutory procedure cannot be used. If the tenancy is for a fixed term, the landlord cannot increase the rent without the agreement of the tenant unless the tenancy agreement provides for this.
• AGREEMENT TO GRANT A NEW FIXED TERM TENANCY - The landlord will have the opportunity to increase the rent if he grants the tenant a new tenancy. If the current tenancy is continuing the landlord will need the tenant to agree to enter a new tenancy, and this will operate to surrender the previous tenancy and grant an entirely new tenancy. If the tenant does not agree to terminate the current tenancy, the protection provided to the tenant by the HA 1988 means that unless the landlord is able to use either a break clause in the tenancy agreement or section 8 or section 21 HA 1988, the landlord will need to wait for the current tenancy to expire. Any new tenancy offered can then be at an increased rent.
• AGREEMENT TO GRANT A NEW PERIODIC TENANCY - If the tenancy is a periodic tenancy, instead of allowing the current tenancy to keep continuing from period to period the landlord may agree to grant the tenant a new periodic tenancy at a higher rent. Again, if the tenant agrees to enter a new tenancy before the current tenancy expires, this operates to surrender the previous tenancy and grant an entirely new tenancy. However, if the tenant is not amenable to the increase, the landlord will need to increase the rent by using the statutory procedure under section 13 –explained further below.
• INVOKING STATUTORY PROCEDURE - If the landlord and tenant cannot agree that the rent payable under a periodic tenancy should be increased, the landlord may instigate a rent increase by serving a notice on the tenant under section 13 HA 1988. The tenant then has the choice of accepting the proposed new rent and making arrangements to pay this from the date specified in the notice, or they may refer the notice to their local Rent Assessment Committee.

Starting the Section 13 Housing Act 1988 Rent Increase Procedure: 

This procedure is available only where the tenancy is a periodic assured or assured shorthold tenancy. The landlord should notify the tenant of the proposed rent increase on the prescribed form, which is Form 4b for rent increases in England and Form 4d for those in Wales (a Welsh version is available). Copies of these forms are available on the Letting Centre’s website at www.letlink.co.uk . Tenancies in Scotland are dealt with in a different way (see www.scotland.gov.uk/housing/leaflets/default.asp) and the relevant form is AT 3(L).

Amongst other information (details required are explained on the form), the form must state the date on which the increase will take effect. This date must not be before:

• the anniversary of the date on which the first period of the tenancy began (unless the periodic tenancy is statutory). This means that the s. 13 procedure cannot be used within the first year of the tenancy.
• the expiry of the ‘minimum period’ after service of the notice. This is generally equivalent to a period of the tenancy, although it is one month if the period is less than a month or six months if the period is a year.
• the first anniversary of any previous increase in rent which resulted from a s.13 notice or rent assessment committee decision. (This does not apply to any other rent increase, such as one by agreement, or where a reference to the rent assessment committee did not result in an increase).

As a result of these requirements, the earliest that an increase in rent may take effect is one year after the commencement of the tenancy, providing that the minimum notice period is observed.

Tenant’s Response: 

Once a tenant has received a form from his landlord in which the landlord proposes to increase his rent he may either:

• Accept the rent increase and make arrangements for the rent to be increased to the proposed amount as from the date specified in clause 4 of the notice;
• Accept the rent increase in principle, but negotiate with the landlord as to the amount of the increase or the date from which it becomes effective, or
• Decline to accept the rent increase and refer the notice to his local Rent Assessment Committee on the prescribed form “Application referring a notice proposing a new rent under an Assured Periodic Tenancy or Agricultural Occupancy to a Rent Assessment Committee”. This form must be delivered to the committee before the implementation date specified in the landlord’s notice.

Rent Assessment Committee: 

Once a tenant has completed the prescribed form referring his landlord’s notice proposing an increase in his rent, he should deliver it to his local Rent Assessment Committee. These Committees are organised by Rent Assessment Panels (which is part of the Residential Property Tribunal Service), and are a tribunal of two or three independent and experienced persons. The Clerk to the Committee will write to the landlord and the tenant to inform them of the next steps, and the landlord will be provided with a copy of the tenant’s application. The letter will include the date of an oral hearing, although the parties will be asked if they would prefer to make ‘written representations’ instead. If parties are content for the matter to be dealt with on the basis of the written representations and other relevant information they may choose not to have a hearing. Parties are advised not to withhold documentation and then produce it for the first time at a hearing, as this is likely to cause the hearing to be adjourned to enable the other party to consider the new evidence.

When a hearing is arranged, the Committee will convene at a particular time and place so as to enable the landlord and the tenant to put their cases to it. Both parties may represent themselves, or they may be represented. The Committee may ask questions so as to ensure that it has all the relevant information to enable it to come to a decision. The Committee usually considers it necessary to visit the property, particularly if either party requests this. A time and date will be notified to the tenant in advance, and if the tenant permits the landlord is entitled to be present. Such an inspection will usually take place on the day of the hearing or the day the decision is made. If the Committee cannot gain access at the appointed time, it may adjourn the matter and make another appointment. Alternatively, it may decide that it has sufficient information, including that obtained from an external inspection, to be able to go ahead and make a decision in the absence of an internal inspection.

The Committee will decide on a rent for the property which reflects the rent that the landlord could reasonably expect if he was letting the property on a new tenancy on the same terms as the present tenancy. This will be affected by the rental values of similar properties in the area which are let on similar terms. Any improvements to the property made by the tenant will be ignored (unless paid for by the landlord) so that the tenant does not pay for them twice. Any breach of the tenant’s repairing obligations will also be ignored, as this may otherwise reduce the rental value of the property and thus cause the tenant to benefit from his wrongdoing.

The Clerk to the Committee will write to the parties and enclose the decision notice specifying the rent determined by the Committee. Written reasons for the decision, in summary form unless either party has requested full reasons or the Committee considers this appropriate, will also be provided, within 21 days of receipt of the request. The rent demanded by the landlord in respect of the tenancy can then be no greater than the amount decided on by the Committee.

Sources for Further Information:

• The Residential Property Tribunal Service, website: www.rpts.gov.uk
• The Letting Centre, website: www.letlink.co.uk