The price of simply living life is climbing, and as a landlord things certainly aren’t getting any cheaper. But how easy is it to make sure you can increase your rent accordingly, whilst still making sure that you are being fair on your tenant (after all, most tenants aren’t exactly riding high on huge payrises either)!
I want to increase the rent of my property, what are my options?
Make not of the potential from the start of the relationship: Consider including a rent review clause in your tenancy agreement – this isn’t an unusual inclusion, and most tenants are happy with it, if the review doesn’t state that you have plans to quadruple their rent! Any clause included must comply with the provisions of the Unfair Terms in Consumer Contracts Regulations and the Consumer Rights Act 2015, and above all, be fair.
An easy way to make sure your review is fair is to justify it by a recognised factor, such as costs reflected in the Rental Prices Index. For example, ‘the tenancy shall be liable for a rental increase in line with the retail price index (RPI)’.
You should also make the situation official, by serving an official notice: if you don’t have an official clause within your tenancy agreement, and the initial fixed period of your tenancy has expired and the tenancy has become periodic, you must issue a Section 13 in order to increase the rent. This is an official document giving your tenant notice of your intention to increase the rent.
How much can I increase by?
You can’t go crazy, the increase rate must be ‘fair’. It is advisable to keep your increase in line with other properties in the area. Rightmove and Zoopla are a great place to start to get an idea of what other properties in your neck of the woods are going for. Do bear in mind that condition, parking, location and furnished/unfurnished all must be considered – it’s not as simple as looking for other two-beds in your postcode!
When can I increase?
If you are using a Section 13 form, you are only able to increase the rent after the initial fixed term has been completed. The date in which you intend to collect the new rent cannot be earlier than a year after the date when you last increased the rent using a Section 13 notice.
For a monthly, weekly or fortnightly tenancies, you must give your tenant one month’s notice of the intended increase. If rent is paid annually, a period of six months' notice is required before the increase can be put into effect. The increase must begin on the same day of the month that the tenancy started – you cannot use a Section 13 to change the day that rent is due.
So, what forms do I need, and what boxes must be ticked?
The Section 13 form differs slightly depending on where your property is located.
If your property is in Scotland, it’s a bit trickier – we’ll look at that below!
It is important to remember that the Section 13 form should be served in the same language as the original tenancy agreement, unless agreed otherwise by both landlord and tenant. If agreed otherwise, it would be advisable to get this in writing.
Once you have the correct form, you need to make sure that you include:
- Your/your agent’s details
- Details of your tenant
- Details of the property
- The amount that you intend to increase the rent to
- If you intend to increase any other charges, and if so, to how much
- The date upon which the changes will come into action
How are things different in Scotland?
If you are a landlord in Scotland, the method is slightly different.
Rent can only be increase once in a twelve-month period, and a landlord must give a tenant three months’ notice before such an increase takes place.
In order to increase the rent, the landlord must provide the tenant with a ‘Rent Increase Notice’. The tenant, within 21 days of receiving the notice, can refer the increase for adjudication to a rent officer. If the tenant wishes to do this, they must complete part 3 of the form and return it to the landlord to give them notification of their intention to make a referral to a rent officer. If the tenant fails to return part 3 of the form to their landlord, the rent increase will go ahead as initially proposed in the notice.
The only exception to the rent increase changes is within the Rent Pressure Zones. The tenant is unable to refer the increase to a rent officer as Scottish Ministers have set a cap on the maximum amount that rent can be increased.
Announcements last week by the Scottish Labour leader Richard Leonard touched further on potential changes to rent rate enforcement systems in Scotland, with the potential introduction of the ‘Mary Barbour’ law to help solve the country’s ‘housing crisis’. Mr Leonard outlining Labour’s plans to introduce a private members bill that utilises a points based system linked to average wages to enforce fairer rents, giving tenants greater powers in challenging unfair rents, as well as introducing stricter energy efficiency and health &safety for the private rental sector.
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