Here are the new rent rules planned for the UK
The incoming Renters’ Rights Bill introduces a new statutory framework, replacing many of the flexible mechanisms that landlords have traditionally relied on.
While rent increases will still be permitted once the Renters Rights Act comes into effect, the process will become more structured, transparent, and tenant-focused.
This is the view of Rooshan Saeed of legal firm Anthony Gold, who notes that currently, landlords can include clauses in the tenancy agreement that allow for automatic rent increases after the end of the fixed term. Landlords can also agree on rent increases with the tenants, where the agreement does not contain a rent review clause.
“It is only when the landlord and tenant cannot reach an agreement, and the tenancy agreement does not contain a clause allowing for automatic rent increases, that a landlord can use a Section 13 notice under the Housing Act 1988 to increase the rent. A rent increase under section 13 does not take effect until after the end of the fixed term,” she said.
“Under a section 13 notice, the landlord must give a month’s notice (if the rent is paid monthly) and the proposed rent takes effect at the start of the rental period as the new rent unless the tenant disputes the proposed rent and challenges it in the First-tier Tribunal before the rent increase date.”
Once the rent increase date has passed, the tenant loses the ability to challenge the rent increase and must pay the new rent.
Where a tenant challenges a rent increase notice in the Tribunal, the Tribunal assesses the market rent by considering what would be reasonable for a particular property in an open and competitive market, taking into account similar properties in the same area, as well as factors such as size, condition, location, and features of the property.
“This means that the Tribunal can set a rent that is lower, higher, or the same as the proposed new rent. As the Tribunal can set a higher rent than the proposed rent, it presents a risk to the tenants to challenge the rent increase notice in the Tribunal, especially where the proposed rent is below the market rent,” Saeed said.
Changes under the Renters’ Rights Bill
While landlords will still be able to raise rent once the Renters’ Rights Act comes into effect, rent increases will only be allowed once per year, regardless of what the tenancy agreement states, Saeed said.
Additionally, any rent review clauses contained in tenancy agreements will be abolished, and automatic rent increases will be rendered void.
Instead, all rent increases will only be initiated by the landlord serving a section 13 notice. The amount of notice required for the rent increase will also increase to two months’ notice before the new rent takes effect.
“Additionally, if a tenant believes a proposed increase is excessive, they will still be able to apply to the Tribunal. However, the Tribunal will only be able to award new rent that is lower than the proposed rent, or at the same amount as the proposed rent instead of a market rent higher than the proposed rent.
“Further, if a tenant challenges the increase, the new rent will not take effect until the Tribunal has made its decision. Therefore, tenants will be at a much lower risk and be more encouraged to appeal the notice in the Tribunal, as even if the Tribunal upholds the proposed rent as a justifiable and reasonable increase, it will still delay the time by which the rent increase will come into effect.”
Saeed noted that there is a serious concern that this will result in an increase in appeals in the Tribunal and cause delays and backlogs that the Tribunal might not be able to deal with in a timely manner.
“To overcome this an amendment has been proposed giving the Secretary of State the power to amend the date by way of regulations when the rent increase comes into effect. However, whether the Secretary of State will decide to introduce such regulations remains to be seen.”
Despite these new restrictions, landlords and tenants can still agree to vary the rent outside of the statutory process.
However, this will only be possible where the landlord has served a section 13 notice, and the landlord and tenant agree a rent lower than the proposed rent in the notice, Saeed said.
“Any such agreement must not be used to bypass the once-per-year limit. This will still allow for flexibility in cases where both parties are willing to negotiate, while still protecting tenants from unexpected or frequent increases.”
