I have amazing tenants and as such our relationship has been very warm.
These guys moved in April 2022 for a one-year contract shortly after sign up I had a fall out with the agent I honoured the agents contract and continued this until April 2023, where I returned the deposit and recollected a new deposit and started a new agreement via open rent.
I intended for a contractual periodic and just to keep it clean and get rid of the agents terms I decided to issue another contract for six months, in April 2023 I had increased the rent by £100, which the tenants were happy with bear in mind the rent was still lower then the open market my total new rent 1700 open market 1900.
The fixed term ended in October 2023, however I put in a rent clause in the custom part of the contract “The landlord will review the rent in April each year and give the tenants 1 months’ notice of any increase in rent. Any increase in rent will be to reflect the market rate for the size of the property and its location at the time of review.”
The issue is my fixed rate is ending soon and the current market rate is now £2200, which is what I also need to charge come April 2024, in order to cover interest, maintenance, insurance and of course tax.
Under a periodic tenancy one month notice is sufficient, however as I have a rent clause albeit, which is now a periodic contract can I use section 13? If not what is the best way forward?
You cannot use a section 13 when you already have a rent review clause in your tenancy. You have to follow the terms you put into your tenancy agreement. S13 is used when a tenancy agreement has no clause for adjusting the rent. As you will need to raise the rent significantly in April, I would advise that you to have a conversation with your tenants now. Explain your predicament and and as a result you will have to raise the rent significantly, aligning it with the local market. A £500+ rent increase is a hefty blow for anyone, at least you be giving them ample time to consider their options.
This is sound advise, the predicament I am having is establishing whether a section 13 can be issued and whether it will be valid or not.
Some sources say once the fixed period finishes which in this case was October 2023 the contract then becomes periodic the rent clause no longer applies others just as you stated state that owing to the rent review clause I cannot use it regardless of periodic or not.
Either way I don’t feel comfortable to raise the rent by this amount. The tenants are also really chill just as I suppose I am and you rightly point out £500 is a huge blow.
Will be sad to evict them, but then that will also mean I either move in or sell out which the latter most small landlords are forced to do right now.
Firstly, apologies for mis-spelling your name in my earlier post.
My understanding is, when a tenancy goes periodic, it does so under the same T&Cs as the original fixed term tenancy. The only difference is the notice period required by the tenant if they want to leave. The rental amount can be adjusted in one of 2 ways. There is a rent review clause in the tenancy which dictates how the rent is to be increased or if there is no rent rent review clause, then you can use a ‘contract variation,’ which essentially is what a section 13 notice is. It is wrong to assume that a tenancy that goes periodic is a completely new tenancy, when in fact, it is a continuation of the original tenancy.
The rent review clause was a mistake. You cant now use s13, but you can agree an increase outside the parameters of the clause informally with the tenants rather than evict.