OpenRent Community

RPI-linked upwards-only rent review clause. Fair?

Looking for a landlord’s perspective here, as I’m a tenant and feel this is somewhat unfair.

We had an offer accepted for a tenancy at a £50 discount from asking, for a 24-month term. I felt it was fair for the area, as their asking was on the high side, but not far off and it was a nice property.

Anyway all seemed great, and the reference checks passed for us both.

At the contract signing stage, we receive an email from Openrent saying a custom clause had been added:

The landlord and tenant agree to a Rent Review on the first anniversary of the lease. The Rent review is to be in line with inflation using the Retail Price Index (RPI) and is upward only.

We challenged this, asking for it to be removed. They refused, so we offered to accept a rental review clause based on the ONS’s London property index, with the floor removed (so it could go down as well as up). We figured this would keep them in line with the market, and would be difficult to argue with.

We were wrong. They held firm, and asked us again to accept the clause. We also held firm, so our deposit was refunded.

As this our first experience with Openrent and Rentnow, I want to gauge the sentiment here in case it’s common and we encounter it again. Would you feel this is a fair clause as a landlord?

I am not in london where rents are high. Could you do with a break clause in it ,to get out if rent gets too high?

We considered that, but wanted a longer lease - staring a family and all that! Both us and them wanted a 24-month term, so it didn’t feel like the right thing to change.

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I am a landlord, but this does seem rather unfair, due to the upward only clause. Smacks of greediness to me. I haven’t increased either of my tenants rents since June 2017. I feel increasing rents without needing to just adds to the inflationary cycle.

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Whereas increasing rents annually is not universal many appear to do so especially where the market is volatile and rents are rising
Personally I only raise my rent in line with inflation and keep them generally under the current market value
A 24 mth fixed period seems unusual to me, 6 months being the norm so a rent review after 12 moths doesn’t seem that unreasonable to me
However the fact that it was not discussed until contract signing I consider to be very bad form

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I’m a landlord too and agree with the above comments. I think it is unreasonable to insert such a material clause in contact without discussing it first. If I was on the receiving end I would consider it an act of bad faith and walk away.

In terms of rent increases, my policy is to not seek any increases for the duration of a tenancy, and only seek to reset at market rates once tenants have moved out. My objective is to get long standing tenants with whom I have good working relationships rather than to maximise short term gain. In a situation of falling rents tenants always have the option of moving elsewhere, although I have never had this situation and several tenants have told me they have been put off moving because they like the way I do business. I try to make sure my objective is aligned with the tenants and everyone is happy.

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