I’m a very small business only just realising the impact of the forthcoming Renters Rights Bill due to ill health.
I would like to increase the rents of existing tenants after 3 years with no increase. I usually would produce new Shorthold Tenancy Agreements with the new monthly rent for all parties to agree and sign.
However am I correct in thinking now I just need to do a section 13 (formA) increase with accompanying letter to each existing tenant and then once signed keep these with original Shorthold Agreements?
We’ve got a guide on raising rent and another one specifically about Section 13 rent increases on our landlord blog. Thought you might find them useful!
I’ve looked at the current Shorthold Tenancy Agreements (STA) in place and there is nothing within these that talks about a rent review. These tenants have been in place for at least the last 3 years.
With regards to periodic or contractual I’m going to have to show my inexperience here the tenants pay monthly rent the only contract I have with them is through the STA I’m a limited company and the agreements are in my name directly with the tenants. Sorry is this doesn’t answer the question fully. Thank you much appreciated.
The fact there is no rent review clause means you will need to serve a section 13
You can just do it in writing and if they accept and pay it’s deemed accepted
We are now being advised to increase rents yearly as the RRB is indirect rent control so get your rent up to market rent now
Even if the tenant challenges this is the last chance where they can be forced into an increase
The new rules means it can only be held or reduced
You will need to serve a s13
If the tenant doesn’t want to pay you have to go to a tribunal
The rate will only then be increased after the ruling and not backdated
It’s indirect rent control do they don’t end up with lots of homeless tenants
It’s worth listening to the landlord law conference webinars from the last two days
It goes into it in depth
Nothing is yet written in stone but the future is bleak and we have been told to accept it
You do not NEED to issue a Section 13 notice. I’ve never issued one, but instead write a letter to the tenant explaining the increase, and ask them to sign & send back agreement, or contact me to discuss if they don’t agree. I do this digitally now.
You can do the above or anything else you wish. It could be verbal chat if you like, with no notice needed in writing, but I prefer to put something in writing.
You may NEED to issue a Section 13 notice in the future under the RRB but this is not needed now.
I checked this myself a couple of weeks ago. The first (and best option) is to AGREE a sensible increase like rational human beings, and avoid the need for a Section 13 agreement.
Option 2 is to repaper with a new AST, which might be preferred by the tenant.
Section 13 is a route to forcing an increase, but it’s scary and not needed.
I have good relations with all the tenants and my increases are small really especially given I’ve not increased a rent in 3 years. I don’t foresee a problem with any of them.
So I really agree with your points about a section 13 being quite an aggressive legal approach.
I will issue a letter and a new Shorthold tenancy agreement as per my usual process. My only issue now is I used to buy all my AST agreements from the CAB but this stopped a couple of years ago and I’m struggling where to buy a decent legally binding alternative.
I will certainly take your advice and instead issue a letter and new Shorthold tenancy agreement as the tenants involved will not have an issue with the increase as it’s minimal and their first in 3 years.
If you have any advice about where to get decent legally binding Shorthold Tenancy Agreements please share I’m struggling to find one. I recently brought some from a company called Shaws and when I read them there was a point under landlords responsibilities that stated ‘the landlord will pay the water charges for the property’ which is incorrect of course.
I can see now from the helpful comments that I actually need to issue a letter for the increase along with a new Shorthold Tenancy Agreement for signed agreement as per my usual practice.
However I’m struggling to find a comprehensive and legally binding agreement that I feel is suitable to now use. Do you have any advice at all with this please?
What has been proposed in the RRB is that you can only legally raise the rent using a Section 13 giving two months notice.
The notice advises the tenant (in bold letters) that if they disagree with the rent increase, they can challenge it at the First Tier Tribunal (FTT). This is nothing new. What is new is the FTT will either hold the rent at the amount the LL asked for or lower it to what they deem it should be. Currently the FTT can also raise the rent to higher than what the LL has asked for if it is below the market therefore discouraging a tenant from maliciously challenging the rent for no good reason.
Currently the FTT are only dealing with a minute number of cases and it’s taking them 2 - 3 months to make judgements although their judgement will be backdated. When the bill comes in the proposed increase will only take affect after they make their judgement. Industry insiders are saying the FTT will eventually grind to a halt under the shear number of cases. LLs will be unable to increase the rent annually as they do now.
Tenants that receive a S13 have two options;
Pay the proposed rent increase
Challenge it.
If they challenge it the worst that can happen is they will have to pay it 6/7 months later.
Labour have said that they are not in favour of rent controls. This underhanded system has been dubbed “rent suppression”.
I forgot to add that the tenant can also make a hardship claim and the FTT can delay the rent increase even further.
Issuing a new tenancy agreement is a mistake imo. Its not in your interest or necessarily the tenants. There is nothing agressive about a s13 notice. If you think the tenant will pay, then just send them a letter or email with the proposed increase instead as suggested.
For years I’ve always given a new tenancy agreement with every increase. This way the tenants are signing a new agreement with the new rent.
I do take your point about just doing this increase via a letter, I guess I could asks them to sign a copy of this letter instead? I’m just a bit concerned to ensure that every communication and agreement has been formerly agreed.
Having read some of the comments it does seem that the section 13 approach could seem a bit direct for some tenants that are deemed not to have a major issue with an increase although it does seem that this might end up being the only process in the future.