Following from last week’s blog about the proposed new enhanced Section 8 notices we are now looking at the proposed changes around rent reviews.
Rent Reviews
The bill proposes that rent reviews can only be applied on the following basis:
- The rent for the property will not be allowed to be raised any more than once per calendar year.
- As all tenancy agreements will now be a statutory periodic tenancy all rent review notifications will need to be issued on the new proposed Section 13 notice.
- Two months notice for an increase in rent via the Section 13 notice must now be given.
- The new proposed rent must be no more than the current market value of the property. Evidence of the market value should be provided to the tenant should they request that.
One of the major changes is that should the tenant not agree the revised rental level with the Landlord they have the right to refer it to the First Tier Tribunal for adjudication. The tribunal will then set the new rate, at what they consider the market rate to be, however this will be at a level no higher than that on the Section 13 notice even if that is below the market rate that they determine. Presently, if a tenant refers a rent increase to the tribunal, the tribunal can set a new rent at either a fair or market rent, even if it is higher than the new revised rent and it can be backdated to the rent review date.
The new rent, as determined, will only commence from the next rent due date following the tribunals decision and will not be allowed to be back dated.
First tier tribunal costs are yet to be determined but the present situation is that the applicant pays the fixed cost and can apply for costs at the discretion of the tribunal although it is normal for each party to bear their own tribunal costs unless one is deemed to have acted unreasonable, and in the case of the Landlord, the tribunal could award a rent repayment order for the most extreme unreasonable behaviour of a Landlord during the process. Presently it is envisaged that most of such referrals by the tenant will be dealt with by written submission and not by a hearing.
In both the House of Commons debates and the Lords, it has been discussed that the new referral system makes it advantageous for the tenant to refer every rent increase to the tribunal as they have a mechanism to delay any increase although it may cost them a small application cost. Given this potential detrimental situation for a landlord, representations have been made to the Housing Minister to reconsider safeguards for this, what could be determined, unreasonable tenant behaviour. Currently First Tier Tribunal decision periods are between 14-20 weeks so this could be a “great” way for tenants to put off a justified rent increase. We would look to overcome this by having that pro-active conversation with the tenant regarding the proposed rent review in the first place. We can only wait and see on this.
If a new tenancy is issued by either having new tenants (including where existing tenants change, I.E. one leaves and is replaced by another) the property can be let at any rent level even if it is above market rates as per normal.
We, at Taylored Propman, still advocate that given good tenants living in a good condition property with a fair market rent this change should not be detrimental to the Landlord and as always we will be able to provide end-to end support to you through this process.
Please contact us so that we can offer advice and help you through these changes
- Email us: office@tayloredpropman.co.uk