Huge increase in Rent! Help

Old-Ben_2

Hi,

A friend and her husband have been renting a 3bedroom cottage for 18months at £300/month. The landlord is now saying he wants to increase the rent in line with the property's market value (probably £120K). They are both worried that it will be nearer £500/month and as they're struggling at £300 it's causing lots of sleepless nights & stress. Can he do this? Are there limits as to how much the rent can increase in any one year?

Any help or advice much appreciated.

Ben

zar

I would think the first step is for your friend (or you if they aren't on the net) is to have a really good look through the local rental property market - rightmove, local property websites, private ads in the local paper (these may be available online too) to see what typical rent asking prices are in that area.

The property's sale value is irrelevant - we pay £600 a month rent and our landlady had the property up for sale at £315k before we moved in! - even if it was overpriced I would think it would cost at least £250k to buy - at a 90% mortgage that is £940 I/O or £1500 repayment mortgage. Of course her mortgage won't be that big as she built the house herself and bought the land about 7 years ago, before the boom.

Are local rents for similar properties closer to the £300 or £500? That is a huge difference. I don't think there's much protection against the size of rent increases in law unfortunately, although with any luck someone more knowledgeable will comment. I hope your friends are worried needlessly, and any increase would be much more sensible e.g. inflation at 2% :rolleyes: It's a horrible situation for them - perhaps it would be best to ask the landlord for how much he is thinking of asap so at least they aren't worried about the unknown and can actually decide what to do?

Ivrytwr3

http://www.odpm.gov.uk/index.asp?id=1151918

http://www.odpm.gov.uk/index.asp?id=1151898

When a fixed term tenancy ends and the tenancy lapses into a statutory periodic tenancy, the landlord can put the rent up if you agree. Alternatively he or she can use the formal procedure in the Housing Act 1988 to propose a rent increase to be payable as soon as the statutory tenancy starts. The landlord can then propose further increases at yearly intervals after the first increase.

7.4 What is the formal procedure for proposing a rent increase for contractual or statutory periodic tenancies where this is not covered in the tenancy agreement?

The landlord must propose the rent increase on one of two special forms called "Landlord's notice proposing a new rent under an Assured Periodic Tenancy of premises situated in England" or "Landlord's notice proposing a new rent under an Assured Periodic Tenancy of premises situated in Wales". The forms can be used for assured or assured shorthold tenancies.

He or she must give at least a month's notice of the proposed increase if the rent is paid on a weekly or monthly basis (more if the rent period is longer). More details are in Appendix E.

7.5 What should I do if I get formal notice of a rent increase?

If you accept the rent increase, you should simply pay it from the date given in the notice.

If you do not agree with the increase, you must apply to a rent assessment committee to decide what the rent should be. You must apply on a special form called "Application referring a Notice proposing a new rent under an Assured Periodic Tenancy or Agricultural Occupancy to a Rent Assessment Committee", available from law stationers or rent assessment panels (see Appendix D). (This form must also be used if the tenancy is a shorthold tenancy). The committee must receive the application before the date on which the new rent would be due.

7.6 What is a rent assessment committee?

Rent assessment committees are made up of 2 or 3 people - usually a lawyer, a property valuer and a lay person. They are drawn from rent assessment panels - bodies of people with appropriate expertise appointed by Government Ministers. There are 6 rent assessment panels in England and Wales. Their addresses are given in Appendix D. The committees are independent of both central and local government. There is no appeal against a committee's decision except on a point of law.

The committee may make a decision by considering the relevant papers although you or the landlord can ask for an informal hearing, which you may both attend. There is no charge for a committee decision.

7.7 When can I apply to a rent assessment committee for a decision on the rent?

If you are an assured or a shorthold tenant, you can ask a committee to set a rent under a contractual periodic or statutory periodic tenancy if you have been given notice by the landlord of a rent increase (see section 7.4).

If you are a shorthold tenant, you can ask a committee to set a rent at the beginning of a shorthold tenancy if you consider the rent to be significantly higher than rents for comparable tenancies (see section 7.10).

7.8 How does the rent assessment committee decide on a rent for a contractual periodic or statutory periodic tenancy?

When settling disputes on rent, the committee decides what rent the landlord could reasonably expect for the property if he or she was letting it on the open market under a new tenancy on the same terms. It does not take into account any increase in the value of the property due to voluntary improvements by you. The committee may agree the proposed rent or set a higher or lower rent.

The rent fixed by the committee is the legal maximum the landlord can charge. The new rent will be payable from the date specified in the landlord's notice unless the committee considers this would cause you undue hardship in which case it may specify a later date.

7.9 Can the landlord propose a further rent increase after the committee has made a decision?

The landlord can propose that the rent is increased a year after the date on which the rent decided by the committee was payable (but see Appendix E), unless you agree that he or she can put it up earlier. You must apply to a rent assessment committee to decide what the rent should be if you do not agree with the proposed increase.

So...............

So firstly how has he requested the rent increase, he has to use the special form, not just send a letter or tell you. He must give you a months notice and then you can object to the rent assessment panel. Then they will set the rent not him, probably from what you say a lot lower than what he is asking, and will take into cobsideration the state of the property, location and other factors etc.

silvercar

I guess the risk in objecting to the rent increase is that you get a notice to quit.

If the landlord is convinced he get a higher rent from someone else he could well decide to try and get new tennants.