Rent increase clauses

paris321

We are moving house soon and recently recieved our ats agreement from the agent, in it is a clause that says -
The rent will increase at least 3% per annum .

I've been googling and searching threads on here and am no clearer really.....

Does this mean the rent will with out a doubt increase each year as thats the impression i get from the wording, i personally dont agree with that.
Rent increases should be discussed as and when needed with the landlord and agreed upon and having googled this seems like the most common method.

It also worries me that in the wording its not capped at a certain percentage ? surely there should be a minimum and maximum percentage ?

Is this just a standard clause that all agents use? (i've only rented privately before)

thank you.

bmar71n

Never seen that before, but if the agreement is no longer than one year don't see how it will be relevant

AMG762

How long is the fixed term of your new tennancy?

Normally at the end of a fixed term you can negotiate agency renewal fees and proposed rent increases with the landlord or agent.

It would obviously go to your advantage if the property is kept well and rent paid on time

Yorkie1

I imagine that the rent increase clause is there for the eventuality of the tenancy going to periodic rather than a new fixed term.

However, it is meaningless in the wording used. In order to be of any use / binding, it needs to be more detailed i.e. by reference to a rate of inflation in a given month which provides sufficient notice.

Simply to state that it will go up every x months without reference to anything more, is unenforceable. However, if the LL / LA think it's fine, you do wonder what else they think is fine but actually is unenforceable ...

G_M

This clause has no legal force. Ignore it. It cannot be enforced.

Any clause relating to a rent increase must make it clear how much the increase will be, either
* in a fixed % term, or
* a specific cash term, or
* by reference to some clearly understood external reference eg the retail price index or similar.

"at least 3% per annum" does not make this clear. It could be 3.1% or 10%. That is an unfair term.

How long is your tenancy agreement? 12 months? At theend of that, you can either negotiate / agree a new rent and sign a new fixed Term tenancy agreememnt, or continue the existing agreement, at the same rent, on a Periodic (monthly) basis. If the latter, there is a legal mechanism (S13) for the LL to increase the rent, but as always, you can negotiate.

paris321

thank you very much for your replies.

Its a 6 month AST then going on to a periodic lease.

I've tried calling them but they aren't open till 2 today so shall try then and see what they say.

There is also a clause saying the agent keeps the interested earned on our deposit! which shocked me, do all agents do this as we rent privately and any interest earned on our deposit we get to keep......

Fuzzyness

we have a similar clause in the agreement our tenant has with us. we've not invoked a rent rise in the last two years but if we should chose to we could in line with the terms specified in the agreement. the clause in my mind means that its at the discretion of the LL whether they seek to increase the rent.

princeofpounds

As the others said, it's a very badly worded rent escalation clause, so badly worded it is legally meaningless I would imagine. After the fixed term expires either party can negotiate on rent anyway, with implementation subject to agreement (assuming there is any!) and possibly some basic procedures like a Section 13 notice.

The clause is in there because it's easier for a landlord to force a rent rise through without going through Section 13 if it's agreed in the contract. It just save a little paperwork is ll. But it's so badly written that even if you stayed and refused to pay any more they would have a hard time enforcing it and so would have to go the more formal route.

As for the interest on the deposit, it should be protected in a scheme and quite possibly held by one too, depending on which they pick. What happens to the interest depends on the scheme. Forget the interest, it will be peanuts anyway and isn't a battle worth fighting.