Rent Increase

wildg

Hi all

I had an assured shorthold tenancy for a year ending October 2010 and have held over since then, and have not signed any new agreement. I assume this means that I am now in a monthly periodic tenancy that is subject to the terms of the previous shorthold tenancy agreement?

My landlord has told me he wants to put the rent up for the first time since I have been here. The shorthold tenancy agreement states:

The rent increase will be the amount stated for the annual increase in the Index of Retail Prices (All Items) as quoted for the month two months prior to the month of the increase.

Please can you help me work out what percentage that's going to be. I looked up the RPI for March 2015 and it was 0.9% so does that mean my landlord can only add 0.9% to my monthly rent? (so multiply my existing rent by 1.09?)

Thank you

G_M

The LL should write to you 2 months in advance and tell you what the new rent will be.

* Rent increases: when & how can rent be increased?

multiply my existing rent by 1.09

Nearly. multiply my existing rent by 1.09%

jjlandlord

Multiply by 1.009... not 1.09, not 1.09%

Whether the landlord needs to give notice, or indicate what the new rent will be depends on the actual clause.
The clause may also specify precise dates on which an increase may occur.

Guest101

G_M wrote: »

The LL should write to you 2 months in advance and tell you what the new rent will be.

* Rent increases: when & how can rent be increased?





Nearly. multiply my existing rent by 1.09%

Otherwise it's 9% increase OP. Incase you didnt get the significance.

multiply by 1.009

AdrianC

Does the AST say what can happen if the rent increase isn't applied? He may be able to "keep it on one side", allowing him to increase the rent by RPI since the inception of the contract or the last increase, whichever's was more recent.

RPI tables
http://ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-323629
(p36 of spreadsheet)

RPI Mar '15 = 257.1
RPI Mar '14 = 254.8
RPI Oct '10 = 225.8

Divide your rent by the starting index figure, and multiply by the current one.

So - if your rent is £500, and he's only applying the last year's...

£500 / 254.8 = 1.9623 x 257.1 = £504.50 (and, yes, that is 0.9% - £1000 rent would become £1009)

If he can apply increases back to Oct '10, then...
£500 / 225.8 = 2.2143 x 257.1 = £569.29 (just under 14%, in four and a half years)

Whilst it'd result in increases strictly above the contract, I don't think it'd be unreasonable to round either of those - so £505 or £570 - but make sure he applies RPI to your original rent for any future increases, rather than the rounded figure.

If you're shocked at the £570 figure, remember he could have increased it every year since you moved in, but hasn't - and, if he had, it would still have come to this figure.

Guest101

AdrianC wrote: »

Does the AST say what can happen if the rent increase isn't applied? He may be able to "keep it on one side", allowing him to increase the rent by RPI since the inception of the contract or the last increase, whichever's was more recent.

RPI tables
http://ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-323629
(p36 of spreadsheet)

RPI Mar '15 = 257.1
RPI Mar '14 = 254.8
RPI Oct '10 = 225.8

Divide your rent by the starting index figure, and multiply by the current one.

So - if your rent is £500, and he's only applying the last year's...

£500 / 254.8 = 1.9623 x 257.1 = £504.50 (and, yes, that is 0.9% - £1000 rent would become £1009)

If he can apply increases back to Oct '10, then...
£500 / 225.8 = 2.2143 x 257.1 = £569.29 (just under 14%, in four and a half years)

Whilst it'd result in increases strictly above the contract, I don't think it'd be unreasonable to round either of those - so £505 or £570 - but make sure he applies RPI to your original rent for any future increases, rather than the rounded figure.

If you're shocked at the £570 figure, remember he could have increased it every year since you moved in, but hasn't - and, if he had, it would still have come to this figure.

Interesting, though i suspect that an arbitration panel may find this to be an unfair term if enforced like this, as effectively the annual rate goes up 11%

But im not sure and interested to find out more

jjlandlord

If, depending on the wording of the clause, the increase is automatic then OP is in arrear as he should have applied the increase every year.

If, on the other hand, the increase is not automatic then what was quoted clearly states that the increase can only be the annual RPI increase.

AdrianC

jjlandlord wrote: »

If, on the other hand, the increase is not automatic then what was quoted clearly states that the increase can only be the annual RPI increase.

What was quoted says that, yes. But what wasn't quoted?

Might there be a separate clause like this...?

1.7.8.5 Not applying the rent increase at the first Rent Due Date more than 363 days after the commencement date or last rent increase date will not then prevent the Landlord applying an increase on any future Rent Due Date.

1.7.8.6 In clause 1.7.8.5 the Rent will increase by the amount of the increase in the Index of Retail Prices (All Items) from two months before the start of the tenancy or the last increase, whichever is later, to the month two months prior to the month of the increase.

wildg

Thank you for all responses, I really appreciate it - I'm a bit lost with this as I'm not well and have a fuzzy head.

The full rent increase section of the contract states:

1.1 If for any reason the Tenant remains in possession of the Property of the lawful tenant of the Property, for more than 12 months, then the Rent may increase once each year.

1.2 The first increase will be the first Rent Due Date more than 365 days after the commencement date.

1.3 Subsequent increases will be on the first Rent Due Date more than 365 days since the last rent increase.

1.4 In clauses 1.2 and 1.3 the Rent will increase by the amount stated for the annual increase in the Index of Retail Prices (All Items) as quoted for the month two months prior to the month of the increase.

1.5 Not applying the rent increase at the first Rent Due Date more than 365 days after the commencement date or last rent increase date will not then prevent the Landlord applying an increase on any future Rent Due Date.

1.6 In clause 1.5 the Rent will increase by the amount of the increase in the Index of Retail Prices (All Items) from two months before the last increase to the month two months prior to the month of the increase

So I don't think he has to give me any defined notice prior to increase.

I think then that everyone's agreeing that as the RPI annual rate for March 2015 is 0.9, if the rent were to be increased this month, my existing rent would need to be multiplied by 1.009 and in the £500 pcm example would become £504.50 pcm?

And the landlord is contractually prevented from increasing it any more than this amount? Because he's probably going to tell me that he wants to add on another £50 a month or something because he hasn't increased it in the 5.5 years I've been here.

jjlandlord

These clauses are not very well drafted in that they mix 'may increase' and 'will increase', thereby being unclear as to whether the increase is automatic or not.
However, clause 1.5 suggests that the landlord must apply the increase.

Clause 1.6 is also a bit dodgy, especially in your case as there is no 'last increase'.

wildg wrote: »

And the landlord is contractually prevented from increasing it any more than this amount?

Unfortunately for you, even leaving clause 1.6 aside, he isn't if the tenancy is a statutory periodic AST.

In any case, you should consider the local market: As long as the proposed new rent is below it I see no reason not to reach a reasonable agreement.

dodger1

The LL can increase the rent to whatever they wish, you then have the opportunity to agree or not. If you disagree the LL then may start the eviction process or indeed negotiate.

For me it would depend what is reasonable and if the rent increase brings the property in line with others. I'd guess that LL will probably want a little more than 0.9% after five years.

I'm guessing the LL is reasonable as he hasn't increased the rent in a long time, unless there have been other problems of course.