"in an upwards only fashion" rent review

RedDwarf82

I have been asked to sign a tenancy agreement that only says this about rent reviews:

It is agreed that the rent as defined in this Agreement will be reviewed in an upwards only fashion on the anniversary of this tenancy and upon each subsequent anniversary in line with the Retail Price Index (RPI) increases for the previous 12 months and subject to a minimum of 3% and a maximum of 7.5%.

I have argued that this condition *requires* an annual rent increase linked to the RPI, which could make the rent higher than in other properties in the zone if the RPI happens to be higher than the rent inflation in the open market in the zone. This would be bad for me, because I would pay too much, and for the landlord because he would end up losing a good tenant... just to get another one that would pay the open market value anyway.
The letting agency has stated multiple times that the condition only makes *possible* a rent increase, but doesn't require it.

I was sure the agency was wrong until I found this article:
https://www.landlordzone.co.uk/information/commercial/upward-only-rent-review
The article is not exactly about the same situation, I have not really completely understood what it says. But after reading the

‘upward-only’ rent review does not mean the rent must increase.

sentence I have started to believe anything is possible in law...

I do still believe that the clause clearly states that the rent must increase. But... does somebody here has any piece of wisdom to explain why this would not be true?

Thanks.

flashg67

Crikey, that really takes some understanding (and I'm not sure I do after reading it), I read it that it does not necessarily mean the rent has to increase. it just means it won't go down if the open market rental rate decreases?

davidmcn

RedDwarf82 wrote: »

I do still believe that the clause clearly states that the rent must increase. But... does somebody here has any piece of wisdom to explain why this would not be true?

By itself, "upwards only" just means "not downwards". It's the minimum 3% increase bit which means you should expect it to go up.

Of course, your landlord might be wonderfully generous and not increase the rent even though they're entitled to.

G_M

Seems perfectly clear.

* rent will not go down, even if RPI drops

* rent will increase by either 3%, or the annual RPI increase, whichever is greater

* rent will never increase by more than 7.5%, even if RPI does.

* this is a 'review', so as the agent says, the LL may decide not to increase at all. So if you showed the LL that rents were dropping, or rising slower, and that you might therefore move elsewhere, he might well be pursuaded not to increase the rent.

Now read:

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

RedDwarf82

G_M wrote: »

Seems perfectly clear.

* rent will not go down, even if RPI drops

* rent will increase by either 3%, or the annual RPI increase, whichever is greater

* rent will never increase by more than 7.5%, even if RPI does.

* this is a 'review', so as the agent says, the LL may decide not to increase at all. So if you showed the LL that rents were dropping, or rising slower, and that you might therefore move elsewhere, he might well be pursuaded not to increase the rent.

Now read:

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

This is the only situation where the agent could be right. I had discarded it for absurd.
So it would mean that the landlord could "not increase it", or increase it by a 3%... but not by a 2%? (agreements can always me amended, sure, but it would still be absurd to create a clause forbidding the landlord from increasing the rent a 2% if he so wishes)
And not sure how to read the "in line" from "in line with the Retail Price Index". But would this condition state than if the RPI is 4% the landlord can "not increase" the rent, or increase the rent a 4%... but not a 3%?

G_M

I agree it is strange, but yes.

It appears the LL can choose to either review but do nothing, or review and increase by at least 3%.

Though in reality, it is always open to the two parties to discuss, negotiate, and agree something different!

RedDwarf82

G_M wrote: »

I agree it is strange, but yes.

It appears the LL can choose to either review but do nothing, or review and increase by at least 3%.

Though in reality, it is always open to the two parties to discuss, negotiate, and agree something different!

What's specially strange is for the agent to decide to use such a confusing wording. Why? They like the cost of handling complains? They can change that clause to something more obvious, doing the exact same thing, and avoid the cost!

davidmcn

RedDwarf82 wrote: »

So it would mean that the landlord could "not increase it", or increase it by a 3%... but not by a 2%?

They can do what they like as long as the tenant doesn't object. And if the landlord is entitled to increase by (at least) 3%, why would the tenant object to 2%?

davidmcn

RedDwarf82 wrote: »

What's specially strange is for the agent to decide to use such a confusing wording. Why? They like the cost of handling complains? They can change that clause to something more obvious, doing the exact same thing, and avoid the cost!

I wouldn't say it was all that confusing*, though the words "upwards only" are redundant given the increase must be in the range 3-7.5%

(* admittedly I'm more used to commercial lease rent review clauses which typically go on for several pages)

RedDwarf82

davidmcn wrote: »

I wouldn't say it was all that confusing*, though the words "upwards only" are redundant given the increase must be in the range 3-7.5%

(* admittedly I'm more used to commercial lease rent review clauses which typically go on for several pages)

Since I'm not native I asked 4 natives what they though and they all said it means a hard requirement. Small sample, but...
Basically while "review" makes some people unsure, or say it's optional, the use of "_will_ review" and specially the "minimum" and "in an upwards only fashion" moves any doubt on the basis of the implicit intention of the writer. Now, if the intention of the writer is putting love and hard work in writing a very specific piece of legal text... on the basis that the landlord can always ignore it and propose a 2%... I guess people do more strange things than that.

But OK. Since I have your attention, my only remaining problem is with the lack of a clause in the agreement specifying how a rent increase needs to be notified. I mean, as far as I can see the landlord can send me a letter the day before saying only "this year the rent will increase the RPI"... and leave me with just a few hours to find out myself the RPI, calculate the new rent, and amend the standing order. Would you consider reasonable a request to include such a clause? (https://www.gov.uk/government/publications/model-agreement-for-a-shorthold-assured-tenancy includes it in B6.3) And if the agent refuses, do you think the The Property Ombudsman would get in my side on the basis that their code of practice says the agent needs to treat all involved "fairly"?
I mean, even if the agent is good. They could ask the landlord 2 months before, the landlord only say he wants to increase the rent 1 day before, and the agent now needs to pass the request to me since it's "in the best interest" of the landlord.

The lack of this clause was another reason to suspect the other one meant the rent increase was compulsory. If it's compulsory there is no need for anybody to notice me of the increase, I know it will always be there. If the rent can or cannot increase you would expect the agreement to specify HOW an increase must be announced.

rtho782

Why would a landlord even want this clause, given that without it they can increase rent by as much or as little as they like anyway?