Changing the Rent

This page considers how to increase the rent for tenancies in England.

Assured shorthold tenancy

There are three ways to review the rent in an assured shorthold tenancy:

• by way of a rent review clause in the tenancy agreement or
• by agreement with the tenant or
• by notice under section 13 of the Housing Act 1988.

Rent Review Clauses in the Tenancy Agreement

During the fixed term

Typically, reviewing the rent during the tenancy's fixed term is only possible if there is a valid rent review clause or the tenant agrees to the review. If the tenant agrees, this should be recorded (which could also be achieved by seeking the tenant's signature on a new tenancy agreement).

Where the tenancy includes a clause to increase the rent, the clause must comply with the unfair terms provisions of the Consumer Rights Act 2015 and be fair. Clauses allowing the landlord to review (mainly to increase) the rent as they see fit are likely unenforceable. Any increase upon a valid rent review is more likely to be enforceable if justified by a recognised/established factor (such as significant improvements to the property or general cost increases reflected in the Retail Prices Index).

Periodic tenancy

The case of London District Properties Management Ltd & Ors v Goolamy & Anor [2009] highlighted the importance of section 13 in statutory periodic tenancies. The court ruled that when an assured tenancy ends and becomes a statutory periodic tenancy, any rent review clause from the original assured tenancy does not continue. Instead, landlords must follow the statutory process under section 13 for rent increases, regardless of what the original tenancy stated. This ruling reinforces that section 13 overrides contractual clauses once the tenancy becomes statutory periodic, requiring landlords to issue a notice if they seek to increase rent.

However, suppose the assured shorthold tenancy continues as a contractual tenancy (where a term is contained within the tenancy agreement explaining that it does not end but instead continues as a contractual periodic tenancy). In that case, the rent review clause will remain, and any increase must be made following the tenancy clause.

If the assured shorthold tenancy was periodic from the outset, if there is a rent review clause, it should be followed.

Validity of clauses

To be a valid, enforceable rent increase, a provision must provide certainty about the level of the rise. This could be an increase of £20 per month or an increase equal to the Consumer Price Index. Both of these create certainty and are, therefore, 'provisions'. If the clause says the rent can be increased to the open market level or to a level the landlord decides, it might not be a valid provision. In that case, the landlord would need the tenant's agreement.

Clauses that provide for substantial increases will generally be void (e.g., where the rent increase is not to achieve a fair rent but to artificially raise it to a level that jeopardises the tenant's security, potentially causing rent arrears). A tenant could challenge a rent review clause by referring it to the First-tier Tribunal (Property Chamber - Residential Property).

If a clause references the Housing Act (e.g., "The Landlord may increase the Rent for the Property upon providing to the Tenant such notice as required by the Act"), landlords would still need to follow the section 13 procedure to increase the rent during a periodic tenancy. Such a clause does not provide an independent mechanism for rent increases but reiterates the statutory requirement under section 13, which applies even without the clause.

Rent Increase by Agreement

It is also possible to review the rent by seeking the tenant's signature on a document (such as a copy of a letter to the tenant proposing the new rent) that confirms the agreement. Landlords wishing to do this are encouraged to speak to the tenant first to gauge whether or not they are content with the proposed new rent.

An agreement to vary the rent this way is permitted by section 13(5) of the Housing Act 1988:

13(5) Nothing in this section (or in section 14 below) affects the right of the landlord and the tenant under an assured tenancy to vary by agreement any term of the tenancy (including a term relating to rent).

Once an agreement has been reached, the landlord should send a formal duplicate letter proposing the new rent and asking the tenant to sign, date and return one copy to confirm their agreement. If the tenant fails to return the letter or pay the new rent, the rent will not be validly reviewed. The review will be less susceptible to challenge if the landlord gives the tenant something in exchange for any rent increase -- for instance, allowing the tenant to stay longer than would otherwise be the case or improving the facilities or condition of the property. If this is the case, it should be recorded in a letter from the landlord to the tenant.

It is impossible to increase the rent unilaterally by simply sending a letter to the tenant telling them their rent will be increased from a specific date. If the tenant agrees to this and starts paying the rent, the increase is agreed upon, but they can refuse to pay the increase if the tenant does not agree.

Rent Increase by Notice Under Section 13 of the Housing Act 1988

If the tenancy is an assured or assured shorthold, the landlord can use a formal procedure in section 13 of the Housing Act 1988 to propose a rent increase.

A prescribed form is needed to do this, which is obtainable from law stationers, landlord associations, and some online services for landlords on the internet.

To use a Section 13 notice, the tenancy must be:

• a statutory periodic tenancy, or
• a contractual periodic tenancy without a provision within the tenancy agreement for a rent increase

A section 13 notice can be first used:

• for a statutory periodic tenancy after the fixed term has ended or
• for a contractual periodic tenancy (with no rent increase provision in the agreement) after 52 weeks from when the tenancy began.

It's unclear whether the landlord can serve the notice during the fixed term to start from when it has become periodic. Therefore, a landlord is advised to give notice after any fixed term has ended.

The date on the notice when the new rent will start must be "the beginning of a new period of the tenancy, " meaning a rent day. For example, if the rent is payable on the 15th of every month and the notice is served on the 8th June, the new rent must start on the 15th July (where the rent is payable calendar monthly).

Typically, the notice must be at least one month long from the date it is served to when the new rent starts, but the length depends on the rent period.

• Where the rent is monthly or less, at least one month's notice is required
• If the rent is quarterly, a quarter's notice is required.
• The landlord must provide at least six months' notice if the rent is payable yearly.

Additionally, it would be best to allow an extra four days to deliver the notice, particularly when it is posted.

The form must be completed in full and served to the tenant. If the tenant does nothing during this period, the rent increase will take effect from the date specified in the notice.

The Section 13 notice procedure can only be used once every 12 months.

If the tenant feels the rent increase is too high, they can refer it to the First-tier Tribunal (Property Chamber - Residential Property) for review. The tenant must apply no later than the last day of the notice period, or it will be invalid, and the increased rent will stand. If the rent is challenged, the First-tier Tribunal will consider the matter, and if they believe the rent is not market rent, they will substitute what they consider to be market rent. The First-tier Tribunal's view is not always in the tenant's favour, and it is not unknown for them to think that the proposed rent may be too low.

Lodger agreement (excluded license)

Where the landlord shares accommodation with a lodger, they will typically be on an excluded license lodger agreement. Increasing the licence fee (rent) during the lodger agreement is only possible if there is a valid licence fee review clause or the lodger agrees to the increase. If the lodger agrees, this should be recorded (which could also be achieved by seeking the lodger's signature on a new lodger agreement).

Where there is a clause in the agreement, its terms should be followed, including the length of the notice and how the notice should be delivered. There is no prescribed form for increasing the licence fee on a lodger agreement; a clearly worded letter will suffice. Typically, at least a licence fee period's worth of notice would be given (for example, if monthly, a month's notice, quarterly, a quarter's notice). The new licence fee should start on a rental day.

Contractual tenancy

A contractual tenancy (sometimes called a common-law tenancy) exists in situations where the tenancy cannot be an assured shorthold, such as (not an exhaustive list):

• Resident landlord (where the landlord lives in one part of a building and rents another part but does not share accommodation with the tenant, and they have exclusive occupation)
• Company let
• Rent in excess of £100k per annum or less than £250.

Increasing the rent during the contractual tenancy is only possible if there is a valid rent review clause or the tenant agrees to the increase. If the tenant agrees, this should be recorded (which could also be achieved by seeking the tenant's signature on a new tenancy agreement).

Where there is a clause in the agreement, its terms should be followed, including the length of the notice and how the notice should be delivered. There is no prescribed form for increasing the rent on a contractual tenancy; a clearly worded letter will suffice. Typically, at least a rent period's worth of notice would be given (for example, if the rent is monthly, a month's notice, quarterly, a quarter's notice). The new rent should start on a rent day.

Rent Act (Regulated) Tenancies

Regulated tenancies are governed by the Rent Act 1977, which will all have been created before 15 January 1989.

The Rent Act allows the tenant (or the landlord) to apply for a 'fair rent' registered for the property, and once this has been done, the fair rent is the only rent the landlord can charge.

These are rents fixed by the local office of the Rent Service, and they do not consider the impact of scarcity on the market value of rented accommodation. You can obtain the local Rent Service contact details from the council's housing advice service.

If a fair rent has been registered, a new registration cannot be made less than two years after the date the existing registration came into effect unless:

• Landlord and tenant apply jointly or
• There has been a change of circumstances, such as significant repairs, improvements, or changes in the tenancy terms.

It is in the landlord's interest to apply promptly for rent increases every two years; otherwise, the rent charged might fall behind market rents because the increase is capped under a complicated calculation set out under regulations (The Rent Acts (Maximum Fair Rent) Order 1999).

If the rent has not already been registered, a landlord can increase the rent if the tenancy agreement or contract allows for rent increases. If the agreement does not allow for rent increases, it can only be increased if:

• The landlord and tenant make a formal rent agreement, which must follow special rules or
• The Rent Officer registers a fair rent.