Rent increase within a fixed term

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    Rent increase within a fixed term

    A nice simple question, which I just wanted the answer clairfying to.

    S13 of 1988 HA only applies to periodic tenancies.

    Are there any provisions within any of the HA's for a rent increase within a fixed term, assuming the AST does not have such a clause built into it?

    I am unaware of any but would be interested to see if I am mistaken.

    Kind regards,

    John

    #2
    S.13 only allows for increases in rent in the 53rd week from AST commencement or from the last increase. You can't have any increase during the fixed term as the tenant and landlord have contracted to a specific rent over a given period. A variation is therefore not posible until the end of the fixed term.
    The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

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      #3
      Thanks for the reply, pretty much as I thought.

      Is there any reason why an AST cannot have a clause in giving the right to a rent review after such a period of time?

      My concerns from the tenant's point of view is how this is regulated?

      For example a clause stating that the rent will be reviewed after 12 months would leave the tenants rather open to abuse from the LL!

      Kind regards,

      John

      Comment


        #4
        Originally posted by MaverickPropertyManagemen View Post
        Thanks for the reply, pretty much as I thought.

        Is there any reason why an AST cannot have a clause in giving the right to a rent review after such a period of time?

        My concerns from the tenant's point of view is how this is regulated?

        For example a clause stating that the rent will be reviewed after 12 months would leave the tenants rather open to abuse from the LL!

        Kind regards,

        John
        Have a read of this

        http://www.bailii.org/cgi-bin/markup...method=boolean
        ****************************************

        If you are unsure about what to do seek professional Legal advice.

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          #5
          I'm confused... if a tenants 6 month AST has expired and they have renewed for a further 12 months AST - does that mean a landlord would not be able to increase the rent untill 18 months after they moved in? or can a clause be put into a 12 months agreement notifying the tenants that the rent will increase as per RPI rates after the 6 months have lapsed of the 12 month AST
          Has plans for world domination

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            #6
            Very interesting, had a relatively quick read of that.

            In summary (please correct me if I am wrong), the appeal was successful as made by the LA as the AST included its own clause for the rent increase and was therefore exempt from going down the S13 route.

            However, this case was for a periodic tenancy and not within a fixed terms, so I am still interested if an increase in a fixed term would be enforceable?

            Kind regards,

            John

            Comment


              #7
              Originally posted by MaverickPropertyManagemen View Post
              Very interesting, had a relatively quick read of that.

              In summary (please correct me if I am wrong), the appeal was successful as made by the LA as the AST included its own clause for the rent increase and was therefore exempt from going down the S13 route.

              However, this case was for a periodic tenancy and not within a fixed terms, so I am still interested if an increase in a fixed term would be enforceable?

              Kind regards,

              John
              I believe you can have a clause within a fixed term that states that the rent may be varied. I believe that this clause should be clear enough to show what the increase might be and how much notice a tenant would get of the increase. I believe that a landlord would have to be careful in drafting such a clause in that it might well be considered an unfair term.

              As you will note from my extensive use of believe I'm not overly sure.

              If there is no such clause then there is no statutory way of increasing the rent during a fixed term.

              I believe
              ****************************************

              If you are unsure about what to do seek professional Legal advice.

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                #8
                Thanks for your reply House.

                Being considered an unfair term is exactly what I am worried about because then you might as well save some printer ink and leave it out!

                I have drafted my own clause regarding rent increase within a fixed term and would welcome any thoughts: -

                Every twelve months from the commencement date of the tenancy agreement the rent may be reviewed by the landlord, and provided one months written notice of the increase is given to the tenants, the rent may be increased up to a maximum set by the Retail Price Index (RPI) variation over the previous period since the last rent increase or commencement of the tenancy agreement. Any rental increase can only take effect on the due date of rent to be paid.

                I do also have a commercial contract that has the procedure laid out but it wouldn't be far off the length of my whole AST!

                Kind regards,

                John

                Comment


                  #9
                  Originally posted by MaverickPropertyManagemen View Post
                  Every twelve months from the commencement date of the tenancy agreement the rent may be reviewed by the landlord, and provided one months written notice of the increase is given to the tenants, the rent may be increased up to a maximum set by the Retail Price Index (RPI) variation over the previous period since the last rent increase or commencement of the tenancy agreement. Any rental increase can only take effect on the due date of rent to be paid.
                  A bit too vague. "May be" is unwise wording.
                  Better: use standard Rent Review clause wording. If a Commercial lease's text for it is too long, try Law Society Business Lease; its RR clause is about 30 lines of half-page-width text, and would be about 12-15 lines if reformatted.
                  JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                  1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                  2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                  3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                  4. *- Contact info: click on my name (blue-highlight link).

                  Comment


                    #10
                    Thanks for the reply, I will look up their business lease. This is a RR from a commercial lease I have. Obviously some parts would need changing but it appears to be a little too complicated for a residential tenancy...

                    3. FROM every review date (that is to say from the expiration of every zero year of the term) the rent may be reviewed and varied to the market rent of the premises and the following provisions shall apply —

                    (1) The machinery of review shall be a written notice given to the other party by the party requiring the review and (failing agreement on the amount of the new rent) the fixing of the new rent by an arbitrator agreed or (failing agreement on an arbitrator) appointed on the application of either party by the President of the Royal Institution of Chartered Surveyors.

                    (2) The "market rent" shall be the rent which having regard to the terms of the Lease (other than those relating to rent) the premises would at the review date currently command in the open market there being disregarded the several items mentioned in paragraphs (a) to (d) of section 34 of the Landlord and Tenant Act 1954 as amended by the Law of Property Act 1969.

                    (3) Time shall not in the first place be of the essence of the machinery of review but the time scale for notice requiring a review shall be three months (so that a three months or longer notice expiring on the review date shall always be effective) and either party may before or after the review date by writing require the other to serve notice or operate any other part of the machinery of review within a reasonable time (which shall become of the essence of the contract accordingly).

                    Comment


                      #11
                      A nice simple question, which I just wanted the answer clairfying to.

                      S13 of 1988 HA only applies to periodic tenancies.

                      Are there any provisions within any of the HA's for a rent increase within a fixed term, assuming the AST does not have such a clause built into it?

                      I am unaware of any but would be interested to see if I am mistaken.
                      Just to clarify outright answers. You are correct that section 13 can only be used on a periodic as the law prescribes it. It can be used more the 52 weeks after the commencement of a periodic tenancy or the last increase, unless such an increase would bring the increase date more than one week earlier than the first increase since Feb 2003 (hence that question on the form). Then it would have to be 53 weeks. THe section 13 notice can be used immediately on the expiry of a fixed term AST reagardless of the length of the fixed term (i.e. with the 12 months is fine).

                      I see no reason you could not contractually agree to notify the rent increase to the tenant by a section 13notice, but they would not have the statutory provision of appeal to the rent assessment committee.

                      Regarding rent increases in the fixed term, they are, in principle fine. Obviously they need to be fair and there are a couple of cases where they have been thrown out due to them having ulterior motives (eg increaseing the rent from about £4,500 to £25,000 in one hike!). Provided you are not looking to increase above open market value you should not suffer too much of a problem.

                      If you have a rent increase clause, it is fine to try and keep it short but if this results in less clarity and more arguements you have saved nothing. Go for fairness and clarity rather than brevity.

                      We have amended our recently to deal with issues like what happens if it is not imposed inany one year? Also when you link it to RPI you need to state which month you will use. If you use the month in which the increase is due you will inevitably go into arrears as the figure is not published for a month or so (suggest you go for the figure for the month two months before the month of the increase(I.e. July increase uses figure for RPI form May).

                      You can increase the rent every month in the tenancy (even if it a fixed term agreement) if this is agreeable (easier if you start low!). You can also agree with the tenant to increase the rent at any time, during the fixed term or periodic, simply by agreement of variation of the contract with the tenant. Get it confirmed in writing. Clear increases in the contract, and by later agreement, will both take you out of the remit of the Rent Assessment Committee saving you time and hassle.

                      For letting.agent.chick, any new agreement signed can be on any new rent agreed by the parties, though with a new right of appeal for 6 months if it is above open market value.

                      Comment


                        #12
                        And guard against RPI:
                        a. ceasing to exist at all; or
                        b. being so altered as to be radically different.

                        A similar problem happened when Minimum Lending Rate was abolished.
                        Q: What about all the contracts/tenancies/leases referring to it? [A: I don't know.]

                        Solution: include a fallback procedure, something like, "Provided that, if the said index ceases to be published or is - in the reasonable opinion of the Landlord- altered so radically as no longer to signify the ongoing rate of price inflation as it did prior to the alteration, the Landlord may prescribe a reasonably equivalent index for the purposes of this Agreement/Lease".
                        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                        4. *- Contact info: click on my name (blue-highlight link).

                        Comment


                          #13
                          Thank you for both of your replies, bringing up points which I had not considered. I obviously need to give it some further thought before I can draft such a clause effectively!

                          Kind regards,

                          John

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