Clause in tenancy agreement increasing rent by RPI - fair?

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    Clause in tenancy agreement increasing rent by RPI - fair?

    All,

    First post - I have done a decent search but couldn't find a good answer addressing this from a tenant's point of view.

    Currently in the process of moving into a flat. During the negotiation we agreed to a 2 year lease. I have been looking at the tenancy agreement before signing and there is a clause inserted right at the end under 'other clauses' stating that:

    'It is hereby agreed and understood by both parties that, at end of the first year of the tenancy, the tenancy shall be liable for a rental increase in line with the retail price index (RPI). For the avoidance of doubt, it is agreed that the increase shall be a minimum of 3% and a maximum of 8%. This clause will apply for every subsequent year stayed in the property.'

    How reasonable is this clause? This has not been mentioned at all by the letting agent throughout the process - seems a bit sneaky to have been inserted now.

    Thanks in advance for responses.

    #2
    Don't see anything unfair about it.

    Though whether it takes the rent outside of a "market rent" is another matter.

    Where I am, market rents have gone up by zero in the past 4 years, but I understand there are parts of the county where they have gone up 20% in that time

    Comment


      #3
      Perfectly reasonable. Standard practice in social housing is based on RPI +0.5% and I’d be glad if a private rent was as little as an RPI only increase.
      Given the current drive to make more social housing 'affordable rent' or 80% market rent, it's not going to take long for the two to merge. Thanks Dave!!
      I may be a housing professional but my views, thoughts, opinions, advice, criticisms or otherwise on this board are mine and are not representative of my company, colleagues, managers. I am here as an independent human being who simply wants to learn new stuff, share ideas and interact with like minded people.

      Comment


        #4
        Originally posted by HarrierJet View Post
        How reasonable is this clause? This has not been mentioned at all by the letting agent throughout the process - seems a bit sneaky to have been inserted now.
        There's nothing unfair with that clause. Only unclear part, which may cause trouble imo, is that it does not mention which RPI figure is to be used.

        Obviously if this clause was never mentioned and agreed you can keep on negotiating.
        Or just cross it out before signing and see how the agent/landlord reacts...

        Comment


          #5
          We can't judge if it unfair as we do not know if the initial rent is "reasonable" or not.

          eg if initial rent if £100/mo for a 2-bed central London flat the clause is ludicrously fair. If however initial rent is £1000/mo for a remote Scottish highlands flat the initial rent & clause are barking...

          It's your choice - you decide if the overall rent for 2 years sounds OK to you. Are you absolutely certain you want to be tied to 2 years and all that means if you get a job elsewhere/get-sick/decide to marry/have a family crisis???
          I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

          Comment


            #6
            Office of fair trading guidance on unfair terms in tenancy agreements says:

            3.102 Rent variation clauses are more likely to be fair as follows:
            • where the amount and timing of any rent increases are specified (the precise amounts for each year or within narrow limits if not precisely stated), they effectively form part of the agreed price.31 As such, they may be regarded as 'core' terms setting the price, provided the details are clear, in plain intelligible language, and are adequately drawn to the tenant's attention

            • terms that permit increases linked to a relevant published price index outside the landlord's control, such as the RPI, are likely to be acceptable, as paragraph 2(d) of Schedule 2 to the Regulations indicates,32 and

            • rent review clauses that allow for an increase in the rent to be determined in the light of objective factors by a person who is wholly independent of the landlord. A fair alternative, where the parties cannot agree a new rent, is to agree that the matter should be referred to an independent expert.

            Comment


              #7
              All,

              Thanks for your advice - makes sense. We're quite happy with the length of the lease and what we would be paying for the flat.

              My question was around whether this is a relatively standard procedure, which it seems it is. Yet the agent never mentioned this clause and therefore as jjlandlord says I have used it as a negotiating point. I have asked for it to be taken out and if they refuse there are a couple of things we would like bought for the property.

              Comment


                #8
                Originally posted by HarrierJet View Post
                the agent never mentioned this clause
                You will have looked at the A.S.T. agreement.
                There will be MANY items in there that the agent did not mention.
                They cant mention every thing.

                Did they mention if you dont pay the rent they will evict you.
                Did they mention section 8, section 21,etc etc verbaly.
                No, thats why you read the A.S.T.
                ( its all in there )

                Or was it the reference to the RPI you objected to ?

                Comment


                  #9
                  Originally posted by ram View Post
                  You will have looked at the A.S.T. agreement.
                  There will be MANY items in there that the agent did not mention.
                  They cant mention every thing.

                  Did they mention if you dont pay the rent they will evict you.
                  Did they mention section 8, section 21,etc etc verbaly.
                  No, thats why you read the A.S.T.
                  ( its all in there )

                  Or was it the reference to the RPI you objected to ?
                  Except that such a rent increase clause is both not standard and a crucial term same as, e.g., the rent: would you say that T should read AST to discover how much rent LL intends to charge?

                  Comment


                    #10
                    Originally posted by jjlandlord View Post
                    e.g., the rent: would you say that T should read AST to discover
                    how much rent LL intends to charge?
                    Rent will be in the written communications, and on the web site of
                    the property to let, and when given an AST to sign ( and read ) the
                    rent payable will be on page one or two.

                    It's on page two of mine. If i did not look at the AST before
                    signing, to check the rent payable was say£ 500, but said
                    £ 5000, more fool me for not looking at what I signed.

                    I got a draft AST last year that said the rent was £ 13.50 per
                    week ( should have been £ 135 per week )
                    I should have signed, but went for a place 10 times dearer !

                    Above refers to rent only, and not any increase in rent discussion.

                    R.a.M.
                    Last edited by ram; 28-02-2013, 18:37 PM. Reason: extras added

                    Comment

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