Easy rent review without S13 – approved by Citizens Advice?

Easy rent review without S13 – approved by Citizens Advice?

9:33 AM, 10th April 2024, About 8 months ago 10

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Hello, I am thinking of granting an AST for three years. It will have a tenant’s break clause on the first anniversary and at any time thereafter by three months notice

The rent would be initially x and become x plus 5 per cent on the anniversary x plus 10 per cent on the 2nd anniversary x plus 15 per cent on the third anniversary and x plus 20 per cent on the last day of the term.

I am considering an alternative to provide that at my discretion I can substitute the RPI.

Since these sums are fixed and agreed I can’t see how they can be referred to a Valuation Tribunal or notices to increase the rent are necessary. Have I got this wrong? If I’m right every landlord needs to know about these possibilities. Of course this is not advice by me.

Since writing this I have found the Citizens Advice site says they agree the agreed rents are not challengeable:

https://www.citizensadvice.org.uk/housing/paying-rent/challenging-a-rent-increase/

Someone suggested that I should simply give 6 month ASTs to avoid rent review issues. But my objective is to have a continuous income stream. With as little hassle as possible. Having to justify a rent increase is a complete negation of that. So is having a tenant walk away after 6 months.

If I understand correctly the tenancy expires with no new agreement signed, a rolling statutory tenancy will come into existence. But with the rent at the last day of the term.

For any increase of rent of that term the Landlord will have to use S13.

I have not yet seen whether the tenant can apply to get the last date of tenancy rent reduced

On abolition of S21, are the arrears for allowing notice to be given reduced? And removal of the arrears no longer resulting in dismissal of the application for possession?

Thank you,

EJ


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Rupert Chapman

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9:56 AM, 10th April 2024, About 8 months ago

Assuming you are legally correct, you face a disadvantage in that you are committed to the tenancy for three years and cannot issue a possession notice within that period. I appreciate you are looking for long term income (who isnt?), but with a new tenant you have unknowns regarding anti social behaviour and rent payment reliability. Other legislative hurdles, unknown today may change your view on the investment. Most people want the ability to liquidate their investments at reasonable notice to accommodate unexpected personal life changes. Apart from anything else you will be reducing your pool of willing tenants with this arrangement. The one certainty in life is change. If the tenant loses their income stream, no contract is going to magic the rent into your bank account. I doubt a rent guarantee insurer will cover your contract and if so, it would be limited to 9 months of rent normally. Best to go with the normal. Tribunal judges are far more familiar with normal.

Fed Up Landlord

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10:05 AM, 10th April 2024, About 8 months ago

1. Rent Reform Bill will outlaw rent increase clauses other than by Section 13.

2. You are restricting yourself by granting a tenancy of three years. With the anticipated loss of Section 21 you will not be able to get your property back.

3. Stick with a 6 or 12 month tenancies with just below Section 13 market rent increases. In 22 years never had a tenant take me to rent tribunal.

reader

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10:07 AM, 10th April 2024, About 8 months ago

Whatever route you decide do consider the proposed changes within the Renters Reform Bill. Whatever government we have in the near future changes on the issues you raise in your questions seems inevitable, some more extreme than others. Including negating contractual provisions.

Reluctant Landlord

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11:00 AM, 10th April 2024, About 8 months ago

why complicate this? Due diligence, offer a 6 month min AST and just conduct a rent review annually and issue S13 if you decide to increase the rent.

SteveFowkes

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11:36 AM, 10th April 2024, About 8 months ago

Please don't do this

If the tenant stops paying you can't get them out (S8 is easily circumvented)

6 months AST always

Yvonne Francis

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12:24 PM, 10th April 2024, About 8 months ago

What ever you decide to do it will be outlawed by the Renters Reform Bill. Rishi Sunak has promised to get this bill through before the election. Every Landlord hopes it will be adjusted or even abandon but its best to take a look to see what you may be in for.

Michael Booth

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15:21 PM, 10th April 2024, About 8 months ago

Over complicating the situation set the rent at full market value and offer a 12 month ast with clause to increase rent to a percentage set in it.if tenant not happy they don't rent the property simple.

Cider Drinker

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15:55 PM, 10th April 2024, About 8 months ago

Of inflation rockets to 100%, you’d be in dire straits.

I’d offer rent fixed for one year and rising by RPI (rather than CPI) in years 2 and 3 but only if the tenant requested it. Otherwise, I’d say rent will be reviewed annually with 3 months’ notice.

I have offered 3 years in the past. Nowadays, I’m more inclined to restrict it to one year.

I have increased rents by around 15% this year and expect to do something similar next year. Having provided some of the lowest rents for 20%+ years, the party is over (for my tenants). I’d like to sell up but I won’t evict them or sell to another landlord.

Julie Ford

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17:03 PM, 10th April 2024, About 8 months ago

So rent to increase 5% 10% 15%
Are you confident the tenants wage will increase inline with this?
Consider their other outgoings, council tax, utilities.

What if market rents go down and you find that your 10% & 15% are now completely unachievable

You may well believed you have found the perfect loophole
But ask yourself “why are LLs not already doing this?”

You say you will have a break clause giving 3months notice - well s21 only has a 6month shelf life which again limits you on timeline of going to court

The renters reform bill is unlikely to honour your long term contractual clauses as it is expected that all existing ASTs will automatically become the new periodic assured 12 months after the Bill is enacted

I’d avoid trying the cheat the system and reduce your risk by working with they systems and processes and understanding the new laws that are fast approaching

DPT

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17:35 PM, 10th April 2024, About 8 months ago

This sounds like madness to me. Locking yourself into 3 years unnecessarily.

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