Inflation linked rent review clauses?

Inflation linked rent review clauses?

9:44 AM, 21st June 2022, About A week ago 6

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Hello Property118’ers, I wish to add inflation-linked rent review clauses to my assured shorthold tenancy agreements moving forward.

Can anyone provide a copy of the clauses used that would stand up in court if ever challenged?

Would you use the Retail Price Index (RPI) or the Consumer Price Index (CPI) ?

This now seems a logical way of keeping pace with rampant inflation.

Regards

Keir



Comments

Ian Narbeth View Profile

9:57 AM, 21st June 2022, About A week ago

"Can anyone provide a copy of the clauses used that would stand up in court if ever challenged?"

It is not possible to guarantee that such a clause cannot be challenged in court. Rent increases must be reasonable. The fact that inflation (whether RPI or CPI) goes up does not mean that rents will rise by the same percentage. It all depends. It depends on the location of the property and the demand in the local area.

CPI is usually lower than RPI (traditionally 0.8% to 1% per annum but the gap is now much wider - about 2%) so if you use CPI it is less likely to be challenged.

Old Mrs Landlord

10:13 AM, 21st June 2022, About A week ago

I hope you realise that you will not have assured shorthold tenancies "moving forward" as they will cease to exist once the rental reform legislation comes into force.

DSR

10:23 AM, 21st June 2022, About A week ago

why bother at all putting that level of description in at all? Stick with an annual rent review then any rise in line with current market value taking into account the factors that this incorporates?
Easier for tenant to understand (they can see for themselves on rightmove similar properties/location/size/condition). Less likely for them to challenge, and at best a good start point for mediation?
Seems the most 'reasonable' way of assessing this to me. It totally current and based on market forces at the time which by default take into inflation and other measures at the time. Sticking to 0.8 - 2% or whatever means you are tied to it.

northern landlord View Profile

18:02 PM, 21st June 2022, About A week ago

Don’t worry about rent increases I am fairly confident that the Government will probably ban them or severely limit them at some point. I say this because a minister recently stated that rent controls are not being considered. Given this Governments back tracking on promises it’s a bit like when a football club says they have every confidence in the manager, you then know for sure the manager is in for the chop. Look at pensions, they stuck to the triple lock while inflation was low and promptly dropped it when inflation rose meaning that they would actually have to stump up a decent amount for a change. What about no tax increases? That soon went out of the window as well. Don’t forget as inflation rises it is inflation plus VAT for most of us and the increased VAT goes in the Government’s pockets as well.

Landlords have no power. They have been vilified and have such a poor press that there will be no outcry if rents are frozen, just a sense of it serving us right. If rent controls do come in and you want to sell up I expect all sorts of extra strings and new hoops to jump through will be put in as part of the nitty gritty of the new White Paper. Time will tell. If things get worse and push comes to shove who knows what might happen. Anyway, Matron says it’s time for my medication!

David

19:18 PM, 26th June 2022, About 4 days ago

As DSR Says, why tie yourself to limited increases when s13 provides the flexibility to set you own increase each year to respond to market conditions.

DSR

10:32 AM, 27th June 2022, About 4 days ago

As Shelter themselves state...

Rent review clause.
Section 13 cannot be used to increase the rent for a contractual periodic tenancy that contains a rent review clause.

Content of a review clause
To be enforceable, a rent review clause need only contain the mechanism for increasing the rent. It does not need to specify by how much and when the rent will increase. Thus, a non-specific clause such as 'the rent will be reviewed by the landlord in April of each year, and the landlord will give the tenant four weeks' notice of the revised amount payable' will suffice.

Unfair contract terms
A rent review term that does not comply with the requirements of consumer protection legislation may be an unfair term. An unfair term in a tenancy is one which creates a significant imbalance in the relationship of the landlord and tenant to the detriment of the tenant.

I therefor regard a simple clause stating 'the rent will be reviewed by the landlord in (month of year) each year, and the landlord will give the tenant four weeks' notice of the revised amount payable' as totally fitting the remit. Notice is then given and the rent increase will be on par with current market rates.

Done. If the tenant in some way contests this - market rate is what any tribunal defer to anyway.

Lets face it market rate is hardly liable to go down and if it ever did you don't enact a rent review that year so you wont be any worse off.

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