Renters’ Rights Bill – Managing rent increases

Renters’ Rights Bill – Managing rent increases

In this latest article brought to you by our housing management team we explore the proposed changes to rent and, in particular, rent increases, contained within the Renters’ Rights Bill.

As mentioned in previous articles, the Bill was due to conclude its committee stage by the 28 November 2024. It in fact finished ahead of this and the Bill has now passed to the House of Lords, where the second reading will take place on 4 February 2025. It is indicated that Labours’ aim is for the Bill to be enacted in Spring 2025, and this now seems very likely to be the case.

Rent increases

As residential landlords will be aware, the ability to increase  rent under a tenancy agreement is either in accordance with express clauses of the tenancy agreement, or by way of the statutory procedure set out at section 13 Housing Act 1988.

The biggest proposed change, by way of the Bill, seeks that all landlords will be required to use the statutory procedure – irrespective of what the tenancy says. This will see landlords only being able to implement a new increase once at least 52 weeks has passed since the last increase. It is important to note, however, that these proposals will only be applicable to those in the Private Rented Sector (PRS), and those tenancies let at market rent by registered providers of social housing.

The Bill also seeks to make changes to the statutory procedure, where it relates to PRS tenancies and those let at market rent, to require landlords to provide two months’ notice within their notice of increase, instead of the current requirement to provide only one month’s notice.

Low cost tenancies

Other changes proposed by the Bill also introduce a new section 13(A) to the 1988 Act, which is designed to apply to low cost tenancies provided by registered providers, or other such tenancies which will be identified under future regulations. These proposals simply mirror the current procedure – being that at least one month’s notice must be provided before any increase is implemented.

This introduction also results in landlords of low costs tenancies being able to continue to rely on express clauses of the tenancy agreement to increase the rent.

Tribunal powers

Further changes will see the powers of the Tribunal expand to include:

·       The ability to decide on the validity of a rent increase notice (served under section 13) – where an application is made by the tenant to challenge this. This currently only able to be determined by a county court.

·       When determining the level of a rent increase – where a challenge has been made by the tenant – the Tribunal will be able to consider delaying the date of implementation of the increase (for up to two months’) where it considers it would cause undue hardship to the tenant.

·       When determining the new rent, this is to be the lower of either the proposed rent, or the open market rent. Meaning extra care will need to be taken when considering the setting of rent increases.

The impact of the above changes will be troublesome to those PRS landlords who do not ordinarily use the statutory process, and will also see registered providers of social housing having potential staggered rent increase start dates between their social/affordable rent tenancies and those under market rent (particularly if challenges are made by tenants to the Tribunal, and where they use their powers to delay the start date).

It is also safe to assume that with the extra powers provided to the Tribunal, this will undoubtedly see an increase on their service and inevitable delays as a result.

Ultimately our recommendation is for landlords to take the time now to review tenancy agreements, policies and procedures and obtain advice as to the impact of the above of their relevant stock portfolios (along with other relevant provisions of the Bill). It may also be helpful for those landlords, who do not current use the statutory procedure, to obtain training ahead of the changes being implemented. We are very happy to assist in these regards.

Should you wish to discuss any of the issues in the article, or the bill more generally, please contact Sarah Orchard.