A Guide To Section 13 Rent Increase Notices

We’ve been hearing a great deal about what the Renters’ Rights Bill will change when it finally comes into effect, with the Section 21 abolishment taking most of the headlines.

However, there are many other pieces of legislation detailed in the Bill that will impact landlords, including changes to rent increase rules. Up until now, landlords have been able to raise rents through rent review clauses in fixed term contracts, increases at renewals of fixed term tenancies and through written agreements during tenancies. This is all set to change with the end of fixed term tenancies as periodic tenancies will be the only type of tenancy.

This means that rent review clauses and fixed term tenancy renewals will no longer be options for increasing rents and the only process for raising rent will be to give tenants a Section 13 rent increase notice.

What is a Section 13 notice?

If you haven’t used a Section 13 notice before, they are a set of forms provided on the gov.uk website to use for proposing rent increases to tenants – Tenancy Form 4 is the form used by landlords to increase rent on periodic tenancies.

When filling in the form, landlords must include:

·      The amount of the proposed new rent

·      The start date for the proposed new rent

·      Tenant name, address of rental property

·      Landlord’s contact details

If the tenant accepts the rent increase, they sign the form and amend their standing order.

When can landlords use a Section 13 notice?

Landlords can only use a Section 13 notice once per year and under the new rules, they will need to provide at least two months’ notice prior to the start date of the proposed new rent payment.

What happens if a tenant does not accept a Section 13 notice?

The government is introducing changes to make it easier for tenants to challenge what they believe to be unfair rent increases. Tenants will be able to apply to the First-Tier Tribunal (for free), who will assess the rent proposal to decide whether it is fair, based on rents for comparable properties in the area. A decision will be made on whether the rent increase is fair.

Once a decision has been made, the decided rent amount is legally binding.

Therefore, if the rent increase proposed is accepted by the tribunal, the tenant must pay the new rent amount. 

If the tribunal dismisses the rent increase, the rent payments stay as they were.

Furthermore, the new, increased rent will apply from the date of the tribunals decision, not backdated and the tribunal will also have the power to delay a rent increase for up to two months in cases of genuine financial hardship for the tenant

Previously a rent tribunal could increase the rent above the amount proposed by the landlord in the Section 13 notice. However, under the new rules of the Renters’ Rights Bill the tribunal's role is to decide if the proposed rent is fair compared to the open market rent; the rent can only be set at the proposed amount or lower. 

This new policy aims to remove the risk for tenants, ensuring they will never pay more than the landlord initially asked for. 

Rental bidding wars banned

Another important change to be aware of is that rental bidding wars will be illegal. Landlords must only accept the advertised rent amount, so if a tenant offers a higher rent to try and secure the rental, landlords must refuse.

Support for landlords

Once the Renters’ Rights Bill is closer to becoming law, we expect that the government will provide detailed guidance to support landlords with understanding these changes.

The Renters’ Right Bill is the biggest reform to the rented sector for many years and there is a lot of information to take on board. Our lettings team can help take care of the everyday management of your tenanted properties, from handling rent increases to arranging gas safety certificates, EPCs, EICRs and all the other time-consuming tasks and legal requirements.

Get in touch if you would like to find out more about our letting services.