Raising Rents When Your Tenant Disputes the Increase
If you are a buy-to-let landlord who is looking to make a rent increase on your property, you may wish to read our article, ‘How to Raise Rents without Resistance from Your Tenants’. But what if you cannot agree on a new rental amount with your tenant?
Serving Section 13 to your tenants is the legal way to raise rents when the increase is disputed. However, there are some stipulations and paperwork involved. You must serve a Section 13 according to the law. If you don’t, the rent increase won’t stick.
Here is our guide to serving a Section 13 while complying with all the legal requirements.
What Is a Section 13?
Section 13 is a part of the Housing Act 1988 and provides landlords with the framework to increase rent.
Section 13 notice can only be issued to your tenants if your situation meets certain criteria. These are:
- If the rent increase is not stated in your tenancy agreement
- Your tenant does not agree to the proposed rent increase
- Your tenant is in an assured shorthold tenancy that does not have a fixed term
- Your tenant is in an assured tenancy that has a fixed term, but the initial period has passed
The rent increase you are proposing must be fair, and comparable to rental prices for similar properties in the local area.
Increasing the Rent on Your Buy-To-Let Property by Serving a Section 13 Notice
Section 13 notices are generally served when you cannot come to an agreement for a rent increase with your tenant. Serving a Section 13 is a formal process and requires you, the landlord, to fill out a ‘Form 4’.
How Much Notice Are You Required to Give a Tenant for a Rent Increase?
You are required to give your tenant enough notice of any rent increases. The notice period will vary based on the tenancy you have and how often the tenant pays their rent, as follows:
- Monthly, weekly or fortnightly tenancies: one month’s notice is required
- Yearly tenancy: six months’ notice is required
The rent increase must also start on the same day of the month that the tenancy began. For example, if the tenant’s rent is currently due on the 1st of every month, then the rent increase should also be due on the 1st of the month.
You cannot serve a Section 13 notice on your tenant if they are on an assured tenancy with a fixed period and you are still within this period. You must wait for the fixed term to end.
Can You Serve a Section 13 If You Do Not Have a Written Tenancy Agreement?
If you do not have a written tenancy agreement in place, and therefore no fixed period for the tenancy to expire, you cannot serve your tenant with a Section 13 until 52 weeks after the tenancy began.
Filling out a Form 4
You must complete Form 4 in full and serve it on your tenant.
The form is straightforward, describing what needs to be included in each section. However, there are some common mistakes that landlords make. Here are the top mistakes to avoid when filling out a Form 4:
- You must meet all the criteria specified earlier in this article. Serving a Section 13 notice which does not meet the necessary criteria will make it invalid.
- Remember to make the new rental amount payable from the start of the rental period.
- Fill out the form with the intent to serve it on your tenant within the notice period required for their tenancy (as specified above).
- Remember to sign and date the form. If you are a co-landlord with another person, then you must both sign the form (unless you already have an agreement in place that one of you can sign for both of you).
- Check all the spelling is correct, especially for your tenants’ names.
- Use the correct buy-to-let property address.
Serving a Section 13 Notice
Once your Form 4 is filled in and you have checked it for errors, it will need to be served on your tenant.
You can serve the notice by:
- Delivering it in person, or posting it through the letterbox at your buy-to-let property
- First-class post
- A process server
What Happens After You Serve Your Tenant with a Section 13?
What happens after Section 13 notice is served will depend on your tenant. If they agree to the rent increase, then you start to charge the new rental amount from the next rental period.
However, your tenant may challenge the rent increase. In this case, they can refer the increase to a tribunal that handles property and land disputes.
If they do wish to challenge the rent increase, they must refer it to a tribunal before the first due date of the increased rent. The tribunal will then review the case based on the rent you can expect to achieve on the open market for the same tenancy. The tribunal will order that the rent:
- Remains unchanged;
- Is decreased;
- Is increased to a different amount, or;
- Is increased to the proposed new rental amount.
Should You Use a Section 13?
It is always preferable to raise rents in an amicable manner. However, sometimes the tenant may dispute the rental increase. Usually, this happens because the tenant mistakenly feels that the rental increase is too much.
When negotiating rent, by explaining the reasons for the increase and the rationale behind the increase – such as inflation, higher mortgage rates, local rents moving higher, etc. – you should meet little resistance. But it is always wise to be prepared to serve a Section 13 if needed. For more information, contact Ezytrac today at +44 0 1522 503 717.
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