The Labour Party manifesto states that they will introduce legislation to empower tenants to challenge unreasonable rent increases. But what powers do tenants have now?

One of the problems for tenants challenging anything at the moment is the threat that hangs over them of their landlord using the no-fault section 21 ground to evict them.

This is the main reason why tenants tend not to challenge landlords and either give in or move out.

However, we know for sure that Labour are going to abolish section 21.

So, let us consider the ways currently available to tenants to challenge their rent.  Assuming section 21 does not exist.

Refusing to sign a new tenancy agreement

The main way that rent is changed is by ‘agreement’.  I.e. by tenants signing a new fixed term tenancy agreement or renewal form in exchange for a further fixed term in the property.

It is of course, always open to tenants to refuse to sign.  Indeed, tenants who have security of tenure (e.g. protected tenants or assured tenants) do often refuse to sign.

The fact that tenants have signed a new tenancy agreement generally means that the new rent agreed cannot then be challenged as they have ‘agreed’ to it. Unless they have a protected tenancy under the 1977 Rent Act, where different rules apply.

NB This article does not discuss protected tenancies further as there are not many left, but protected tenants can find out more on our Renters Guide website.

However, most tenants feel pressured by the threat of section 21 into signing.  If this threat is removed, then they will have a genuine choice whether to sign or not.

Challenging a proposed new rent to the First Tier Tribunal

If tenants refuse to sign a new fixed-term agreement (or are not offered one) then, if they remain in occupation after the fixed term has ended, they will acquire a periodic tenancy under section 5 of the Housing Act 1988.

Landlords have the right under s13 of the Act to increase this by the statutory notice procedure. They can do this once every 12 months and must use the proper prescribed form.

Tenants have the right to challenge the proposed new rent during the 1 month notice period.  But only on the basis that the rent is not a ‘market rent’.

The challenge is done by referring the rent to the First Tier Tribunal (or the Rent Assessment Committee in Wales). The Tribunal will then consider what the market rent for the property is, and order that this be the rent payable.

Tenants are always taking a bit of a risk, therefore, when doing this.  As it is always possible that the Tribunal will decide that the market rent is actually higher than that proposed by the landlord.

Rent increased under a rent review clause

Landlords can only use the statutory notice procedure to increase rent during a periodic tenancy. If they want to increase rent during the fixed term, this will, therefore have to be pursuant to a clause in the tenancy agreement. Known as ‘rent review’ or ‘rent increase’ clauses.

These are often included in tenancies for a long fixed term, such as 2 or 3 years. Otherwise, landlords may find that inflation has reduced the value of the rent to make their property investment unviable.

If rents are increased properly under a valid rent review clause, then tenants will not be able to challenge this.  As they will have agreed to the process when they signed the tenancy agreement.

But is the clause valid?

Many landlords include clauses which effectively give them the right to increase the rent to whatever they want. Which will be unenforceable under the unfair terms rules, now part of the Consumer Rights Act 2015.

So, if you are a tenant and your landlord is looking to increase your rent under a clause in your tenancy agreement, you should seek advice on this.

Is the clause in YOUR tenancy agreement enforceable against you?

If the landlord has given himself an unfettered right to increase the rent to whatever they want, then almost certainly, it won’t be.

In which case, you can ignore the landlord’s attempts to increase the rent under the clause and carry on paying the same rent as before.

And finally

It will be interesting to see how the Renters Rights Bill (not yet published at the time of writing) will deal with the manifesto commitment to allow tenants to challenge ‘unreasonable rent increases’.

I suspect that landlords’ rights under s13 will remain but may be tweaked a bit.

The Renters Reform Bill, which was lost at the end of the last Parliament, also got rid of fixed-term tenancies and provided for rent to be only increased under the section 13 procedure.

Will Labour do the same? We will have to wait and see.

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