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Reducing rent of an AST

This content applies to England

How the rent of an assured shorthold tenancy may be reduced, and the process of rent assessment.

Applying for a rent assessment

Under section 22 of the Housing Act 1988 an assured shorthold tenant may be able to refer the rent to the First-tier Tribunal (Property Chamber) for an assessment as to whether it is 'excessive'.[1]

Only one application can be made. The application must be made on a prescribed form (Form 7),[2] which is available on Gov.uk

For tenancies that began before 28 February 1997 an application may only be made during the initial fixed term and will not be available during subsequent agreements. For tenancies that began on or after 28 February 1997 once the tenant has been in the property for more than six months section 22 will no longer be available.

When advising clients advisers will need to be aware that given the limited security of an assured shorthold tenant section 22 may be of limited use, especially if the fixed term is of short duration or if the tenancy is periodic. The landlord will be able to legally evict the tenant very easily after the first six months or the fixed term have expired.

Criteria for making an assessment

The First-tier Tribunal (Property Chamber) can only set a rent if it considers there are enough assured tenancies in the locality with which to compare and if it feels that the existing rent is significantly higher than rents for other such properties.[3]

Case law from earlier legislation on rent-fixing suggests that when deciding whether a rent is excessive the Tribunal should take into account the fact that a 'market' rent may reflect extreme scarcity, and as a result, may be higher than that which is reasonable.[4]

The Tribunal's determination

If the First-tier Tribunal (Property Chamber) does consider that the rent is excessive it can determine a new rent that it considers could reasonably be obtained under the tenancy.[5] This may be lower than a rent for an assured tenancy, reflecting its more limited security. If a new rent is determined, the Tribunal will decide the date from which it is to take effect.

Effect of section 22 rent determination

From the date of the First-tier Tribunal (Property Chamber) determination the landlord will only be able to recover the amount set by the Rent Assessment Committee. After a year the landlord can apply under section 13 of the Housing Act 1988 to increase the rent (see below). If section 13 is not available (ie because the tenancy is still in the fixed term or because there is a rent review clause in a contractual periodic tenancy) then the landlord will not be able to increase the rent except by coming to a new fixed-term or periodic agreement with the tenant or by using the rent review clause.

The rent fixed by the Tribunal will take effect from a date decided by the Tribunal, which cannot be earlier than the date of the application.[6]

[1] s.22 Housing Act 1988, as amended by s.100 Housing Act 1996.

[2] reg 3(g) Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015 SI 2015/620.

[3] s.22(3) Housing Act 1988.

[4] John Kay v Kay [1952] 1 All ER 813.

[5] s.22(1) Housing Act 1988.

[6] s.22(4)(a) Housing Act 1988.

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