Rents and rent increases for assured and assured shorthold tenancies

Rent for assured and assured shorthold tenancies is set in the tenancy agreement, and landlords can increase it by giving the correct notice.

This content applies to England

Market rents

Assured and assured shorthold tenants have less protection on rent levels than Rent Act tenants. Assured and assured shorthold tenancies (AST) are subject to market rents and tenants cannot apply for a fair rent.

For both assured and assured shorthold tenancies the initial rent for the property is that agreed between landlord and tenant. However, an assured shorthold tenant may be able to challenge the rent if it is significantly higher than similar assured shorthold tenancies in the area.

Rent levels for assured and assured shorthold tenants of private registered providers of social housing (PRPSH) will generally be lower than those of private landlords.

Statement of terms for assured shorthold tenancies

Assured shorthold tenants have the right to receive a statement of certain tenancy terms which are not already stated in writing.[1] Assured shorthold tenants without written agreements can demand from their landlords a statement which includes details of the rent and any rent review clause. A failure to provide such a statement is a criminal offence, which may result in a fine.

Rent review clauses will usually contain a provision relating to the notice that needs to be given if the landlord wishes to increase the rent. A House of Lords decision [2] held that, provided the landlord gives the required notice, generous interpretation will be given to any provision which sets a timetable for the landlord to notify a tenant of rent increases.

Rent increase during fixed term

There is no statutory method by which a landlord of an assured or assured shorthold fixed-term tenant can increase the rent during the fixed term. The rent will be that which was agreed by the parties, subject to:

  • an application from an assured shorthold tenant to reduce the rent

  • a rent review clause

  • agreeing to a new rent

When a fixed-term tenancy is renewed and a new fixed term agreed, the rent will again be that agreed by the landlord and the tenant. If the tenancy is not renewed then the tenancy will become statutory periodic and section 13  (or section 6 in some circumstances) may be used.

Rent increase in periodic tenancies

There are only certain ways in which a landlord wishing to increase the rent of an assured or assured shorthold periodic tenant can do so. They are by:

  • agreement with the tenant

  • operating a rent review clause (but this does not apply to statutory periodic tenancies)

  • using section 6 of the Housing Act 1988 (variation of terms for statutory periodic tenancies in limited circumstances)

  • using section 13 of the Housing Act 1988 (notice of increase in limited circumstances)

Rent review clauses

A rent review clause will apply to fixed-term or contractual periodic tenancies. Where such a term is included in a fixed-term or contractual periodic tenancy agreement, the section 13 procedure for increasing rent will be excluded.[3]

Where a tenancy is statutory periodic (one that arises after expiry of the fixed term) then a rent review clause in the fixed term tenancy agreement will no longer apply.[4] If the landlord and tenant cannot agree a new rent, the landlord can only lawfully increase the rent by using the section 13 procedure, or the section 6 procedure for variation of terms in limited circumstances.

Content of a review clause

To be enforceable, a rent review clause need only contain the mechanism for increasing the rent. It does not need to specify by how much and when the rent will increase.[5] Thus, a non-specific clause such as 'the rent will be reviewed by the landlord in April of each year, and the landlord will give the tenant four weeks' notice of the revised amount payable' will suffice.

Unfair contract terms

A rent review term that does not comply with the requirements of consumer protection legislation may be an unfair term. An unfair term in a tenancy is one which creates a significant imbalance in the relationship of the landlord and tenant to the detriment of the tenant.

Section 6 procedure - notice of variation of the tenancy

The procedure can only be used in the first 12 months of the statutory periodic tenancy.[6] It is not available to landlords of contractual periodic tenants. The landlord or the tenant may serve a notice proposing a variation in the terms of the tenancy. This must be done on a prescribed Form 1.[7] The notice will take effect three months from its date of service, unless it is referred to the Tribunal.

This procedure is meant to be used by landlords who need to change the terms of a tenancy because it has become statutory after the expiry of a fixed term. If the changes in the terms of the agreement merit a change in the rent then this can be proposed by the landlord or the tenant at the same time. Even if there is no proposal for a change in the rent, if the application goes to the First-tier Tribunal (Property Chamber) and the Tribunal varies other terms of the tenancy it can determine a new rent reflecting these. The rent could go up or down.

Appeals to the First-tier Tribunal (Property Chamber)

Appeals to the First-tier Tribunal (Property Chamber) must be made on a prescribed Form 2.[8] When making its determination, the Tribunal must make decisions on any other proposed variations to the tenancy before determining a market rent; any rent determined will then take into account those variations. Any rent increase will take effect from the date decided by the Tribunal but cannot be earlier that the date specified in the notice.

If a landlord proposes variations under section 6 and a rent increase under section 13, the Tribunal can consider these together.

Section 13 procedure - notice of rent increase

Section 13 of the Housing Act 1988 allows a landlord to raise the rent on a periodic assured or assured shorthold tenancy by means of a notice of increase in the prescribed form.

The use of section 13 is subject to limitations:

  • it cannot be used during the first 12 months (52 weeks) of a contractual periodic tenancy[9]

  • a notice of increase can be served during the fixed term of an assured or assured shorthold tenancy, but the rent increase must take effect after the:[10]

    • tenancy has become statutory periodic, and

    • 'minimum period' following service of the notice has expired

  • for assured shorthold tenants where a Tribunal has reduced an 'excessive' rent under section 22, an increase cannot take effect until the anniversary of that determination

  • it can only be used to increase the rent once every 12 months (52 weeks)[11]

A tenant who has succeeded to a periodic assured tenancy under the succession provisions of the Rent Act 1977 or the Rent (Agriculture) Act 1976 will be treated as a statutory periodic assured tenant and therefore the section 13 procedure can start immediately.[12]

Rent review clause

Section 13 does not apply to a contractual periodic tenancy that contains a rent review clause, as the clause will prevail.[13]

However, where a statutory periodic tenancy arises at the end of a fixed-term tenancy, a rent review clause no longer has effect. To increase the rent the landlord must use the section 13 procedure or obtain the tenant’s agreement.[14]

Notice of increase

The landlord must serve a notice of increase of rent in the prescribed form (Form 4). The information on the form includes a note to the tenant advising her/him of her/his right to refer the increase to a First-tier Tribunal (Property Chamber).[15]

The increase cannot take effect earlier than the minimum period following service of the notice. The period reflects the law governing notice to quit, as such the length of notice required for a tenancy of a period of:

  • a year, is six months

  • less than a month, is one month

  • a month or more (but less than a year), is one period of the tenancy

On expiry of the notice period the increased rent will take effect unless the:[16]

  • tenant refers the notice of increase to the Tribunal, or

  • landlord and tenant agree to a different rent

Referral to the First-tier Tribunal

If the tenant disagrees with the rent increase, they can refer the notice of increase to the First-tier Tribunal.[17]

The referral must be made:

  • before the notice period expires[18]

  • on the form prescribed in the relevant regulations[19]

Currently, the prescribed form is Form 6. There is an alternative Form Rents 1 also available on gov.uk.

The Tribunal does not have the power to extend the time-limit for referral. Referred in this context means received by the Tribunal.[20]

The Tribunal should determine a market rent for the property, which is the rent which could reasonably be expected to be obtained in the open market for a similar property let on similar terms.[21]

Rent increase by social landlords

Rent increases for tenants of private registered providers of social housing (PRPSH) are regulated by the Social Housing Regulator.

It is important to check the rent review clause in the tenancy agreement, as the landlord may be able to increase the rent, provided that the relevant notice has been given to the tenant.

A decision in the House of Lords provides some guidance on the process of rent review increases for assured tenancies of registered social landlords. In Riverside Housing Association Ltd v White[22] the tenant complained that the landlord had served an ineffective rent increase as they were served after the rent variation date. On appeal, the House of Lords held that the notices were valid and that all that was required (as was set out in the agreement) was that the landlord needed to give four weeks notice.

It should be noted however, that the effect of this decision on other instances where a tenant wishes to challenge the validity of the rent increase will depend entirely on the wording of the clause in the agreement.

Rents for assured agricultural occupancies

The principles governing rents for assured agricultural occupancies are the same as those covering assured tenancies.[23]

Applications 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.[24]

Only one application can be made. The application must be made on a prescribed Form 7.

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.

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.

Invalid rent increases

The rent increase demanded by a landlord will not be payable if they fail to give the correct notice of increase, or operate a rent review clause strictly in accordance with the agreement.

The tenant is entitled to continue paying rent at the existing levels.

However, if the tenant starts to pay the increased rent, the landlord may be able to argue that the tenant has actually agreed to the increase, in which case it will be binding. This would not apply where an assured shorthold rent had previously been set by the Fist-tier Tribunal (Property Chamber) under section 22 of the Housing Act 1988, in which case it may be necessary to use the section 13 procedure.

An agreement to increase the rent is likely to be implied (even if nothing has been actually said) if the tenant responds to a request for an increased rent by paying the amount requested.

In the event of a dispute, the tenant could prevent this by making it clear that the payments are being made 'without prejudice' while the position is clarified.

Disputes about rent increases

Disputes about the validity of notices of increase and tenancy variation are usually determined by the First-tier Tribunal (Property Chamber).

The Tribunal can only hear applications where the correct notice has been served.[25]

In addition, any dispute about whether an increase is valid could be dealt with by applying to the county court for a declaration.[26]

Last updated: 30 March 2021

Footnotes

  • [1]

    s.20A Housing Act 1988 inserted by s.96 Housing Act 1996.

  • [2]

    Riverside Housing Association v White and Another [2007] UKHL 20.

  • [3]

    s.13(1)(b) Housing Act 1988.

  • [4]

    London Districts Properties Management Ltd and others v Goolamy [2009] EWHC 1367 (Admin).

  • [5]

    Contour Homes Ltd v Rowen [2007] EWCA Civ 842.

  • [6]

    s.6(2) Housing Act 1988.

  • [7]

    Form No.1 Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015 SI 2015/620.

  • [8]

    Form No.2 Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015 SI 2015/620.

  • [9]

    s.13(2)(b)(ii) Housing Act 1988.

  • [10]

    s.13(2) Housing Act 1988.

  • [11]

    s.13(3A)(b) Housing Act 1988, as inserted by art.2(b) Regulatory Reform (Assured Periodic Tenancies) (Rent Increases) Order 2003 SI 2003/259.

  • [12]

    s.39(6) Housing Act 1988.

  • [13]

    s.13(1)(b) Housing Act 1988; Contour Homes Ltd v Rowen [2007] EWCA Civ 842; Chouhan v Earls High School [2016] UKUT 405 (LC).

  • [14]

    London District Properties Management Ltd (2) Ferguson (3) Ferguson (4) Sawer v (1) Goolamy (2) Goolamy [2009] EWHC 1367 (Admin).

  • [15]

    s.13(2) Housing Act 1988; Form No.4, Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015 SI 2015/620, as amended by Assured Tenancies and Agricultural Occupancies (Forms) (England) (Amendment) Regulations 2016 SI 2016/443.

  • [16]

    s.13(4) Housing Act 1988.

  • [17]

    s.14 Housing Act 1988.

  • [18]

    s.13(4)(a) Housing Act 1988.

  • [19]

    reg 3(f) and Schedule 1 (Form No.6) Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015 SI 2015/620.

  • [20]

    R (on the application of Lester) v London Rent Assessment Committee [2003] EWCA Civ 319; Robertson v Webb [2018] UKUT 235 (LC).

  • [21]

    s.14(1) Housing Act 1988; Pimlott v Varcity Accommodation Ltd [2012] EWHC 19 (Admin).

  • [22]

    Riverside Housing Association v White and Another [2007] UKHL 20.

  • [23]

    s.24(3) Housing Act 1988.

  • [24]

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

  • [25]

    s.14(1) Housing Act 1988.

  • [26]

    s.40 Housing Act 1988.