Understanding Section 13 and Rent Increases in the Private Rented Sector: Guide

In the realm of private renting, both landlords and tenants need to navigate the complexities of rent increases. One key aspect of this process is Section 13 of the Housing Act (1988), which outlines the procedure for landlords to increase rents for periodic tenancies. However, with the impending Renters (Reform) Bill, significant changes are on the horizon. In this comprehensive guide, we'll delve into the current processes under Section 13, explore when and how it can be utilized, discuss tenant rights in disputing rent increases, and examine the upcoming changes brought forth by the Renters (Reform) Bill.

Current Process under Section 13:
 

Methods of Rent Increase: Landlords currently have several avenues to increase rents:
Including a "rent review clause" in Assured Shorthold Tenancy agreements.
Increasing rent at the end of a fixed-term tenancy by initiating a new fixed-term contract.
Mutual agreement between landlord and tenant, with a written record of the agreement.
Utilizing Section 13 for periodic tenancies, with at least one month's notice using the "Landlord’s notice proposing a new rent" form.

Fair and Realistic Increases: Rent increases must align with local market rates and be deemed fair and realistic.

 

When Can Section 13 be Used:
 

1. Applicability: Section 13 is applicable only during periodic tenancies, which have no fixed end date.
2. Timing: It cannot be used within the first year of a periodic tenancy, and rent can only be increased once a year using this process.
3. Rent Review Clauses: Section 13 cannot be used if there's an existing rent review clause. However, upon the conversion of a fixed-term tenancy to a periodic tenancy, the rent review clause becomes void, and Section 13 can then be employed.

 

Disputing a Section 13 Notice:
 

1. Tenant's Rights: Tenants have the right to dispute a rent increase if they perceive it as unfair.
2. Resolution: Initially, tenants should communicate with their landlord to address concerns. If an agreement cannot be reached, tenants can escalate the matter to the First-tier Property Tribunal.
3. Tribunal Intervention: The tribunal can help set a new rent, potentially different from the landlord's proposed increase, if deemed necessary.

 

Changes under the Renters (Reform) Bill:
 

1. Transition to Periodic Tenancies: All tenancies will transition to periodic under the new system.
2. Simplified Process: Similar to Section 13, landlords will utilize a simple form to propose rent increases.
3. Extended Notice Period: Landlords must provide a two-month notice period for rent increases.
4. Tenant Response: Tenants can accept the proposed increase by paying the new rent or dispute it through the First-tier Tribunal before the effective date.
5. Frequency of Increases: Despite the new process, landlords can only increase rents once a year using this mechanism.

 

Conclusion: As the private rented sector undergoes legislative reforms, it's crucial for both landlords and tenants to understand the nuances of rent increases. From the current Section 13 procedures to the impending changes introduced by the Renters (Reform) Bill, staying informed is key to navigating this aspect of tenancy agreements effectively. While this guide serves as an informative resource, individuals are encouraged to seek legal advice and refer to official government sources for precise information regarding rent increases in the private rented sector.