1 What is they?
They are a clause in a tenancy agreement which provides for you (the landlord) to review the rent, generally on an annual basis, and change it, normally be increasing it
2. How do they work?
Generally the clause will specify some sort of procedure, such as the landlord writing to the tenant about the rent increase, and a time when this should be done.
Often there will be a specific period, often a day in the year, for the rent to change, for example the anniversary day of the tenancy, and the landlord will have to contact the tenant in the period immediately before this to tell him about the increase.
3. Can the landlord increase the rent as much as he likes?
No, that would be ‘unfair’ under the Unfair Terms in Consumer Contracts Regulations 1999. The increase should either be agreed with the tenant, or be referable to something external and independent. Usually this is the retail price index.
4. Are there any problems in practice?
Yes, you must be careful to follow any procedure set out in the clause properly, when increasing the rent.
For example if there is a date in the clause for the review/increase, the rent must be increased at that time. If you try to use the clause to increase the rent at any other time the increase may be invalid.
5. Are they necessary?
In most cases no. The best way to increase the rent is by putting it in a new tenancy agreement or renewal form. The tenants will not then be able to challenge the rent later by, for example, claiming that you did not comply with the clause properly or that it was invalid.
If the tenants refuse to sign a tenancy agreement with a new rent, you can serve a section 21 notice and require them to vacate. Harsh but true.
A rent review clause is essential though are if you are giving the tenant a long fixed term, or if you are creating an assured tenancy where the tenant will have long term security of tenure. Both of these are unusual however in the private rented sector.
Finally, if you need a rent review clause, there is one available in the extra clauses section on Landlord Law, for landlords to use when creating a tenancy agreement using our document generator system.