This is a question to the blog clinic from Amanda (not her real name) who is a landlord in England.
My tenant has refused to sign the new tenancy agreement with an increase of rent from £1100 per month, which has not been increased for 7 years, to £1400 per month.
The new rent is still under the market rental.
She is stating that she got advice from a lawyer and that I have illegally increased the rent. As my mortgage has increased by 120% I have now no option but to sell the property. Where do I stand legally?
Answer
It’s not illegal to ask a tenant to sign a new tenancy agreement at a higher rent, so you have not done anything wrong. But tenants don’t have to sign it if they don’t want to.
If the agreement is not signed, then the tenancy will continue as a periodic tenancy.
Increasing the rent
If you still want to increase the rent, you can do this via the statutory notice procedure. Tenants can challenge this by referring it to the First Tier Tribunal but they will only reduce the rent if they consider it is above the proper market rent. So, as your rent is still below this you should be safe.
Indeed, the Tribunal may increase the rent as their job is to set the rent at the market rent. Which is why most tenants don’t challenge rents increased in this way.
This will change once the Renters Rights Bill is in force by the way as then the Tribunal will only be able to review rent down, they won’t be able to increase it. But the Renters Rights Bill is not in force yet.
Selling the property
If you decide to sell the property, this is always an option. You have a choice
- You can sell the property with the tenants still in situ as an investment property, or
- You can evict the tenants and sell the property with vacant possession.
If you decide to sell with vacant possession, you can evict the tenants using the section 21 procedure, but this will take some time. If you want to quick sale, it will have to be with the tenants still in situ.
There are some companies which specialise in purchasing tenanted properties, but you may not get as good a price as you would with selling with vacant possession.
Further information
We have guidance on Landlord Law for our members both on increasing the rent via the notice procedure and on eviction procedure. Find out more about membership.