Coming off the back of the high interest rate, which has impacted all business activities and increased the financial pressure on households, landlords have been, and are, tempted to raise rents, and not purely to make more money off their tenants, but to cover costs today, and those they anticipate in the future.
Generally landlords are reluctant to put financial pressure on their tenants, particularly those who pay on time, are respectful of the property, and in whom they trust. Regardless of how reliable the tenant, a rent hike is, however, preferable to the sale of the property, which in the current buyer’s market, may not realise the profit or price hoped for.
Landlords who don’t need to sell may also consider hiking the rent regardless of having a good tenant. In such a strong renters’ market, they are likely to find new tenants at the higher rate, without having to haggle with the existing tenants … but that depends on the lease that is in play.
Most leases are valid for a year, at which point the landlord can approach the tenant with a new rental amount, which the tenant either accepts, or makes a decision to move. It is recommended, however, that this is the point that a compromise be reached in favour of both parties.
Rent cannot be raised at will
Within a lease agreement, there should be notice of when a landlord is able or allowed to increase the rent.This requires the landlord to provide at least one month’s written notice before the increase is effective. Such a notice must also advise the new rental fee and the reason for it, such as if it is due to annual increases (eg: municipal services), or perhaps because of renovations that have improved the tenant’s living conditions.
The law is clear in that unless the lease agreement does not include a specific clause specifying that the landlord will increase the rent, and at what time, the rent amount should remain the same throughout the term of the lease agreement. This stops a landlord from raising the rent at will, and goes some way to lessening any unbiased skewing in favour of the landlord.
Market-related rentals
The Consumer Protection Act protects tenants somewhat in that any rent increase, regardless of when they happen, should be reasonable and fair. This goes to market-related prices, which is what is considered a reasonable amount for the rented property in comparison to similar rentals in the same area.
If a tenant believes that a rent increase is unlawful, they can challenge it in law, but only after first attempting to negotiate with the landlord. The Rental Housing Tribunal, which is a free service, can be approached for assistance in resolving any conflict, bearing in mind that it has powers to investigate the complaint. If the finding is in favour of the tenant, the Tribunal may order the landlord to reduce the rent to a reasonable amount.
If the tenant is not happy with the Tribunal’s decision, the tenant can take the further step of approaching a court for legal intervention, but at their own cost. This can be a lengthy procedure and may be financial burden.
Penalty for unlawful rent increase
A landlord who has increased the rent unlawfully can face penalties, such as a fine or imprisonment for up to two years. Alongside the tenant is entitled to claim compensation for damages suffered as a result of an unlawful rent increase. These rules are defined in the rental Housing Act.
No written lease agreement?
It may be that a tenant and a landlord have agreed to the rental arrangement informally (verbal), or a lease has expired and the parties have agreed that the tenant stays, on a month-to-month basis. In the latter case if the tenant is paying, and the landlord accepts the rental, it implies that a new lease has been agreed to.
If the lease is a verbal agreement, tenants still have rights provided they pay the agreed-to rental, on time. Both the landlord and tenant have the right to terminate the verbal lease agreement, but with due and proper notice, which is usually a month.
Landlords who wish to evict their tenant, have to prove a breach, which is invariably failure to pay rent. Eviction will require the landlord to provide notice to the tenant, and if not complied with, the landlord can apply to the courts for an eviction order, which can be defended by the tenant.
Guidance
Most disputes relative to rent and the rights of landlords and renters require professional advice or meditation if wishing to avoid lengthy and/or costly legal battles. Legal aid organisations can offer such guidance, as can property attorneys.
