The part of contract which tenants should ‘really check’ as rents skyrocket

Posted 02nd September 2022 by sdlt-admin

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Renters in the UK are facing “record high” rental costs on top of rising inflation and ballooning energy bills. A large number of renters are taking to Twitter to ask for help as to what they can do to try and tackle the rise in the cost of their home.

There are nearly five million private renters in the UK as of right now and many are likely to have had their rent increased in the last 12 months with some having reported hikes of a few hundred pounds. Speaking to Express.co.uk, Ellie, a property manager at a letting agency in Manchester, said the current rental market is “out of control” and “completely unsustainable”, warning it is the tenants who are the ones that are suffering. As part of her job, Ellie manages around 300 properties in the city centre and acts as a third party between the landlord and the tenant by managing pre-tenancy requirements, organising renewals and rent increases, and arranging building maintenance and repairs.

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For renters who are facing rent increases, before even considering a response, Ellie recommended that they should first check their tenancy contract and see what has already been agreed.

She said: “In most tenancy agreements there is most likely going to be a clause which says that the rent can only be increased once a year and it will either be a set percent or it will say in line with market value.”

At Ellie’s letting agency this amount is set percent, however, she explained that letting agents will usually first propose the increased price to the tenants to see if they are willing to accept it.

Ellie said: “You can say no to this, and from my experience with fixed percent contracts, we will reduce this down lower and lower until we reach the increased price which is stated in the contract. Tenants usually accept one of the higher prices so they should really check this before accepting anything.”

With contracts which cite “in line with market value” Ellie says that this is more difficult to manage but overall, the increase has to be classed as “reasonable” so with these contracts tenants can “open a discussion” as to what a reasonable increase can be.

Ellie suggested that once the discussion has been opened, tenants should first look on sites such as Rightmove and Zoopla to check out the prices in the area and whether the proposed increase is in line with it. They should also check as to when the last increase was because legally landlords cannot increase rent more than once every 12 months.

She also said that the condition of the property and whether it has things such as damage or mould as those can be massive factors in these types of discussions and letting agents and landlords should not be dismissing anything that is brought up in regard to these.

She added: “Honestly, tenants argue that the front door is slightly broken, there are no double glazing windows, or if the decor is aged, these are all factors we as letting agents look at when we are valuing a flat so they are the factors that should be used in an argument when it comes to the price of rent.”

Read: How do I gain a Stamp Duty Refund?

Ellie added that maintenance work and the length of time it takes for work to get done should “100 percent” be highlighted by tenants in their negotiations with landlords.

She said: “We have landlords on our books who do refuse to do stuff and if tenants are constantly reporting problems and nothing is being done, then they do absolutely have the right to turn around and say, well, we’ve had a broken boiler for three months now why should we now pay a rent increase?”

Ellie noted that as of right now landlords still have the ability to serve Section 21 notices, and due to this people may be nervous to fight an increase.

Government legislation announced the abolishment of Section 21 notices or “No fault evictions” in their renter’s reform white paper published in June this year. It has been coined “no-fault evictions” as landlords don’t need to give a reason for kicking the tenant out.

Even with this, Ellie encourages people to try and fight their hike if they believe that it is an unjustifiable rise.

Ellie added: “I don’t think tenants realise how many rights they have when it comes to Government legislation. A tenant does have the right to fight against a rent increase and sometimes the courts can be brought into the game.

“In my experience, the courts have more often than not, leaned in the tenant’s favour, particularly if they good-standing tenants who have no rent arrears, have caused no damage to the property or had any issue in regard to them reported. The courts can reject the landlord’s possession order and the tenant can stay.”

Ellie explained that Britons could continue to fight against the increase past the renewal date of the contract if they want to but she “would not advise this” as a strategy for tenants.

She added: “Tenants can legally do this as after a year contract it usually moves onto a rolling contract automatically. If it does go onto a rolling contract things can get more difficult as all the landlord has to do in this instance is to serve what is called a Section 13 notice which is a month’s notice for the rent to increase which is a lot harder to fight against as it is not a request anymore, it is a legal document.”

In terms of rent reductions, Ellie explained that tenants do have the right to ask for one if there is an issue with the flat which affects the quality of life and differs from the contract that was originally signed.

She added: “If you signed up to a flat that has a balcony, and the balcony door broke and you were unable to access it then you are not getting what you signed up for in the contract and it would be completely right to ask for a reduction.

“We’re seeing this very commonly because of cladding issues as scaffolding has gone up and has caused tenants to lose their parking spaces or their balcony space, so we don’t even blink twice when a request comes through. Most landlords are giving maybe a £50 to £100 discount per month in some instances and are okay with doing it nine times out of 10.”

The average asking price for the average rental property in the UK right now stands at £1,126 per month which is around £177 more than the same time in 2020.

Read: How much Stamp Duty on a second home?

London has seen a 15.8 percent increase over the past year which has pushed the average asking rent price to a record £2,257.

According to Cornerstone Tax, the “catalyst” reason for the increase in rent prices is not really down to the cost of living but is due to a shortage of available stock alongside a significant increase in demand.

David Hannah, group chairman at the firm said: “There is hope that more available properties will enter the UK housing market – thus causing a more manageable supply and demand level and subsequently halting the rapid rise of rental prices.

“Hopefully, a solution to global supply issues will cause an increased supply of new builds, providing the UK housing market with some much-needed extra stock, which should subsequently halt these rapid rises.”

Ellie agrees with this reason adding: “Since the lockdowns ended, we had a massive jump in people looking for rental homes and it is understandable after what people went through in the pandemic they want to move out of their parent’s house or move into their own space rather than a houseshare but we have not seen a dip since – it’s just getting busier.

“I’ve said that this is unsustainable and if something isn’t put in place to regulate it we are going to see prices go so high that people will be priced out of renting as well as being priced out of buying a house.”

Have you purchased UK property that you paid Stamp Duty Land Yax on? See if you are eligible for a refund from HMRC on overpaid SDLT

We’ve reclaimed over £15 million in the last 12 months on overpaid Stamp Duty.

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