Section 13 and rent increase

by | Oct 27, 2022

Introduction

Section 13 has its limits and restrictions and there is a fine balance between being able to stay in control of your rental income as a property owner and abusing the rights of your tenants and perhaps getting yourself into legal trouble as a landlord. So, how do you raise rents and increase section 13 correctly? Read on for all the specifics of section 13.

What is Section 13?

When understanding section 13 rent increases, it is first important you understand the difference between raising rents in general and issuing a section 13. Section 13 only applies to assured shorthold tenancies and assured tenancies. Specifically, regulated tenancies are excluded from section 13.

If a landlord wants to issue a rent increase after a fixed term tenancy agreement comes to an end or there is a break clause where rent can be open to negotiation in a contract, then a landlord doesn’t need to issue a section 13 at all. This is why section 13 is only for assured shorthold tenancies or assured tenancies.

Analyst calculating when to issue a section 13 fo rent increase

As a landlord, you have to give at least a month’s notice before increasing the rent but it is best practice to give more than a month. There are regulations around this such as the landlord only has the right to increase rents once per year and it has to be within the market value

It is important these regulations are followed by landlords because a tenant has the right to challenge a rent increase with a tribunal if they feel it’s out of line with market value or the landlord hasn’t given them enough notice.

Rent increases do not create new tenancies although a landlord can insist a tenant sign a new contract if they can get the tenant to agree

A brief history of section 13

Section 13 was introduced with the housing act of 1988. It gets confused with being classed under the landlord and tenant act 1954 which relates to things like property repairs (section 11) and the notice of a change of landlord (section 3). This is the same act that other regulations like section 21 and section 8 are under in relation to the eviction of tenants. These rights all help protect tenants in their homes.

The housing act of 1988 was introduced after World War One and which created a housing crisis. There simply wasn’t enough property to go around after the UK experienced large-scale infrastructure damage after the blitz. As a result, tenants were quick to be evicted from their homes and lenders also went with whoever was willing to pay the most interest for mortgages.

This made it hard for tenants to have any form of security in their homes and hence the introduction of security tenure was introduced. Many sections were passed under the law with section 13, in particular, minimising how easy it is for landlords to raise rents in a property.

When was section 13 introduced?

In October 1985 the landlord and tenant act and section 13 was issued. It stopped tenants from being kicked out of their homes very effectively, forcing landlords to be more professional in how they raised the price of rent.

To this day there is still debate about whether it is okay or not because landlords will believe they should have the right to rise rents as and when they want as the cost of living increases and inflation goes up. However, at the same time, tenants may struggle with rent increases.

It is therefore important tenants know the laws and that landlords help work with their tenants in order to get a good deal for both parties. Some landlords choose to do rent reviews every year where they send notices to tenants on whether they will use section 13 to increase rents or not, regardless of if there is any change.

Section 13 and Housing Act (1988)

The housing act of 1988 refers to rented accommodation and is one of the leading pieces of legislation regarding property in the UK. Because of the large number of sections of the agreement at 140, there are multiple exceptions to the rule and scenarios where rules don’t apply to all scenarios.

Landlord evaluation section 13

Section 13 is just like this because there are scenarios where a landlord isn’t permitted to raise rents if they are in violation of another section of the law.  For example, a landlord has the right to issue a section 13 but not if the tenant is eligible for fair rent in a regulated tenancy. Fair rents are rents started on or before January 1989. There are a few examples like this throughout the housing act of 1988.

How is section 13 for rent increase served?

In order for a landlord to serve a section 13, the landlord must first ensure they are issuing it under the right grounds before they provide a notice. Then the notice is served and a tenant can wish to challenge the notice or alternatively move out of the property.

To issue a section 13 under the right grounds:

  • A tenant must be signed on to an assured shorthold tenancy or assured tenancy
  • Section 13  must be served only once per year
  • The proposed rent change must be in line with market prices
  • There must be at least one month before the new proposed rent increase

What notice does a landlord need to issue a section 13?

The notice for section 13 must be issued at the address of the tenant and be at least one month in advance of when the rent is set to change. Some landlords choose to issue a lot longer time in advance to give tenants more time.

It is also worth noting that a tenant in an assured tenancy who hasn’t come to the end of their tenancy or hasn’t entered a break clause here rent prices are open to negotiation doesn’t have to agree to a section 13.

Is it mandatory to notify the tenant with a rent increase notice?

Yes, it is mandatory to provide a rent increase notice regardless of whether it is under section 13 or not. For example, if a tenant is signed up to an assured shorthold periodic tenancy, a landlord can issue a rent increase without a section 13. 

However, this rent increase has to still be one month in advance of the proposed change where a landlord gets a tenant to sign a new contract.

How to Fill in Form 4 to Use Section 13 to Increase the Rent

Click here to download form 4. The form includes details about the names and addresses of both landlord and tenant, the proposed rent increase and the amount already agreed to, the starting date for the new amount of rent and additional charges that are included as part of a tenancy agreement so there is no confusion.

Once this form has been signed a tenant must pay the new rent from the date signed and inform their bank of the changes too if they are paying through a standing order.

In addition, if the tenant disagrees with the section 13 notice and thinks it may be invalid or unjust they can bring it to a tribunal and the form contains details of how to do so. It tells tenants to inform their landlords that they plan to take legal action and the correct steps to move forward.

Tenant getting keys again after rent increase

How can a tenant challenge section 13?

If a tenant wants to challenge section 13 in any way, he/she must fill out another form called form 6 which can be found on a download here. A tenant may send it by email or post it to the address on the form to take legal action.

Other ways to increase rent without using section 13

Section 13 is used as a means for landlords to have some rights to increase their rent under the law. It means if a tenant believes they shouldn’t have a rent increase, even if there are terms in their tenancy agreement that state the tenancy is open for renegotiation.

A landlord can override this decision and have the legal power to set fair prices under market conditions. However, there are other ways to increase rent.

Increasing the Rent by Mutual Agreement or with a rent review clause

Rent review clauses make rent increases more straightforward without having to involve section 13 legislation and with the understanding that any rent increase is within reason. This is the best way for landlords to stay on good terms with their tenants as often, issuing a section 13 can be a long legal process if there are disputes.

Landlords should also understand that tenants are people so looking after them with fair rent increases and general safety like making sure there are always cp12 checks and the property complies with the building safety fund is the best way to get a good relationship with a lessor and negotiate rent increases.

Section 13 as Landlords

A landlord trying to increase rent by getting a tenant to agree through coercion is entirely legal. At the same time, a landlord should know that if they intend to have any legal backing in the eyes of the law, they must use section 13 carefully and precisely. Not abusing their power and also understanding the situation of tenants.

When can landlords serve section 13?

A landlord can only serve a section 13 annually. Unlike other sections like section 8 or section 21 which are dependent on the terms of the tenancy agreement or the behaviour of tenants. In this way, landlords use section 13 carefully and only when absolutely needed. 

Is there a limit to rent increase via section 13?

It is important a landlord includes in the tenancy agreement when they’ll review rent for rent increases and by how much rent is likely to increase. Then when they do increase rent it shouldn’t come as a surprise to tenants as a result. This is the limit landlords must have for rent increases.

To make sure rents reflect the market value of the area, landlords can calculate an average for the area and put in the agreement that rent will always be within 5% or 10% as an example of this figure. Using legitimate website sources in your research is the best way to get tenants to comply and help them understand.

Expert doing market research on rent increases

Does issuing a section 13 make a new tenancy agreement?

When issuing a section 13, a new regulated tenancy doesn’t have to be created, the same agreement just gets changed in an addendum agreement. People may get confused because, in the rent act of 1977, it is true that a rent increase has the effect of terminating a tenancy and moving into a statutorily regulated tenancy. 

These tenancies were signed before 1989 so unless you have been renting under the same agreement for 30+ years to a private landlord, chances are this rule doesn’t apply and for more modern tenancies regulated under the housing act of 1988

So most of the time,  no new tenancy agreements have to be created when rent increases are applied although they can be. It is up to the landlord and the tenant.

Are there any restrictions when serving section 13?

Section 13 only holds weight in court if it is issued in a periodic tenancy or a break in a fixed-term tenancy. As well as this, regulated tenancies are exempt from section 13

Section 13 as Tenants

If you receive a section 13 as a tenant, it can be the last thing you expect and dealing with a rent increase could cause you a lot of stress. Here’s what you should be aware of.

Check your section 13 notice is valid

First, check your landlord has issued a section 13 in the correct manner. If your landlord has:

  • Issued a section 13 more than once a year
  • A landlord has not given you one month’s notice for the change
  • Issued it within a fixed-term tenancy
  • Priced rents out of market value

If any of those are true, there is a strong chance that section 13 isn’t valid. If you have been issued a section 13 within a fixed term of your tenancy agreement (dependent on your own agreement) then you will not even need to respond to that section 13 notice. For any other issue, you will need to fill out form 6 here to take section 13 to the tribunal and challenge your rent increase.

How to refer to the Rent Assessment Committee

If a tenant has applied for form 6 and has sent it off. The form will be sent to the rent assessment committee which will decide whether the claim of unfair rent is legitimate. For details on how this works click here

It is worth noting that the committee will come up with a new rent to be issued under section 13 they deem fair but this doesn’t mean the rent will necessarily decrease. It could go up.

What if you have problems paying your increased rent?

If section 13 gets approved and you cannot afford it, as a tenant you may start to default on your rental payments. As a result, the property may then become repossessed by the landlord under section 8 of the housing act 1988.

Alternatively, before things get this serious, you could inform the council or local authority of your situation who may grant you social housing.

Tenancy types and section 13 for rent increase

A tenancy agreement can either be fixed term or periodic. Given a landlord only serves section 13 once per year and gives one month’s notice, the act can be given to a tenant in a fixed term within a break clause and in a periodic tenancy whenever they choose.

As well as this, if a tenant is still in the fixed term period of their tenancy (they can be in the first 6 months of an AST), a landlord cannot issue a section 13 validly either. Apart from if this has been explicitly agreed upon within a clause in the contract.

What are fixed-term tenancies?

Fixed tenancies are rental agreements between landlords and tenants for a set period of time in which the contract has protection from being renegotiated legally. This can be an assured tenancy or an assured shorthold tenancy. Typically, both of those agreements start with some form of a fixed term.

Evaluation chart of section 13 rent increase

What are periodic tenancies

Periodic tenancies are where tenants pay rent for an indefinite amount of time every week, month or perhaps quarter. These types of tenancies are usually assured shorthold tenancies and have less protection under the law from both section 13 and section 21.

In conclusion

Section 13 is the area of the law relating to rent increases and now you know how it works. So, double-check if you’re serving a section 13 notice in the right way as a landlord as well as understand the law surrounding the rights of your tenants before issuing the notice.