Do you need to use a Section 13 Notice to increase rents?

All the buy-to-let landlord needs to know about Section 13 Notices

In a recent article discussing how to raise rents legally in the UK buy-to-let market, I introduced the need to issue a Section 13 Notice if the tenancy is periodic or if the tenant disputes the rent increase. A landlord client sent us an email after we published that article, asking if we could explain more about a Section 13 Notice. Here’s all you need to know.

What is a Section 13 Notice?

You cannot increase the rent during the first fixed term unless you have included a rent review clause. After the fixed term has ended, it is usual to move the tenant to a periodic tenancy. This is more flexible and makes it easier to evict a nightmare tenant.
With the tenant on a periodic tenancy, you will need to use a Section 13 Notice to increase the rent. It must include the following details:

• The landlord and/or property manager’s details
• The tenant’s details
• The property’s details
• The newly proposed rent
• The proposed date from which the new rent will be charged

Limitations of a Section 13 Notice

There are some limitations when you use a Section 13 to raise the rent. You cannot use it to raise the rent:

• Until 12 months after the start of the tenancy
• More often than every 12 months
• If the tenancy agreement includes rent review clauses that stipulate the terms for a rent increase

Notice of a rent increase must be given

When a Section 13 Notice is served, you must give at least one month’s notice of your intention to increase the rent if the rent is paid either weekly or monthly. If the tenancy is yearly, at least six months’ notice must be given.
The new rent must also start on the same date of the month that the tenancy started. So, for example, if the tenancy began on the 14^th, then the rent increase must take effect on the 14^th. Therefore, if you wish to give one month’s notice, you would need to serve the Section 13 Notice on the 14^th of the month.

How much can you increase the rent by?

You cannot simply increase the rent by an arbitrary amount; it must be ‘fair’. In other words, it must be in line with the rent charged for similar properties in the same area. Therefore, you should always do a little research before increasing the rent.

What if the tenant disputes the increase?

If the tenant thinks that the rent increase is too much, they can dispute it by applying to the First-tier Tribunal. If the tribunal accepts to hear the case, you should be prepared to present evidence to back up the increase. This might include comparison rents from other letting agents in the area.
If you or the tenant don’t agree with the decision of the tribunal, an appeal can be made within 28 days.
The laws that the tribunal will consider when making its decision are:

• The Rent Act 1977
• Rent Acts (Maximum Fair Rent) Order 1999
• Local Government and Housing Act 1989
• Housing Act 1988

What if the tenant is still unhappy with the rent increase?

If the tenant is still unhappy with the increase, then they will probably move out. However, you may need to serve a Section 21 Notice and evict the tenant.
In our experience, good tenants are worth keeping, even if it means charging a slightly lower rent than you may otherwise be able to charge. Read the following articles before raising rents:

• Balance your emotional side and business brain to increase rents
• How to raise rents legally in the UK buy-to-let market
• How to raise rents without resistance from your tenants

You don’t have to be the one to break the ‘bad news’ of a rent increase to your tenant. We keep our clients updated about local rents. We’ll offer advice about raising rents. And we liaise with the tenant on your behalf. To chat about this and other benefits of hiring us as your property manager, get in touch with the team at Ezytrac  at +44 0 1522 503 717
Live with passion,
Brett Alegre-Wood