Can Landlords Still Raise Rents Under New Legislation? Clarifying the Section 13 Process - Ep. 21

Can Landlords Still Raise Rents Under New Legislation? Clarifying the Section 13 Process - Ep. 21.

Welcome to The All Things Property Podcast. In today’s episode, we tackle a crucial question facing landlords: How can landlords still increase rent after the new legislation comes into effect?

Host, Simon Bacon with Ian Sadler, dives straight into the realities of rent increases under the new Renters' Rights Act. Whether you’re managing a single buy-to-let or a larger portfolio, we break down the Section 13 rent increase procedure, highlight what’s changing and explore what these changes mean for your tenancies.

We share real-world scenarios and discuss practical strategies for reviewing rents, handling market shifts, and communicating with tenants. If you’re unsure about how often you can raise rents, the importance of market value, or want to know how tenants can challenge increases, this episode is for you.

Stay tuned for direct, honest advice, grounded in local expertise and authentic experiences, from letting agents who put relationships above corporate scripts.

Chapters

00:00 Fixed-term vs periodic tenancy

06:12 Dealing with rent increases

06:52 Keeping tenants happy with fair rent

11:48 Checking and reviewing rent regularly

14:52 Discussing rent increases under new legislation

16:35 Understanding Section 13 rent increases

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www.prefprop.com

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Transcript

SPEAKER_01 0:00

So in this episode we are going to talk about can landlords still increase rent after the new legislation comes into effect. Welcome to the All Things Property podcast with me, Simon Bacon of Preferential Properties. Every week, Ian Sadler and I will delve into All Things Property. We'll guide you through with friendly, no nonsense advice. Ian, I think you've had something very recently about this.

SPEAKER_00 0:28

I had an email last night from a landlord just confirming a maintenance issue that he was given permission for, but uh he added uh an afterthought onto his email by saying that could we look at increasing all the rents now? Because I'm not sure what's happening or what will happen, will I be able to when the new legislation comes in? And that that's a theme, really. Any aspect of this new Renters' Rights Act, it's a lack of knowledge of actually what's going to happen, what people can do and what they can't do.

SPEAKER_01 1:01

Okay. So if you're a landlord asking that very question of when and how do I go about increasing the rents on my tenancies, this episode will be for you. So let's kick that off then. So the way that rents are increased now is through a section 13 notice. Um, and that is still going to be exactly the same under the new legislation. That the main mechanism will remain that the section 13 rent increase procedure will continue. So what does that actually mean now? How often can you serve a section 13 notice under the new legislation?

SPEAKER_00 1:42

New legislation. If uh you have to wait for 12 months after the inception of a new tenancy, so 1st of January 26th, you can't put the rent up again until 1st of January 27th. If it's an existing tenancy, um then you can put the rent up, but it has to be 12 months since the previous increase.

SPEAKER_01 2:04

Yeah, exactly. Um and again, section 13 notices can be quite challenging for landlords to complete. So if you have any questions regarding completing a section 13 notice, then please do give us a call and we're happy to talk through the mechanisms because if you do it wrong, the section 13 notice can be challenged. So let's let's look at some different scenarios in in terms of what do you do at the moment in terms of putting a rent up? Do you look at what kind of things do you consider when putting a rent up or reviewing a rent I should?

SPEAKER_00 2:44

Well, my my um approach to this might be slightly different to yours. I think you've got to get rent up to a market rent, or in your case a full market rent, I think maybe, but in mine I like to keep them more competitive from two angles. If you've got a tenant who's been in a property a long time and looked after the place, does you have a vested interest in keeping that tenant happy? The best way to keep that tenant happy is to keep the rent reasonable and to let them know when you increase the rent that it's still below market value, and they do appreciate that. But and I try to explain this to landlords that as I just said, that there is a point in keeping it fair and reasonable and slightly below market value. Why? Because you have a happy tenant, and a happy tenant's a happy tenancy, it reduces potential problems.

SPEAKER_01 3:37

But where does where does the landlord sit then in terms of so let's say you're saying to your landlord, you know, the market rent is £900, that's what I could get for it, but you've got a lovely tenant in there, and they're looking after the property, they're doing all the things the tenant should be doing, so I'm only going to charge them £850. Is that what the landlord wants? Is that the landlord? No, I don't think.

SPEAKER_00 3:59

No, I don't I don't think you can keep it a maximum would be £50 below market value. I think £25. Or if you've got a property where they've been there for five years and the rent is visibly below market value, then there's two ways of doing it. You can put it straight up to a market value, which might be an increase of £150, £200, or you can stagger that increase or work out the best route to get that level market, that rental back up to a market value or close to it. But is that just not you being a bad letting agent not putting the rent? No, it's No, I'm aware I I review my rents probably more often than you do, to be honest. No, you don't. I do. I don't think you do. How often do you review your rents? I'm constantly finger on the pulse of rent increases. If I see one you can only review it every 12 months, can't you? Yes, I can. But uh if uh if I get to a stage where, let's say the beginning of April and I look at all the rents and I think that one could go up, that one could go up, that one should go up, then But what do you base that on?

SPEAKER_01 4:58

Just oh it's been 12 months since.

SPEAKER_00 5:00

No, don't be nasty. I base it on market value, suitability of tenants, other looking at if I wanted can I say this, if I wanted to focus a tenant's thoughts, then I'm more likely to say the market value for this rent is 1100, you're paying 900, I'm gonna put it up to 1100. And you could get you could do that under new legislation, you can do that because it's a market rent. If I want to keep the relationship, and you you just as well as I do think that a good relationship with a tenant and an agent, a three-way relationship, agent, landlord, tenant, is gonna work. It's got communication. And if you can give them a little something to make them realise they're getting a good deal, even if it's £25 or £50 below market value, if it still works, that £50 a month that you're not getting could give you more benefits from attending the capital property and staying there longer. But that's £600 potentially potentially a year that that landlord is is losing?

SPEAKER_01 6:03

And given given all the legislative changes and the you know the requirements of landlords to you know potentially license their property or to make sure that everything is absolutely where it should be in terms of legal compliance, do you think that's the right approach? Is the landlord not going to go? You know, how many landlords you know nationally are starting to say, oh, you know, it's not worth our while to do this because of you know, a business cost, my insurance has gone up.

SPEAKER_00 6:34

I think a lot of landlords start from that perspective that I'm gonna get out of this business, it's not worth any more. But very well, enough do, but not as many as you'd think. They start on the level of no knowledge, and it's not the worst case scenario, it's not gonna work for me. But three months, six months into the process, they've still got their properties. I've got the a classic example that I can't give you because he'd recognize he'd recognise who he is. But he he every time something happens. So you're gonna tell us anyway. No, I'm not. Every time something happens, he's he wants, oh, I'm I'm getting out of this, I'm selling it. But that was 12 months ago that started. It's still got all the time.

SPEAKER_01 7:13

But in fairness, you and we all have landlords like that who the moment that they have a big cost, they their first thought is, Oh, I can't be doing this. They're not looking at it from a you know a holistic approach, I suppose.

SPEAKER_00 7:28

Well, that's a part of our business, isn't it? Isn't educating people, tenants, landlords, you.

SPEAKER_01 7:34

So let me ask, let me perhaps put a question out there. Are you a landlord who checks your rent every 12 months? Are you a landlord who makes sure that your letting agent changes their rent, you know, reviews the rent every 12 months, or at least on a regular basis, or are you a landlord who actually doesn't have a clue what what the rent is on on your property uh when it was last increased? Whatever you are, I think there are things in this episode that will resonate with you and you know it's worth considering what we're talking about. So, you know, let's talk about maybe um what if the tenant give me an example of have you put a rent up where the tenant has come back to you and gone, uh oh I want to leave because of that rent?

SPEAKER_00 8:25

No.

SPEAKER_01 8:26

No.

SPEAKER_00 8:27

It's a process, you can start at A and end at B.

SPEAKER_01 8:31

And do you think a Section 13 notice will still permit you to do that? What what recourse does a tenant have? So if you're a tenant and you receive a section thirteen rent increase notice, what can you do about it? Make an appeal. Who to? Rent tribunal. Okay. And what will the rent tribunal be doing? What what will they base their judgment on?

SPEAKER_00 8:52

Well, a market most mainly uh the market rent is if it's considered to be at or slightly below a market rent, then they have no grounds for challenging it.

SPEAKER_01 9:05

So when you so therefore, when you do a rent increase notice, are you going to have to produce records to determine what is a market rent to support that? If you needed to, if it was challenged, yeah, but that's pretty easy, isn't it?

SPEAKER_00 9:22

Where do you think rents are at the moment? Up, down, staying where they are? Definitely get not definitely not increasing, staying where they are, slightly decreasing in certain cases, but I think the the supply and demand effects in the rental market will keep rents where they are without any significant decreases because there simply aren't enough properties around to supply the demand from tenants, so tenants have to pay the going rate.

SPEAKER_01 9:51

So do you think landlords are familiar with rent levels? I think most of them are. Most of mine are. Do you get many landlords who challenge you as to I wouldn't say challenges in fair word?

SPEAKER_00 10:02

They inquire gently, do you think we could increase the rent here? At the end of the day, if a landlord's got investment properties and they're running smoothly and there are no glaring differences between the rent they're getting and the market rent, they they are less likely to challenge. They like a smooth process.

SPEAKER_01 10:23

What if a landlord decides that their rent is, you know, imagine you're a landlord who hasn't put your rent up for a couple of years, and I think we've probably all got those landlords or know have let only landlords that have done that. What what could they be doing now?

SPEAKER_00 10:43

Well, under the new legislation, which is what we're discussing, they could serve the section 13 notice and increase the rent. And it's it's a straightforward process. If it's they're paying 900, the market rent is 1100, a landlord could ask for the rent to be increased to 1100. And that can have the effect of well, the knock on effect, that is yes, a tenant could say, Well, I don't really want to, but I will do. Tenant could say, Okay, I'm gonna leave. On net effect, that would be that the landlord could relet it and get the rent up to the market rent. But the me, the process for me would be trying to find common ground between both parties to keep again to keep tenant and landlord happy. Uh acknowledging acknowledgement from a tenant that they are getting a good deal, not a ridiculously good deal, but a good deal, and an acknowledgement from a landlord why that rent is being paid. You've got three happy people.

SPEAKER_01 11:40

So, have you ever had situations where tenants have challenged a rent increase? And if so, on what basis have they challenged it?

SPEAKER_00 11:50

Well, the challenge is an exchange of emails, change of views. I don't can't afford to pay that now, but I I I would agree to you increasing it by £50 now, and then £50 in 12 months' time. And if they're long-term, I wouldn't do that necessarily for short-term tenants, but for long-term tenants, they've been in the property for nine, six, seven years, maybe. Then getting a resolution to that issue the best way possible is getting both parties to agree to a compromise. Okay.

SPEAKER_01 12:21

So in in terms of I suppose recapping this episode, let's let's look at what what it really means. So section 38, a section 13 notice, rent can only be increased by serving a section 13 notice. Um if you if you're a tenant who wants to challenge that, you can't challenge it because potentially you can't you think it's unreasonable that the landlord is putting the rent up by £75 or £100 or you know, even more than that. The challenge is is the rent that I'm being charged a new rent I'm being charged an affordable rent and comparable with other rents in the local area. That's that's one of the fundamentals to come out of this. I think for landlords, are you charging a affordable rent? Are you charging a market rent? If you are, and you should be checking that. If you are, then you know that's all well and good. If you're not, then when you consider your section 13 rent increase notice, you should be considering what the what the market rent is before you even start to put that rent increase on. Then I think you can do the variables, which are how long has the tenant been in, do I want to keep it slightly below the affordable rent or the market rent for that property at the moment, or do I want to charge the market rent? And there should be, I hope, some security that the tribunal will be able to determine what a market rent is. I think the other upshot is that we as letting agents, if we're serving Section 13 notices, need to be able to justify what the market rent is for that kind of property in the area. So again, I don't think section 13 notices and the legislation around rent increases should cause landlords or tenants any um concern. But what it's doing is saying that rents should be market rents, not just, well, I fancy charging you this amount of money, it's got to be a market rent. And that's probably a good a good way of closing this particular episode. Thanks for tuning in to this week's episode of the All Things Proper Podcast. If you found this episode useful, don't forget to subscribe, like, and share. These things really help us reach the people who need to hear this advice. See you next week.