UK Landlord Forum / Life

What is the best position in terms of wording an AST (6 months fixed then static periodic) to define how rent increases will be done going forward.

I am thinking that I would review this every 12 months, but, is it better in the AST to state

- a defined percentage increase each year
- that it will be linked to something like a mortage rate or base rate or inflation
- that there will be a review and not commit to anything specific in the AST
- nothing at all, dont even mention it
- something else I have not thought of

My question arises because my current AST template does not mention anything about changes in rent.

Thanks

That's the best approach.

thanks for your reply.

Quote from: jpkeates on March 16, 2025, 06:26:57 AMThat's the best approach.

Actually, I just went back through the AST again and found this buried in there


3.28   Rent Review
Should the tenancy continue beyond the term certain the Landlord reserves the right without notice to ask the Tenant for a new rent on the first and any subsequent anniversary of the starting date of the tenancy which new rent shall be the current open market rent.


Does having this in there, help or hinder me. I assume this indicates that I would be able to use a section 13 form to make proposals.

A section 13 notice isn't a proposal, it sets a new rent.

The existence of any tenancy term that indicates that the rent may be greater than the current rent precludes the use of a s13 notice, so that term isn't helpful - because it probably means that you can't use a section 13 notice, and doesn't actually set a new rent amount (given that "current open market rent" is a matter of opinion).

Ideally the tenancy agreement should not mention rent increases at all.

thank you, I will remove it.

I would advise you sit down and consider the Tenancy terms, this is not a template it is a legal agreement that could tie you up in knots for years.

If you are a DIY type of person you could take the model agreement for an AST from the .Gov website and use all 67 pages to create inspiration of what you want.

https://www.gov.uk/government/publications/model-agreement-for-a-shorthold-assured-tenancy

However, what you should not do is copy bits you like into an existing tenancy agreement, because you may create confusion due to contrary terms.

Instead make a note of the terms you think you like, copy them into a document, give that document to a Housing Lawyer and ask if they have a contract that covers all the things you liked.

For example you might think that way an SPT gives the Tenant two months notice but leaves you with one month is not entirely fair, so you could decide that your agreement should impose the two month notice on both sides.  Generally an agreement should be equal to both sides but it still can't override legislation and statutory obligations.

In my opinion the best wording comes from not allowing it to become SPT, but to create a contractual periodic tenancy from day one.  Such a Tenancy would only end when the break clauses in the Tenancy are triggered by either party. 

As for rent increases, they should be baked in using rules that more or less mirror the legislation but also include an RPI increase that will happen no matter what. These are by far the most rock solid, they are fair and they use the ONS data for 12 months prior to two months before a tenancy anniversary. 

So the agreement never ends unless one of the parties terminates it via break clause, other terms need to cover the eventuality that a break clause is exercised but the Tenant does not leave.  However, the RPI rent increases carry forward even if it does become an SPT, if a Tenant refers an embedded rent increase to the FTT, it would likely would deem it has no jurisdiction because rent increases are baked in. This is supported by their own rules and case law.

Again, this is not something you should try to construct yourself as you will likely shoot yourself in the foot.  Collect or buy several agreements and spend some hours figuring out what you like and dislike, the way to approach this is to imagine your worst nightmare. 

Checkout the Shelter website for potential nightmares, all of their advice is backed by legislation and they even point to which.

Then look for terms that protect you whilst still remaining within the legislation as you can't contract out of common law obligations, e.g. repairs, eviction and so on.

Remember don't change terms without speaking to a Housing Lawyer, even the most simple thing can tie you in knots. Where possible use statutory guides like the Tenant Fees Act (2019)

https://www.gov.uk/government/publications/tenant-fees-act-2019-guidance

However, check the Tenant Guidance too so you are informed.

Also become informed about the pitfalls by checking out the blog posts on the main side related to Tenancy Agreements.

https://www.propertyinvestmentproject.co.uk/?s=Tenancy+agreement

I have seen so many agreements, some of the amendments I have seen were definitely not put there by a Solicitor because they a contrary to common law. For example if you are 7 days late in paying rent you automatically trigger a 3 day forced eviction.  That Landlord lost just under £15k in legal fees alone, but they opened themselves up to huge fines.

I don't really recommend a specific contract, I have seen some that are pretty elegant, such as those offered by Painsmith, although I might construct their contractual periodic elements a little differently.

Various Landlord organisations also have model agreements, e.g the NRLA, their agreements are not bad, they are cheap as chips used to be and they have a lot of construction help

https://www.nrla.org.uk/resources/creating-your-tenancy

Did I mention not change these yourself, speak to a Housing Lawyer.

Considering changes in the legislation you might want to decide that you will only rent to those with a guarantor, so a solid guarantor agreement is also necessary.  Again various organisations offer these and some are rock solid.

Remember that this is a business, Tenants are not your friends, they are your customers but customers who have obligations along with highly enforceable rights.

Think of your rent the way Microsoft think about software revenues or ALDI think about food prices, they don't ask our permission, they link their prices to market forces. An RPI increase that happens every year is always going to be considered fair.   

Quote from: marthr on March 15, 2025, 09:02:15 PMWhat is the best position in terms of wording an AST (6 months fixed then static periodic) to define how rent increases will be done going forward.

I am thinking that I would review this every 12 months, but, is it better in the AST to state

- a defined percentage increase each year
- that it will be linked to something like a mortage rate or base rate or inflation
- that there will be a review and not commit to anything specific in the AST
- nothing at all, dont even mention it
- something else I have not thought of

My question arises because my current AST template does not mention anything about changes in rent.

Thanks