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how to increase rent on periodic rolling AST, without ability to use Section 21?

Started by Shoemond, February 26, 2019, 09:43:37 AM

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Shoemond

I realise I have made an error , I have a tenant who moved in on 14 May 2015, I did accept a deposit but unfortunately for me did not put it into a rent guarantee scheme. I realise now my error. In terms of not being allowed to serve Section 21 Notice.  The fixed term has expired and I would like to increase the rent, but what can I do if my tenant doesn't agree or refuses to pay the rent increase?

KTC


heavykarma

When you realised your "error",did you then protect the deposit? The tenant holds all the cards here,and I would not aggravate matters further with a rent increase,If you want to evict,I think you should return the deposit in full first.

Martha

Quote from: KTC on February 26, 2019, 09:50:58 AM
Section 13 notice. Form 4 in England, Form 4D in Wales.

What are the outcomes when a landlord gives notice that the rent is to increase a) without using a Section 13, versus b) with using a section 13.

In particular what is the difference if the tenant does not agree to the increase in each case.

Thanks

KTC

Quote from: Martha on February 26, 2019, 12:09:11 PM
What are the outcomes when a landlord gives notice that the rent is to increase a) without using a Section 13, versus b) with using a section 13.

In particular what is the difference if the tenant does not agree to the increase in each case.

For a statutory periodic tenancy arising from a fixed term tenancy in pursuant to s5 of the Housing Act 1988, any rent review clause in the original fixed term tenancy is of no effect. (London District Properties Management Ltd & Ors v Goolamy & Anor [2009]), so the only way for the rent payable to change is either with the agreement of the tenant, or in accordance with section 13. The proposed increase is binding on the tenant unless before the expiry of the notice, the tenant make an application (Form 6) to the First Tier Tribunal (Property Chamber) for a determination of a fair market rent. The rent set by the tribunal is then binding unless the landlord and tenant agree a different amount.

Martha

Quote from: KTC on February 26, 2019, 12:30:07 PM
Quote from: Martha on February 26, 2019, 12:09:11 PM
What are the outcomes when a landlord gives notice that the rent is to increase a) without using a Section 13, versus b) with using a section 13.

In particular what is the difference if the tenant does not agree to the increase in each case.

For a statutory periodic tenancy arising from a fixed term tenancy in pursuant to s5 of the Housing Act 1988, any rent review clause in the original fixed term tenancy is of no effect. (London District Properties Management Ltd & Ors v Goolamy & Anor [2009]), so the only way for the rent payable to change is either with the agreement of the tenant, or in accordance with section 13. The proposed increase is binding on the tenant unless before the expiry of the notice, the tenant make an application (Form 6) to the First Tier Tribunal (Property Chamber) for a determination of a fair market rent. The rent set by the tribunal is then binding unless the landlord and tenant agree a different amount.

Thanks

Shoemond

No I haven't done anything as yet as I'm trying to work out the best way forward, I don't intend to take the property back now but in the future will need to in order to sell it to pay off the mortgage.  If I just give  her back the money and get her to sign a letter to say she has received it will this be enough although her original tenancy agreement states there is a deposit.  Or shall I put it into the protected scheme now albeit several years later?

Hippogriff

When you increase the rent, don't just spent it... put the extra into a jam-jar savings account, so you can pay your penalty for not protecting the Deposit, if and when the time comes.

If a tenancy is ongoing and you retain a Deposit it needs to be in a Deposit Protection Scheme. You could decide you don't want the Deposit, I suppose... but most Landlords take one as it's all about protecting your own interests... however, your mistake has probably already kinda put paid to that, I guess.

I have never used a Section 13. Never had to. Rent increases - obviously - are best done by agreement. Sure, no-one likes an increase, but if you aren't taking the mickey and it's somehow tied into market rates, or your increasing costs (or decreasing profits) or some measure of inflation, then it's hard for a Tenant to forcibly argue against a modest increase.

Shoemond

Yes your right my mistake has really sent me into a spin, I'm so fearful now that when the time comes and I do want the property back I won't be able to do so if my tenant doesn't agree, she is on benefits so agreeing to surrender the tenancy won't work as the council will say she's made herself intentionally homeless. 
So I guess I'm right in assuming that even if I give her the deposit back and even if she would agree to a new tenancy agreement I would still not be allowed to use the Section 21 route to get the property back as I have previously not protected the deposit which I then gave her back.

So if she had no arrears, and didn't agree to move then I could be forced to sell the property with her in it?  Which is not what I had intended to do, I intended on refurbishing and selling on the open market not just to a landlord.

Hippogriff

Quote from: Shoemond on February 27, 2019, 10:14:53 AMSo I guess I'm right in assuming that even if I give her the deposit back and even if she would agree to a new tenancy agreement I would still not be allowed to use the Section 21 route to get the property back as I have previously not protected the deposit which I then gave her back.

No, the inability to serve a Section 21 does not apply if the Deposit has been returned (in full, or with agreed deductions).

The original offence of you not protecting the Deposit still exists... nice, and fat, and happy... just waiting.

KTC

Return the deposit. Even if you protect it now, it wouldn't let you issue a s21 notice. You're nowhere close to limitation either, so it's not like you can wait it out before returning it so as not to tip your tenant off that you failed to protect.

Shoemond

So if I give her the money back now, I would be able to use the section 21 procedure in the future but will still have to pay up to 3x rent deposit in fine if tenant claims or judge says I have to ...have I got that right?

KTC

1x-3x penalty per tenancy that you have with her. If there was a fixed term that ended, the statutory periodic tenancy that then arose is a seperate tenancy. Those are in the past, there's no action you can take that will eliminate the liability.

Section 21, correct.

Hippogriff

If Tenant claims and Judge says you have to... not or.

Biggest (?) - or just another big - problem you have is that it's a Council-funded Tenant.. they're hard to dislodge, imagine a limpet...

Don't expect help from the Council... well, help for you... the Tenant will get help and advice on how to frustrate your attempts to evict.

Martha

Quote from: KTC on February 27, 2019, 11:26:19 AM
1x-3x penalty per tenancy that you have with her. If there was a fixed term that ended, the statutory periodic tenancy that then arose is a seperate tenancy. Those are in the past, there's no action you can take that will eliminate the liability.



OK. I am confused.  I realised that under the Superstrike case this anomoly existed, but I thought that under the deregulation act, this had been overturned.

Even the TDS website states :

"Essentially if the deposit was received on or after 6th April 2007 and was protected correctly at the time, the deposit does not need to be re-protected nor prescribed information served again on renewal (or at the start of the statutory periodic tenancy) "

What am I missing here?


KTC

The bit of your quote where it says "and was protected correctly at the time".

Per Superstrike, the requirements apply afresh at the start of every tenancy. What the changes in the Deregulation Act have done is that if the landlord have protected the deposit and given PI and nothing have changed, then the landlord need not do anything again. It doesn't offer any help to landlords who haven't protected the deposit and given PI correctly.

Shoemond

The problem is that I did not protect the deposit, and have renewed the agreement a couple of times also, so perhaps I will have to pay a fine on each tenancy agreement...yes you are right I need to start saving!  I feel really gutted now as I said to the tenant when she moved in that the money she gave me would cover her last months rent, and the rent has not increased since then.  But I guess no matter what I said I didn't follow the correct procedure so I'll end up paying for it.

Shoemond

Is there a time limit on when a tenant can claim compensation for non protected deposit after they have moved out?

KTC

Quote from: Shoemond on February 27, 2019, 12:07:33 PM
I feel really gutted now as I said to the tenant when she moved in that the money she gave me would cover her last months rent, and the rent has not increased since then.

Is that all the money you took? If it was clearly money taken to discharge last month liability of rent, payable at the start of the tenancy, then it's probably not a deposit. But the fact that there have been a number of tenancies renewal make things difficult.

Quote from: Shoemond on February 27, 2019, 12:11:09 PM
Is there a time limit on when a tenant can claim compensation for non protected deposit after they have moved out?

The limitation is six years from the cause of action, which I think mean in practice six years from when the deposit was supposed to have been protected by (i.e. +30 days from when you received the deposit / start of replacement tenancy).

Shoemond

I guess I'll just have to pay up for my error if she makes a claim or if a judge awards it to her. Many thanks to all for your help, I'm going to give the deposit back to her, keep my fingers crossed and hope for the best outcome when I do need the property back in a few years.

Martha

Quote from: KTC on February 27, 2019, 12:04:22 PM
The bit of your quote where it says "and was protected correctly at the time".

Per Superstrike, the requirements apply afresh at the start of every tenancy. What the changes in the Deregulation Act have done is that if the landlord have protected the deposit and given PI and nothing have changed, then the landlord need not do anything again. It doesn't offer any help to landlords who haven't protected the deposit and given PI correctly.

Thanks.

Shoemond

Hi there,  Thank you all for your help last year, it really was much appreciated.  I did return the deposit to my tenant and she signed a letter to confirm she has received payment. I feel a lot happier that I have done it.   I now want to increase the rent, not done so since she moved in 2007. I have discussed this with her and have advised that I have checked the rent in the local area and the local housing allowance rates with the local authority and believe that the new rent proposed is in line with reasonable rents in the open market in the area.  She has verbally agreed and has agreed to sign a letter which she would take to the Council benefits office.  My question is should I write a letter (Rent Increase Agreement) and we both sign it and she takes that to the council benefits office or would it be better if I issue a Section 13,(2) notice proposing new rent? and she take that to the council benefits office?

KTC

There's nothing to stop you doing both. Issue the notice, and her signing she received the notice and agreed to it.

Shoemond

Thanks for your advice.  Just 1 more query, on the landlords Notice Proposing a new rent form I'm unsure of what date to put in question 3. The first rent increase date after 11th February 2003 is... should I put the new rent increase start date? that will mean that both question 3 and 4 will have the same date?

for info the rent has not increased for 13 years

Is this correct?

KTC


Shoemond

Thanks for clarifying this.   I know it may seem ridiculous but I was really unsure of what date to put even after reading note 11.  I found it confusing to read "enter the date on which rent is proposed to be, or was increased under this statutory notice procedure".  As its a statutory notice I didn't want to make an error.

Once again thanks for your help.


KTC

The note is effectively saying, if no increased have previously taken place after that date, don't put N/A, but instead put the proposed upcoming date.