Tenants will soon find it easier to save potentially thousands of pounds as Labour’s flagship rental reforms empower them to challenge rent increases proposed by landlords.
Research from anti-poverty charity Z2K has found that renters who challenge their rent rises are on average £1,140 a year better off than they would be had they accepted the increase.
In 71 per cent of applications for these ‘market rent determinations’ – which are decided by a tribunal – renters have been successful in securing a lower rent than what was proposed, the findings show.
But despite this high success rate, only 1,000 cases have been dealt with over the past two years, representing a tiny fraction of the 5.5 million private rented households across the UK.
In one case last year, a household in Hounslow that had been in the property was able to challenge an increase from £1,000 to £1,450 £450 a month by applying to the tribunal. It found that, while the market rent in the area was £1,400 a month, the poor condition of the property meant the maximum rent should be £1,150 – saving the tenant £3,600 a year over the proposed price.
Five per cent of cases have also seen orders to make the current rent lower. This was the case for a tenant in Newham who was paying £650 a month to live in an HMO and asked to start paying £950. At tribunal, it was found that the property breached a number of safety requirements, and so the rent was lowered the rent to £540 – saving them £4,920.
It is especially worth tenants living in poor housing conditions challenging their rent increases, the Z2K research shows, with the tribunal applying deductions from the market rent due to property condition in 77 per cent of cases. The average deduction in these cases is £2,160 per year.
The research comes as Labour’s Renter’s Rights Act is brought into law, bringing a series of sweeping changes to the system that will empower tenants to challenge rent rises at a tribunal
Chief amongst these is the removal of controversial Section 21 ‘no-fault’ eviction notices, which gave landlords the power to remove a tenant without reason at two months’ notice. Housing charities warned that these were often used in retaliation when a tenant challenged a rent increase, meaning there was a risk in doing so.
Bringing another risk was the possibility that the tribunal could decide to actually increase the rent above the amount the landlord was asking for, which can no longer happen under new rules. Although this was rarer (occurring in 11 per cent per cent of cases), the average increase in these cases was a massive £2,465 a year.
Other changes brought in include:
- Landlords can only increase rents once a year, and only within market rates
- Approved rent increases can no longer be backdated from the date given by the landlord, but must begin after the tribunal’s decision
- The tribunal will also be able to delay the new rent by up to two months to prevent undue hardship
Samuel Thomas, senior policy adviser at the anti-poverty charity Z2K, said: “The Renters’ Rights Act will make welcome changes to how renters can challenge unfair rent increases. Z2K’s new research shows that when renters are able to make use of these protections, the benefits can be significant, putting hundreds of pounds a year back into household budgets and making homes more secure.”
“We are calling on the government to give clear and consistent backing to these reforms, and to ensure renters are supported and confident in using their new rights to challenge unreasonable increases.”
The government was approached for comment.
How to challenge a rent increase
Under the new Renters’ Rights Act, the process for challenging a rent hike has been streamlined to better protect tenants. Landlords must now give a formal Section 13 notice to propose an increase, and can only do this once a year.
Most experts advice trying to negotiate with the landlord first, using evidence such as local market rates or the condition of the property.
If an agreement can’t be reached, the tenant must apply to the tribunal before the rent increase is due to start. Under the new rules, landlords have to give at least two months’ notice of this on the Section 13.
To manage anticipated increased demand on the service, it is no longer free for renters to do this, and the new cost is £47.
Applying for a market rent determination requires a ‘Rents1’ form to be filled out, which can be found on the government website. This cannot be submitted online, and instead must be posted or hand delivered to the tribunal office.
It can take up to 10 weeks for the tribunal to make a decision. If the rent increase is due to start in that period, the tenant must begin paying it.
When gathering evidence, Citizens Advice advises: “Try to find out what others pay for similar properties in your area. You could speak to a local letting agent, look online or ask friends and family. You can then use this as evidence.”
“Any evidence you get will need to be for a property that’s similar to yours. For example, if you live in a one-bedroom furnished flat, compare it with another one-bedroom furnished flat in your area.”
In most cases, the tribunal is be based only on the evidence given, but it could be in person. There may also be a request to inspect the property.
