Landlord warning as rent appeals hit record high

Landlords are being warned they will need robust evidence to back up any proposed rent increases, after a record number of appeals were heard this summer. 

New data from Hamptons reveals 166 market rent decisions were made by the property tribunal in July, the highest level ever recorded, at around four times the number made in the same month last year.

New powers

New rules giving tenants greater powers to challenge rent increases were introduced under the Renters’ Rights Act earlier this year.  

These mean you can now only raise your rent once a year – via a section 13 notice – and that any increase must be in line with the local market rate.  

Other changes include the introduction of a ‘hardship deferral’ should your proposed rise cause ‘undue hardship' to your tenants, and extended notices giving tenants more time to build their case. 

Crucially, even if the tenant’s appeal is unsuccessful, rent payments won’t be backdated and (unlike the previous set up) the tribunal can’t introduce a higher rent than that proposed by the landlord, even if they deem that to be what the market dictates. 

This means the tenant has nothing to lose by putting forward a challenge, with the new data backing up our predictions, that the tribunal would see a potentially exponential increase in appeals as a result of the changes.

According to the report, the proportion of cases submitted after 1st May, when the new Act was introduced, has grown rapidly, with 73% of all tribunal decisions made by August involving applications submitted on or after this date. 

Despite this, wait times are improving. 

Last month we reported that the courts and tribunals service is taking on a thousand new judges and tribunal members this year to cope with increased demand - something we have been calling for, for some time.  

This appears to have already had an impact, with wait times between application and decision falling from between five and six months at the start of the year, to around three months by August.

What can I do to increase my chances of success at tribunal?

When making its decision, the tribunal takes several factors into account, particularly recently achieved local rents.  

These are distinct from ‘advertised rents’ on portals like Rightmove and Zoopla, which is something to bear in mind when you are putting together your evidence. 

The Hamptons data suggests that your proposed rent is more likely to be viewed as reflective of the local market if you have robust evidence to back it up.  

This could mean collecting evidence from local letting agents renting similar properties to find out more about recently agreed rents, or citing evidence from your own portfolio. 

Proposed rents will be given less weight, with the Hamptons report suggesting a large proportion self-managing landlords – accounting for 42% of the decisions in August – were unable to back up their proposals with solid evidence.

Housing quality

Another key factor is the condition of your rental home. 

According to the report, around a quarter of recent decisions knocked down what would be considered local market rent, as the property in question was not up to scratch. 

Reasons given ranged from a home’s EPC rating to the condition of its carpets and age of its white goods – something else you should bear in mind when proposing increases.

Is there any other way I can approach this with my tenant?

Once you have collected evidence of local rents and served the section 13 notice we would advise you talk to your tenants about what you are doing and why. 

It could be that you could negotiate a rent higher than they are paying now, but slightly lower than the proposed rent in your notice, to potentially avoid the need for the tribunal. 

You should also keep evidence of the process itself. 

If you do end up at tribunal, you will need to prove you followed the correct process, so it is essential you write everything down.

More information

• For full guidance on rent increases, including free Section 13 completion notes and letter templates for members  click here. 
• For all the latest on Renters’ Rights you can access our exclusive members’ hub here. 
• Our award-winning training academy runs a comprehensive Renters' Rights Act training offer. Click here to book your place.