Can I index link rents into my tenancy agreements?

Reply to the comment left by Mark Crampton Smith at 21/05/2022 - 09:21
"That’s fine….. but remember a rent increase means a new tenancy."

No it doesn't.

Reply to the comment left by Dylan Morris at 16/05/2022 - 09:34
RPI is quite common in agency agreements. A landlord wouldn't calculate RPI - it's calculated by the ONS and widely published in the press.

Reply to the comment left by Crossed_Swords at 21/05/2022 - 11:09
the thing is though, as i mentioned above, if you as a landlord wanted to track any increases rent between the start date and the review date then CPI/RPI arent really suitable even though people traditionally use them. Have a look at the ONS link i mentioned above as that is really the right one i think

Going to he some difficult conversations with tenants in the coming months as, in reality my opinion is rents will need to rise.
Until now I tend to increase by £10 a month each year in my properties but, have excellent tenants, who Is don't want to upset.
Where management fees are involved it will be interesting to see if these increase substantially over the next year because if they do rents will need to reflect.
Unfortunately we are not immune to increased maintenance costs so lots to reflect on in the coming months.

Reply to the comment left by Matarredonda at 21/05/2022 - 22:18
completely agree that rents will rise. Inflation going up, mortgages harder to get, more security for tenants = more demand = rent increase but it is going to be harder to assess where rents are in order to keep any increase reasonable which is why i would use the ONS data index for rents which deals with rents by area of the country.

With regards to management fees, if we are talking about actual management of the property then, i think alot are based on % of the rent paid so they will increase accordingly with the rent.

In relation to maintenance costs i would think a lot of them the landlord under the AST has to swallow vut not all of them of course.

Reply to the comment left by charles stevens at 21/05/2022 - 12:31If you're saying that rents and RPI are not in line, that is usually so. You don't have to use RPI, just say the rent will reviewed. But then that's not index-linking which was your original question.

Reply to the comment left by Crossed_Swords at 22/05/2022 - 14:46
Yes that's right but, the reason people go down the route of having a rent index linked is that the figure is determined by reference to a independent third parties index data table.

If, as you suggest, you just have a rent this is based upon the terms of the review in the lease (resi - open market normally; commericial - open market with disregards and assumptions) but this can be disputed due to the fact that it is based upon opinions.

If you wanted to give yourself a form of tracked increase in market rent without having to go to the trouble of assessing a market rent then you could apply the ONS index on rent prices.

That's the difference between having rent review as you suggest and having linked to an index which is more appropriate that RPI. Hope that helps.

Reply to the comment left by Mark Crampton Smith at 21/05/2022 - 09:21
Mark, you write: "... but remember a rent increase means a new tenancy."

What is the authority for that statement? The tenancy is the same. It is just that the rent payable under it has increased.

Landlords will be astonished to learn that a new tenancy is created when the rent is increased. If a new tenancy arises that will mean any guarantee of the old tenancy falls away. I think you are 100% wrong.

soooooooooooooo what is ultimately the conclusion here?
As a non Ltd Landlord who does not use Agents I am of the opinion it is much fairer to tenants to raise a rent (if need) to 'market rate' - that is the standard rent for that area, type of property size etc.
As far as I am aware you cant raise the rent in the last 12 months if you have already done so and no it doesn't mean a new AST.
'Fair and reasonable' is just that. If a LL has not raised the rent for years and they does so now to market rate he/she can. The tenant may not like it and of course the LL can give more notice than the standard one month, but this is possible.
If the tenant wants to give notice that they are not happy about it then yes there can be a mediation, but think of it this way round...
If a tenant has had low rent for years (as opposed to market rate at the time) then the LL ups to market rate now, it still means they have had years of LOW rent and now the rent is MATCHING the same in the area, not rising above that.
How many LL's really rent out at £500 a month then a year later raise it to eg £700 a month?
It is possible the LL could have not assessed the rent properly at the time, or circumstances (supply and demand) have dictated the rise.
As far as I am aware (someone may well tell me different!) UNLESS your TA states exactly what the rent increase process is and what it will be raised by, then the 'reasonableness' factor applies.
If you have no rent increase details in your TA then you have to a S13 and there is an avenue for the tenant to complaint if they see it as unfair.
By the same token they can always given notice themselves and find somewhere cheaper. I know the current climate makes this very difficult, BUT the LL is not in control of the higher forces here and if a justified increase to match similar rents in the area is needed then it is warranted at least. it is at the LL discretion what they increase by if at all, but as has been shown those LL's that do not keep up with market rent, only serve to be seen as 'demanding' when they do try and level rents up.
There is no law in the land that says you have to rent your property ON OR BELOW the average rate for the area.

Reply to the comment left by DSR at 23/05/2022 - 13:58
Absolutely spot on. Excellent summary 👍