Tenants forced into signing ‘rent tracker’ contracts

Letting agents say they are being asked by landlords to offer tenants a ‘rent tracker’ agreement – which enables rent rises that follows a rise in the Bank of England base rate.

Research by the i newspaper highlights that the trend appears to be on the rise as landlords pass on the cost of their mortgages to their tenants.

It reports that one tenant in London had to agree to a 20% rent hike, plus a clause that could trigger another increase in six months, to secure her home.

She said she felt like she had no choice, as the demand for rental properties is so high that she would struggle to find another place.

Include the clause in tenancy agreements

The newspaper quotes Marc von Grundherr, of London-based estate agents Benham and Reeves, who reveals that landlords are increasingly asking him to include the clause in tenancy agreements.

He says that the agency has drafted two agreements so far that make clear that rents can be increased if the Bank of England rate rises.

James Lindsay, a Liverpool lettings agent, told i that one landlord had asked for a similar clause after he had agreed something similar with a tenant in another city.

He tells the newspaper that he refused to do it, saying the landlord was trying to ‘game’ the situation in their favour.

Raised its base rate 14 times since the end of 2021

The Bank of England has raised its base rate 14 times since the end of 2021, and it is expected to do so again on 21 September, to 5.5%.

This means that landlords who have variable or tracker mortgages are paying more interest every month.

Some letting agents say they have refused to comply with these requests, as they think it is unfair for tenants who are already facing record-high rents and inflation.

But others have apparently agreed, saying that some landlords are struggling to make ends meet and need to protect themselves from further rate rises.

Renters are facing fierce competition

Rents have soared across the UK over the past year, as the supply of rental properties has not kept up with the demand and now renters are facing fierce competition for every property.

Some letting agents report they receive between 30 and 100 applications per property – which gives landlords more power to impose their terms and conditions on tenants, who often have little room for negotiation.

The i says the situation is likely to worsen as interest rates continue to rise, putting more pressure on landlords and tenants alike.

‘Unusual’ to see these tenancy clauses

A project co-ordinator at Renters’ Rights London, Portia Msimang, says it is ‘unusual’ to see these tenancy clauses – and they typically only apply to those for more than one year.

She says she would advise a tenant not to sign the agreement if there was such a clause.

Shelter’s chief executive, Polly Neate, said that tenants are being back into a corner because they have an impossible choice.

Either they agree to the clause, she says, or they miss out on the property.

A spokesperson from the Department for Levelling-Up, Housing and Communities, told i: “Rents should be agreed between landlords and tenants, and landlords should have a route to change rents, only when it is necessary.

“Our landmark Renters (Reform) Bill currently going through Parliament will deliver a fairer, more secure and higher quality private rented sector.

“It will deliver the government’s commitment of a better deal for renters and landlords by improving the system for both responsible tenants and good landlords.”

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