What will be the market rate for forthcoming Section 13 rent increases?

What will be the market rate for forthcoming Section 13 rent increases?

9:51 AM, 4th December 2024, About 10 hours ago 14

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Hello, When the Renters’ Rights Bill attains Royal Assent next year, and every application for Section 13 annual rent increase qualifies to be referred to the tribunal by your tenant for adjudication, what factors will judges determine a “Market Rate” to be (six months later)?

Will they conduct a survey via Rightmove, use local housing allowance rates in some circumstances, or visit a few lettings agents perhaps, or listen to officers in the council’s selective licensing dept. (Who’ve probably never been in business in their lives?).

The reason it concerns me is that it could conceivably drive down rent to well below what already existed, and from what your tenant was previously accepting, but subsequently thought what had they got to lose by challenging it (encouraged by Shelter and Generation Rent no doubt).

Let’s say I’d just completed a re-roof, plus new windows while scaffolding was up, including increasing loft insulation while the roof is open (to stand between rafters), etc etc., thereby resulting in reduced heating bills for the tenant. An investment of say £20,000.

Apart from an inflation increase like almost all other businesses automatically impose, I would need to gradually recoup part of that large (albeit capital) investment in the property by increasing the rent for a much better equipped house – not be obliged to significantly cut it below what it already was!

This scenario looks to be a very feasible prospect, unless I’ve fundamentally misunderstood this element of the bill as discussed and advanced at Committee stage. It could be revised to below your new five year fixed rate mortgage payment.

Thanks judge for making my slender profit become an unsustainable loss, and the reason for yet another “For Sale” sign appearing.

Thank you,

Andrew


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JohnCaversham

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10:31 AM, 4th December 2024, About 10 hours ago

I agree Andrew-very difficult to decipher how it will play out..
Maybe the answer would be to obtain a new EPC at the better banding and be ready to include that in your arbitration hearing to justify your increase, but then that would suggest that homes with a lower banding EPC should have a lower rent to start with. Personally i think the the notion of not being able to backdate any rental increase to the initial date will drive more small players out. What a load of bull-where's the NLRA and bigger players please?
But no body listens to us whingeing landlords sadly.

Landlord of 25 years

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11:00 AM, 4th December 2024, About 9 hours ago

I always keep my rents just below market comparisons but I'm so fed up with the whole situation if my tenants will not agree to the rent increase then I am going to sell the property . This arbitration service is going to be swamped in the first week and it is in every tenants interests to use it all the time because any increase is not back dated. I've sold 2 rentals already. Every time a tenant leaves it is a really difficult decision whether or not to relet to someone who has the right to stay for ever

NewYorkie

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11:57 AM, 4th December 2024, About 8 hours ago

Reply to the comment left by Landlord of 25 years at 04/12/2024 - 11:00
I have increased my remaining rent 3 times by 9%, to the point it is almost at the market rent [my fault for being a bad landlord and keeping my rents low!]. But my mortgage rate means I am still making a loss over the year [leasehold flat].

I have made my tenant very aware of the precarious position she is in, should I be unable to charge a reasonable rent. I will need to sell, and she won't find another similar flat locally at that rent. So far, I haven't heard a word from her following my latest s13.

JaSam

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12:55 PM, 4th December 2024, About 7 hours ago

This is one of the points I wrote to my MP about in the hope that it gets amended during the bills passage. I can’t think of a logical reason why it shouldn’t be back dated. It just opens the door for every tenant to challenge every increase.

On the flip side a good landlord tenant relationship can work well if the tenant truly understands that not allowing this increase could ultimately result in that property being sold.

PH

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13:49 PM, 4th December 2024, About 6 hours ago

Tenant not accepting rent increase = eviction in order to sell. I won't mess around with this bs legislation, accept it or I sell up, simple.

TheMaluka

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13:55 PM, 4th December 2024, About 6 hours ago

Reply to the comment left by PH at 04/12/2024 - 13:49
We are allowed to increase rents once a year. What if the tribunal takes three years to consider the case?

PH

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14:29 PM, 4th December 2024, About 6 hours ago

As soon as the increase is rejected it will go on the market regardless. I'm in no mood to mess about anymore. If tenants don't respect the fact that I'm providing a very nice property for their convenience it will be them who has the upheaval not me and they won't find a nicer place in the area at such a low rate...their call but they will regret it if they don't accept the increase.

Northernpleb

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14:30 PM, 4th December 2024, About 6 hours ago

Due to The Government and Councils continued war on Private Landlords. It is likely the so called tribunal won`t be doing us any favours .
It is clearly in the Tenants interest to challenge any and every rent increase , and to delay as much as possibly .

JaSam

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15:15 PM, 4th December 2024, About 5 hours ago

Reply to the comment left by PH at 04/12/2024 - 13:49
That’s one to look at it but that might not be a cheap option if your a leveraged and have ERCs + all the other fees that goes with selling.

I definitely agree that it’s BS legislation.

Stella

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15:45 PM, 4th December 2024, About 4 hours ago

Reply to the comment left by TheMaluka at 04/12/2024 - 13:55
As is the case with the rest of the RRB legislation Pennycook is making it very easy for tribunals to favour the tenant and keep the rents low.

They cannot increase the rent but they can reduce it and they can take as long as they like to reach a decision.

The new rent only comes into effect on the decision date.

I would not be surprised if they went even further and tried to phase increases in over a period of time.

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