LONDON, UK — The first months of the new rent-increase system in England are beginning to provide an early indication of how disputes between landlords and tenants are being handled by the First-tier Tribunal (Property Chamber).
An analysis of 25 Section 13 rent-increase cases decided between June 24 and September 2 suggests that landlords have frequently secured much of the rent they originally proposed, although the outcomes have varied considerably between individual cases.
The figures were reviewed by property lawyer David Smith of Bishop & Sewell and reported by LandlordZONE. They offer an early look at how the tribunal is approaching evidence about market rents under the Renters’ Rights Act.
For tenants facing a proposed increase, the cases also underline the importance of producing evidence of comparable rents rather than simply arguing that an increase is unaffordable or excessive.
What the early tribunal cases show
Of the cases reviewed, 12 of 24 determinations gave landlords the full amount specified in their rent-increase notices. Six cases, however, resulted in landlords receiving no more than 25% of the increase they had sought.
Two of those cases resulted in no increase above the tenant’s existing rent.
Across the cases examined, the median proportion of the proposed increase awarded was 92.4%, while the mean was considerably lower at 67.1%.
The difference between those figures is significant because it reflects the wide variation in individual decisions. Some landlords received virtually everything they had requested, while others secured little of the proposed increase.
The rent outcomes ranged from a 5.6% reduction from the existing rent to a 26.2% increase.
The reduction arose after an initial notice was found to be invalid and a replacement proposal set the rent below the existing figure.
Why evidence is becoming increasingly important
The analysis points to one of the central issues in the new system: demonstrating what a property is actually worth on the open market.
Under the current Section 13 process, a landlord can propose a rent increase, but a tenant who believes the proposed rent is above the open-market level can ask the First-tier Tribunal to determine the appropriate rent. GOV.UK describes the open-market rent as the amount the landlord could reasonably expect to obtain if the property were re-let on the open market.
That makes comparable rental evidence particularly important.
Smith’s review found that only two landlords supplied evidence that could properly be described as achieved-rent evidence. Both were apparently institutional private-rented-sector operators using information from their own portfolios.
Ten landlords supplied no rental evidence, or little more than a general claim about prevailing market levels.
Most of the remaining landlords who produced evidence relied on advertised properties from online property portals.
However, the analysis also found that only three of the 15 cases involving portal evidence actually identified which portal had been used.
That distinction matters because an advertised rent is not necessarily the same as the rent eventually agreed between a landlord and tenant.
A property can be listed at a particular figure but ultimately let for less. For a tribunal attempting to establish the open-market rent, evidence showing what comparable homes actually achieved may therefore provide a different picture from asking prices alone.
Tenants are also expected to provide evidence
The evidence gap was not limited to landlords.
In 15 of the 25 cases examined, tenants did not provide comparable rental evidence of their own.
That could become an important feature of future disputes as renters and their advisers become more familiar with the new process.
A tenant challenging a rent increase has the opportunity to present evidence showing that comparable properties are being rented for less than the figure proposed by the landlord.
GOV.UK confirms that tenants can apply to the First-tier Tribunal when they believe a proposed increase is above the open-market rent.
The early cases suggest that simply disputing an increase may not be enough to establish what the correct market rent should be. Evidence about similar properties, their location, condition, size and actual rental values can potentially become central to the tribunal’s assessment.
Two-month notice remains a crucial requirement
The analysis also highlights the importance of getting the procedure right before a rent dispute even reaches the question of market value.
One of the cases was struck out because the landlord had not provided the required minimum two months’ notice.
Under the current rules, landlords increasing rent through the Section 13 process must give tenants at least two months’ notice. The increase can generally only be made once a year.
This means a landlord with strong evidence of market rents can still run into problems if the statutory requirements for serving the notice have not been followed correctly.
For tenants, checking the notice itself can therefore be just as important as examining the proposed rent.
Hardship arguments have had limited success
The cases also provide an early indication of how claims of financial hardship are being treated.
Only two tenants in the sample succeeded when relying on undue hardship under Section 14(7) to seek a postponement of the date on which the new rent would take effect.
That does not mean financial circumstances are irrelevant. Rather, the small number of successful cases in this early sample suggests that hardship arguments have not routinely resulted in the effective date being delayed.
The tribunal’s role remains focused on applying the statutory framework and determining the appropriate rent under the rules governing the case.
What the cases could mean for landlords
For landlords, the early decisions point towards a more evidence-based approach to rent reviews.
A proposed increase does not simply stand because the landlord believes the property is worth more. The tribunal can determine the open-market rent if a tenant challenges the increase.
The evidence reviewed by Smith suggests that landlords with reliable information about actual rents achieved by comparable properties may have stronger material to put before the tribunal than those relying only on general market assertions.
This could be particularly relevant for landlords and letting agents managing several similar properties.
Records showing when comparable properties were let, their location, size, condition and achieved rent could provide a clearer evidential basis for a proposed increase than a collection of asking prices from property portals.
The early cases therefore appear to be putting greater emphasis on the quality of the evidence accompanying a rent increase rather than simply the size of the increase itself.
What tenants should know
For renters, the new system provides a formal route to challenge a proposed rent where they believe it exceeds the open-market level.
But the early cases indicate that tenants should also prepare evidence.
That could include information about comparable properties in the same area, taking account of differences between the homes rather than relying on a single cheaper listing.
The tribunal’s task is not simply to decide whether a tenant feels the proposed increase is too high. It must determine the appropriate open-market rent under the applicable legal framework.
The government’s guidance confirms that the tribunal can set a rent that is lower than, equal to, or otherwise different from the amount proposed by the landlord.
An early picture, not the final verdict on the system
The 25 cases examined by Smith represent a relatively small sample of tribunal decisions, so they should not be treated as a definitive picture of how every future rent dispute will be resolved.
The system is still new, and both landlords and tenants are likely to become more familiar with the evidence expected by the tribunal.
That could change the character of future cases.
Landlords may increasingly bring records of rents actually achieved rather than relying primarily on advertised properties. Tenants, meanwhile, may become more likely to submit their own comparable evidence when challenging proposed increases.
The early decisions nevertheless provide a useful indication of where disputes are heading: evidence about the actual rental market is becoming central to Section 13 challenges.
For landlords, that means keeping detailed records before proposing an increase. For tenants, it means checking the proposed rent against comparable homes and assembling evidence before challenging it.
The First-tier Tribunal’s rent determination process is now an established part of the post-Renters’ Rights Act rental system in England, and the decisions being produced over the coming months should provide a much larger body of evidence about how the rules operate in practice.
Related M10News coverage
M10News has been following the wider changes affecting Britain’s private rented sector, including the government’s preparation for increased pressure on the courts and tribunals following the introduction of the new rental rules. Our earlier report, UK Recruits 1,000 Judges as Rental Possession Cases Rise Under New Renters’ Rights Rules, examines another part of the system’s transition.
Readers can also follow our wider UK housing coverage for further reporting on rents, landlords, tenants and changes to the private rented sector.
