Here’s something you probably didn’t know.
If your landlord wants to raise your rent to a level you don’t agree with, and you can’t negotiate a compromise, they must issue you with a Section 13 notice. And as a tenant you can challenge this notice by applying to the First Tier Tribunal for a rent assessment.
In its 2019 consultation on proposals to abolish Section 21 evictions, the government noted that the Rent Tribunal would remain in place to adjudicate on rent increases outside fixed terms.
If landlords can no longer use the threat of a Section 21 eviction to force tenants to pay a higher rent, we might expect more landlords to use Section 13 notices. This may result in more cases where the tenant has to move because they cannot afford a higher rent – cases that could be thought of as “economic evictions”. The Rent Tribunal will in turn become more important.
But is the Rent Tribunal able to protect tenants?
We looked at 341 cases between January 2019 and August 2021, and – as well as the fact there have been just 341 cases in all that time – it doesn’t look good.
In short, tenants who challenge a rent increase at the Rent Tribunal come away with an average increase of 5.5% per year – much higher than rent inflation in the country as a whole, and much higher than most people see their wages increase by.
This is because the Rent Tribunal bases its decisions on what similar properties to your home are being listed for on the market.
One bit of good news is they do take into account any disrepair in the property that your landlord should have taken care of, and any improvements you have made yourself.
But the big bit of bad news is that as a tenant you get no benefit from a spotless record of paying your rent on time or anything.
So after a trip to the Rent Tribunal, tenants either pay the going market rent determined by the tribunal, or find a new place to live…at the going market rent! That’s no kind of protection.
What the evidence tells us
On average, private landlords asked their tenants for 28% more than what they were already paying in rent. After assessing the local market and the condition of the property, the Rent Tribunal awarded an average rent rise of 11% - all in one go: enough to cause financial hardship for the tenant if they stayed put.
This tells us that landlords tend to demand more than what they'd get in the open market. In three quarters of cases (77%) the Rent Tribunal awarded a rent which was lower than the figure on the Section 13 notice.
But in the rest, the Tribunal awarded the landlord a rent that was what they wanted - or even higher.
According to the Office for National Statistics, rents in the private sector tend to rise slower than wages. The ONS’s Index of Private Housing Rental Prices looks at all tenancies – new and old; ones where landlords raise the rent every year and ones where the landlord keeps it at the same level year after year. As a result, the latest rent inflation figure of just 2.1% is actually the highest it’s been for nearly 5 years.
Cases that went to Tribunal tended to relate to rents that had previously been set two or more years before, so are hard to compare with the ONS figure on their own. We calculated an annualised average rent rise to make this comparison using the 30 Tribunal reports that recorded the date the existing rent was set. Among these cases, the average rent rise was 5.5% per year – around three times faster than the national average.
While few renters are aware of the Rent Tribunal, and even fewer use it, judging by these appalling outcomes, a lot of people are being spared false hope.
What does this mean for reforms?
Without an overhaul of the Rent Tribunal, renters will continue to face unaffordable rent increases and economic evictions after the abolition of Section 21 evictions.
This is why we argue that alongside efforts to restrict Section 13 notices, improve awareness of the Tribunal and widen accessibility for renters, capping rent increases in tenancies at wage inflation is needed to protect renters from unaffordable rent rises.
A summary of our findings can be found here.
Join our campaign for tenancy reform that gives renters real protections here.
Has your landlord asked for a higher rent? Check your options here.