Correct wording on lease

[meagain]

Hi everyone

My T is in receipt of HB and I put the current (at that time) LHA rates down on the lease, which was approx 3mths ago. T's claim has recently been reassessed due to change of circumstances and in that time LHA has risen.

As I understand it, L is entitled to raise rent by a small percentage each year? Is there any correct wording that I could state on the lease that would enable me to receive the then current LHA rates without creating a new AST or applying for rent increase? Or is this done automatically?

Thanks in advance x

[Preston]

Hi

As you probably know, once the initial fixed period of an AST has ended, you can increase the rent in one of three ways:

1) grant another new AST on a new rent, if the tenant agrees

2) issue a section 13 notice (theres a free copy on this site and this can only be done once a year) assuming there is no rent increase clause in the tenancy agreement

3) increase the rent in line with the tenancy agreement.

Many, perhaps most, ASTs dont include a rent increase clause, I guess because it is assumed that the landlord will use either 1 or 2 above. Lots of landlords like to do it this way, because rents are very market sensitive and its very difficult to predict a year or two in advance what the "going rate" will be.

Having said this, I can certainly see why you might want a clause in the agreement. The key with any such clause is that, for it to be legally enforceable, it must be definite and measurable. The reason for this is that it must be clear for both parties - particularly the tenant - so that they can properly understand what they are signing up to. So, I know you wouldnt do this, but just to illustrate, a clause which says that "the rent will be increased on x date by a figure that the landlord will decide" will not be enforceable. However, one which says that the rent will be increased by 5% on x date, would be enforceable because it is clear and specific. I also know that clauses which link the increase to a known independent indicator, such as the RPI for the month 12 months after the start of the tenancy, have been upheld by the courts.

You have said you want to link the increase to the Local Housing Allowance (LHA). The decision you have got to make is whether this would be regarded as sufficiently definite to be enforceable. I have to say I'm not sure, but on balance I think it probably wouldnt.

But there is another reason why I wouldnt include this in a tenancy agreement and that is that I dont think your local housing benefit department would like it very much! If they think the rent is being set specifically to take account of local benefit levels, they have the power not to pay up. Odd I know, because this is inevitably what happens in the real world, but they dont like to think that landlords are just pushing rents up to the maximum level they can get away with, rather than basing their decisions on other market or business factors.

So, on balance, if I were you I think I would use the section 13 procedure, but if you do give a tenancy agreement clause a go, I would be very interested to hear how you get on.

Good luck

Preston

[meagain]

Preston, thank you for taking the time to provide me with such an in-depth answer - it's much appreciated.

On reflection, I think I will take your advice and go down the S13 route.

Thanks again x