Reviewing Rent

We recommend Owners keep their rents in line with market rates throughout the tenancy.

Keeping rents low may retain residents, but it can be very costly, over time.

Where Owners have particular concerns about a resident’s financial circumstances it may be sensible to forego or delay an increase until the resident is back on their feet. However if their finances do not look to improve then the Owner needs to decide how much rent they will forego in support of the resident.

We know some Owners can be concerned that any increase may cause their resident to give notice. In our experience there are only a few circumstances where this happens:

• where the resident can barely afford the property: In which case retaining that resident presents the Owner with a risk of future non-payment and the potential for the costs of eviction.
• where the resident perceives the property quality does not match the market rent: This is primarily an issue where there has been a long-term tenancy, typically over 7 years, where the property condition may have fallen behind the market.
• where the resident perceives the property has not been adequately maintained: We guard against this by ensuring we address maintenance swiftly, although where owners do not agree works or there are delays for any reason, this may mean the residents concerns could be well founded.

Residents are very good at letting us know if any of these situations apply, as they understand a rent review is a negotiation. Where they raise an issue, we conduct a more detailed review of the circumstances and have a discussion with Owners to agree next steps before continuing with negotiations.

There can also be an issue where the increase in rent is substantial, usually due to not increasing rents in earlier years. We recommend the target should always be the market rent, but Owners may decide to achieve that over two increases, rather than in one step.

The main other thing to be aware of is there can often be a peak of maintenance issues reported when rents are increased. Obviously if these are issues that Owners are obliged to address, then works may be needed. Where reported issues could be argued to be resident responsibilities, Owners may choose to make a judgement about whether to do the work, recognising the resident has a rent increase every month.

What happens if a resident objects?

If residents object to us, we will liaise with Owners to agree the next steps for any negotiation. If we can’t reach an agreement with Residents, they have the right to appeal to the Rent Tribunal if they feel the rent is unreasonable. Currently the Rent Tribunal focusses on whether the rent matches the market rates. To support this they use evidence (e.g. for similar properties in the area a range of adverts, or details of actual tenancies) which we or the Owner must provide.

Happily this happens infrequently, but as we always ensure we carefully consider market rents when negotiating any review, we are well prepared for such a claim.

Please get in touch if you have any questions or concerns