AST's

[Maylix]

Hi Guys, a quick question:#
I'm being asked to sign a residential AST (1 year) with a paragraph which says the rent will increase by RPI every year. I'm told, by the agent that 'all AST's have a rent review clause in them'. I'm going to sign the lease anyway, but this agent has messed me about no end, and frankly I don't believe them. I'm sure that many AST's do have such a clause, but is there something in the definition of AST's that mandates that they must have such a clause? Surely it can't be illegal to have an AST with a fixed rent for say two years?
TIA
Maylix

[UncleEbenezer]

IANAL. Anything I say here is worth what you paid for it, or less. But I do have a certain amount of experience with ASTs and have informed myself.

The agreement can say whatever you (the parties) agree on about rent. Flat for two years, indexed annually, or other.

Personally I'd accept RPI - especially if you're an area (above all, London) where seriously abusive landlords and agents are a substantial risk. It's one form of protection against getting blackmailed later. Indeed, I'd take it as a Good Sign if the agent is asking for it, as it reduces their scope to abuse you.

[dealtn]

I've never inserted any such clause, be it fixed uplift or RPI.

(I have never seriously abused anyone, especially a tenant - despite being a London landlord, and don't see I have scope to either!)

[GoSeigen]

Hi Guys, a quick question:#
I'm being asked to sign a residential AST (1 year) with a paragraph which says the rent will increase by RPI every year. I'm told, by the agent that 'all AST's have a rent review clause in them'. I'm going to sign the lease anyway, but this agent has messed me about no end, and frankly I don't believe them. I'm sure that many AST's do have such a clause, but is there something in the definition of AST's that mandates that they must have such a clause? Surely it can't be illegal to have an AST with a fixed rent for say two years?
TIA
Maylix

It's certainly not required or universal. I've only ever had one agreement with such a clause.

If I were you I'd try to avoid it, and if absolutely necessary push for CPI, nor RPI. RPI is much less used than before and because of the way it's calculated tends to be about 0.5% higher than CPI.

You can definitely fix the rent for two years if the landlord agrees, but then you're tied into a 2-year fixed tenancy. Note that even if there is no rent review clause, the landlord may increase the rent after the fixed period and if he's mean or desperate, give notice if you refuse. So practically, as soon as you are out of the fixed period the rent becomes semi-negotiable again.

GS

[Maylix]

Thanks Guys, You've confirmed what I suspected.
The EA is incompetent and is telling porkies to get out of a mess of their own making. I'm shocked. Not.
Maylix

[GoSeigen]

I'm told, by the agent that 'all AST's have a rent review clause in them'. I'm going to sign the lease anyway, but this agent has messed me about no end, and frankly I don't believe them.

There may be a simple misunderstanding here. Of course landlords have the right to review the rent, I haven't checked recently but if my memory is correct then the process for reviewing rent is even written into law. So, many ASTs might refer to this so that the tenant is not surprised when the landlord increases the rent.

What is NOT widespread (in residential leases) is for a set amount of increase to be stipulated, whether it be a fixed percentage or RPI/CPI or some other formula. Agreeing to this would limit your negotiating position if you did not like the increase. Imagine the situation where RPI spikes by 20% but general rental levels do NOT increase. You would be in the invidious position of trying to renegotiate the clause or risk having to move the family home.

GS

[mutantpoodle]

there is nothing wrong in having a REVIEW clause
but your post says 'increase'

does it mean REVIEW ??? or does it mean alter and increase?

as a REVIEW following RPI might...MIGHT actually reduce if we ever have negative inflation

the wording you suggest is a one way deal

and do you have the option to leave if increase not acceptable?

[Maylix]

there is nothing wrong in having a REVIEW clause
but your post says 'increase'

does it mean REVIEW ??? or does it mean alter and increase?

as a REVIEW following RPI might...MIGHT actually reduce if we ever have negative inflation

the wording you suggest is a one way deal

and do you have the option to leave if increase not acceptable?

Hi Mutanpoodle and Go Seigen, FYI here is the actual clause:
"The Landlord can increase the Rent every twelve months on the anniversary of the date
on which the Tenancy began (“the Rent Increase Date”). For the avoidance of doubt this
means that the Rent will increase on 05 September 2021 each year. The increase is to
be calculated according to the rise in the Retail Prices Index from the start of the
Tenancy or the anniversary date whichever is the later. To avoid doubt if the Landlord
does not increase the Rent in any year this will not affect the Landlord’s rights to
increase the Rent in subsequent years"

So, not a review but an increase. It's a bit moot, as the lease is a 1 year lease, so the landlord would have the right to increase the rent anyway for a new lease, but I suppose it does give the LL the increase if it defaults to a periodic lease. The annoying thing was that the first we heard about it was when the lease was sent to us, even though we'd already had discussions about longer leases, break clauses etc. They tried to slip it in 3 days before I'm supposed to move in, and then try try to justify it by saying, 'Oh, all AST's have such a clause'. Must think I was born yesterday. Idiots.

[swill453]

FYI here is the actual clause:
"The Landlord can increase the Rent every twelve months on the anniversary of the date
on which the Tenancy began (“the Rent Increase Date”). For the avoidance of doubt this
means that the Rent will increase on 05 September 2021 each year. The increase is to
be calculated according to the rise in the Retail Prices Index from the start of the
Tenancy or the anniversary date whichever is the later. To avoid doubt if the Landlord
does not increase the Rent in any year this will not affect the Landlord’s rights to
increase the Rent in subsequent years"

That's the exact wording in boilerplate ASTs like this https://www.helpmerent.co.uk/ast/

Scott.

[dealtn]

there is nothing wrong in having a REVIEW clause
but your post says 'increase'

does it mean REVIEW ??? or does it mean alter and increase?

as a REVIEW following RPI might...MIGHT actually reduce if we ever have negative inflation

the wording you suggest is a one way deal

and do you have the option to leave if increase not acceptable?

Hi Mutanpoodle and Go Seigen, FYI here is the actual clause:
"The Landlord can increase the Rent every twelve months on the anniversary of the date
on which the Tenancy began (“the Rent Increase Date”). For the avoidance of doubt this
means that the Rent will increase on 05 September 2021 each year. The increase is to
be calculated according to the rise in the Retail Prices Index from the start of the
Tenancy or the anniversary date whichever is the later. To avoid doubt if the Landlord
does not increase the Rent in any year this will not affect the Landlord’s rights to
increase the Rent in subsequent years"

So, not a review but an increase. It's a bit moot, as the lease is a 1 year lease, so the landlord would have the right to increase the rent anyway for a new lease, but I suppose it does give the LL the increase if it defaults to a periodic lease. The annoying thing was that the first we heard about it was when the lease was sent to us, even though we'd already had discussions about longer leases, break clauses etc. They tried to slip it in 3 days before I'm supposed to move in, and then try try to justify it by saying, 'Oh, all AST's have such a clause'. Must think I was born yesterday. Idiots.

Well that's not the position in your original post.

You've gone from "will" to "can", a big difference.

[GoSeigen]

there is nothing wrong in having a REVIEW clause
but your post says 'increase'

does it mean REVIEW ??? or does it mean alter and increase?

as a REVIEW following RPI might...MIGHT actually reduce if we ever have negative inflation

the wording you suggest is a one way deal

and do you have the option to leave if increase not acceptable?

Hi Mutanpoodle and Go Seigen, FYI here is the actual clause:
"The Landlord can increase the Rent every twelve months on the anniversary of the date
on which the Tenancy began (“the Rent Increase Date”). For the avoidance of doubt this
means that the Rent will increase on 05 September 2021 each year. The increase is to
be calculated according to the rise in the Retail Prices Index from the start of the
Tenancy or the anniversary date whichever is the later. To avoid doubt if the Landlord
does not increase the Rent in any year this will not affect the Landlord’s rights to
increase the Rent in subsequent years"

So, not a review but an increase. It's a bit moot, as the lease is a 1 year lease, so the landlord would have the right to increase the rent anyway for a new lease, but I suppose it does give the LL the increase if it defaults to a periodic lease. The annoying thing was that the first we heard about it was when the lease was sent to us, even though we'd already had discussions about longer leases, break clauses etc. They tried to slip it in 3 days before I'm supposed to move in, and then try try to justify it by saying, 'Oh, all AST's have such a clause'. Must think I was born yesterday. Idiots.

Well that's not the position in your original post.

You've gone from "will" to "can", a big difference.

I don't think it is that big a difference. The effect of the wording is "The tenant agrees that the landlord may at his option raise the rent by RPI on 5 Sep every year". Short of moving out (i.e. this is Hobson's choice) I don't think the OP could argue very much with any rent rise as per the clause.

GS

[dealtn]

I don't think it is that big a difference. The effect of the wording is "The tenant agrees that the landlord may at his option raise the rent by RPI on 5 Sep every year". Short of moving out (i.e. this is Hobson's choice) I don't think the OP could argue very much with any rent rise as per the clause.

GS

I think you are misunderstanding me.

I am not saying that the effect of the wording is particularly different. But the claim in the original post was that the rent will have to go up by RPI, and that the agent says such clauses are in all ASTs (at least that is how I read the original post).

If in fact what is being said is that there is a rent review clause in all ASTs that allows for the landlord to increase the rent at the end of the period, then that claim made by an agent is a lot closer to the truth.

[swill453]

I am not saying that the effect of the wording is particularly different. But the claim in the original post was that the rent will have to go up by RPI, and that the agent says such clauses are in all ASTs (at least that is how I read the original post).

If in fact what is being said is that there is a rent review clause in all ASTs that allows for the landlord to increase the rent at the end of the period, then that claim made by an agent is a lot closer to the truth.

The clause uses both "can" and "will" : "The Landlord can increase the Rent .. this means that the Rent will increase ...".

So despite probably being in thousands of contracts, it seems to be a little badly worded.

Scott.

[GoSeigen]

I don't think it is that big a difference. The effect of the wording is "The tenant agrees that the landlord may at his option raise the rent by RPI on 5 Sep every year". Short of moving out (i.e. this is Hobson's choice) I don't think the OP could argue very much with any rent rise as per the clause.

GS

I think you are misunderstanding me.

I am not saying that the effect of the wording is particularly different. But the claim in the original post was that the rent will have to go up by RPI, and that the agent says such clauses are in all ASTs (at least that is how I read the original post).

If in fact what is being said is that there is a rent review clause in all ASTs that allows for the landlord to increase the rent at the end of the period, then that claim made by an agent is a lot closer to the truth.

Okay, gotcha, I agree rent review clauses per se may be common but the novel thing here is the stipulation of the amount of increase, which, if agreed to in advance makes any negotiation later on more difficult for the tenant.

GS

[Mike4]

Strikes me as the OP gets the best of both worlds with this clause, and it is very fair.

If market rents have not risen in the next 12 months they can argue that an RPI rise is unfair and there should be no rise, but if rents have gone up 20% (as they occasionally do, the market for rents being quite lumpy), then they are protected from a 20% rise to the extent of RPI.

If the LL is unreasonable and insists on an RPI rise when rents have remained flat, they have the option to move out.

Also, I suggest they insist on rolling it over onto a periodic tenancy at the end of the fixed term. The agent I use occasionally is quite open about the fact they ask all their tenants to re-sign 1 year tenancies annually because eventually, all tenants leave. A 'life event' (new job, new partner, etc) is the usual reason for tenants leaving and we have little control over when 'life events' happen to us. If a tenant is on a 12 month tenancy and a life event causes them to want to go, the chances are high it will not be at the end of a fixed term - meaning they have to buy their way out of the tenancy, pay the re-letting fees etc.

Sharp practice in my view but virtually universal in letting agents for this reason.

[brightncheerful]

"FYI here is the actual clause: "The Landlord can increase the Rent every twelve months on the anniversary of the date on which the Tenancy began (“the Rent Increase Date”). For the avoidance of doubt this means that the Rent will increase on 05 September 2021 each year. The increase is to be calculated according to the rise in the Retail Prices Index from the start of the Tenancy or the anniversary date whichever is the later. To avoid doubt if the Landlord does not increase the Rent in any year this will not affect the Landlord’s rights to increase the Rent in subsequent years"

Boilerplate it maybe but not thought through!

On my website, I provide (free to use) what is quite possibly the only RPI and CPI and rent calculator on-line. (RPI and CPI is widely used for rent review in business tenancies) RPI every month from 1974 and CPI from 1988. The calculator for the percentage change for the index figures and the resultant rent. I don't deal with residential property but that doesn't deter enquiries!

RPI is no longer an official statistic but the ONS continues to publish it as RPI is longer established in general usage. RPI is generally considered more favourable to landlords.

The index figure is published in arrear on or about the 17th monthly.

Based on the actual clause above, the review date in 5 September 2021 each year. I think that should read 5 September starting in 2021 and yearly thereafter (or such like). The word 'increase' implies that a fall in the RPI would not affect the rent.

The fun starts with the method for calculation. Assuming the tenancy start is 5 September 2020, the RPI would be the July 2020 figure, because the August figure won't be released until 16 September 2020. Academic in practice because provide the AST continues, the September 2020 figure would be known by mid November 2020 so shouldn't be an issue. Before then the tenant can only estimate what the increase could be on a monthly basis going forward.

For the first review in 5 September 2021, the anniversary date would either be the July 2020 or if the intention is to use the RPI as at 5 September then the parties would have to wait until sometime in November 2021 for the September 2021 figure to be released. The same for subsequent years.

Normally, it is advisable for an agreement to stipulate the actual base figure and for the percentage change to be calculated using the figure that is one or two months preceding the review date, depending upon the review date in relation to the index release date.

"To avoid doubt if the Landlord does not increase the Rent in any year this will not affect the Landlord’s rights to increase the Rent in subsequent years" " i interpret that to mean that if the landlord does not increase the rent in any year the right to do so is lost, but not the right to increase the rent in subsequent years.