The introduction of the Renters’ Rights Act aims to empower tenants by allowing them to challenge unfair rent increases through a tribunal process. However, concerns have been raised by the anti-poverty charity Z2K that the associated tribunal fees could create a significant barrier for tenants, potentially undermining the act’s effectiveness and leaving landlords facing uncertainty.

Challenging rent increases under the new legislation

The Renters’ Rights Act introduces a mechanism for tenants to contest rent rises via a First-tier Property Tribunal. Landlords are restricted to increasing rent only once per year through a Section 13 notice. This reform is designed to provide tenants with stronger protections against excessive rent hikes.

According to data from Z2K, tenants who successfully challenge rent increases save on average £1,140 annually compared to accepting the landlord’s proposed increase. More than 71% of market rent determination applications brought by tenants result in the tribunal setting a lower rent than initially proposed by landlords.

The tribunal frequently applies deductions related to property condition, with 77% of cases resulting in a reduction from the baseline market rent. On average, these deductions amount to £2,160 per year. The charity emphasises that such reductions can be crucial for tenants, especially those on low incomes who already spend a disproportionate share of their earnings on housing costs.

Tribunal fees risk deterring tenants

Despite the potential benefits of the tribunal process, Z2K highlights concerns about the £47 fee introduced by the government for tenants challenging rent increases. The charity warns this upfront cost may pose a “significant barrier” for many renters, particularly those facing imminent rent hikes.

Tenants eligible for a full fee remission must undergo a separate application process requiring detailed disclosure of household income and savings. This additional administrative burden could discourage vulnerable renters or those unfamiliar with legal procedures from pursuing challenges.

Z2K states: “For some, the effort, uncertainty and perceived risk involved may outweigh the benefit of challenging the increase. For those who don’t qualify, it also increases the risk and uncertainty at the point of deciding whether to apply.”

Implications for landlords

The Renters’ Rights Act stipulates that any rent increase upheld by the tribunal takes effect from the date of the tribunal’s decision, not from when the landlord first served notice. This means that even unsuccessful challenges can delay landlords receiving higher rent payments for several months, creating a period of financial limbo.

Geoffrey Vos, Master of the Rolls and head of civil justice in England and Wales, has expressed concern that the legislation might incentivise tenants to challenge every rent increase as a means to delay implementation. This could lead to increased tribunal caseloads and prolonged uncertainty for landlords.

What this means for landlords

Landlords must prepare for the possibility of increased tribunal applications and the associated delays in implementing rent rises. The risk of prolonged uncertainty over rental income may affect financial planning and property management decisions.

While the tribunal process aims to protect tenants from unfair rent increases, landlords should be aware of the potential administrative and financial impacts. Clear communication with tenants and thorough documentation of property conditions may help mitigate disputes and support landlords’ cases if challenges arise.

Source: Based on reporting from Property118

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