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I am renting a (London) flat with an Assured Shorthold Tenancy Agreement which has a duration of 12 months. Since this tenancy started at a time when property prices were temporarily low (during one of the coronavirus lockdowns), I requested an extra term in the contract to ensure the price would not go up too much at the point of renewal. The lettings agent added this term, which I agreed to:

After the first 12 months of the tenancy the landlord has the right to increase the rent of the property to up to 3% at the rate of RPI.

Now that the 12 months of the contract are ending and the agent wants to renew, they're looking to increase the rent substantially (by nearly 30%). Had I been aware that they would do this, I would not have taken the flat in the first place (hence me requesting the assertion in the contract).

I'm aware that my easiest recourse is to simply let this tenancy end without renewing and move elsewhere (with the relatively lower costs which that entails), but this made me wonder about the enforceability of terms like this in a tenancy contract: the intent of the term is clear and unambiguous, but does it actually hold any legal sway?

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  • What is "RPI" in this term, please? Jan 20, 2022 at 1:37
  • That's the Retail Price Index, which is a common base rate used in the UK. One measure of inflation.
    – Dave
    Jan 20, 2022 at 13:21

2 Answers 2

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When the fixed term ends, you have two options if you want to stay.

The first option is that you and the landlord can sign a new tenancy agreement, with a new fixed term. This new agreement replaces the old one at the end of the current fixed term, so the landlord is free to make changes, including proposing any number for the rent - and you are free to reject it.

Alternatively, when the fixed term ends, if you don't sign a new agreement, and you don't leave, the tenancy automatically* becomes a Statutory Periodic Tenancy - often called a rolling contract. This has no fixed term, which means that if you want to leave, you have to give 1 month's notice, while if the landlord wants you to leave, they must give 2 months' notice. Apart from that, the terms of the existing contract, including the rent review clause mentioned in the question, remain in force.

The rent review clause suggests that the landlord can unilaterally impose a rent increase after the fixed term ends, but only up to the amount specified. Hence, without signing a new agreement, any increase beyond that would not be allowed.

Also, it doesn't appear to make any mention of future rent increases, which suggests that the default rules for rolling contracts will apply, in that the landlord can propose a rent increase, which you can accept or reject. Failing that, the landlord can impose one via a Section 13 Notice, but only once a year. If you feel the requested rent is unreasonable, you can challenge this, and a tribunal will make a ruling based on the state of the property and the rents for similar properties in the area.

(* If the tenancy has any provisions relating to what happens once the fixed term ends, then the tenancy may become a Contractual Periodic Tenancy. However, unless those provisions relate to rent, then they may not be relevant here.)

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Of course it holds legal sway

As a term of the contract it is as enforcable as any other term, such as the one that allows you to live there or the one that requires you to pay rent. Under the contract, the term may be increased by 3% or the Retail Price Index (7.5%) whichever is the lesser.

Of course, the landlord can abide by this, and put you on a month-to-month lease, not raise the rent in the first month and then raise the price from the second month onwards to whatever they like.

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