Setting Rents Just Got More Complicated – Are You Up to Speed with the Changes?
If you're a landlord in England, the rules around setting, reviewing and increasing rents have shifted significantly. The Renters' Rights Act has introduced sweeping reforms to the private rented sector, and one of the most immediately practical areas it touches is how rent is determined and managed throughout a tenancy. Whether you manage one property or a large portfolio, getting to grips with these changes isn't optional – it's essential.
This article walks you through the key changes the Renters' Rights Act brings to rent setting, what they mean for your existing and future tenancies, and how you can stay compliant while still running a viable rental business.
Why the Renters' Rights Act Changes Everything for Landlords
The Renters' Rights Act represents the most significant overhaul of private rented sector legislation in a generation. While much of the early commentary focused on the abolition of Section 21 "no-fault" evictions, the Act's impact on rent setting is equally far-reaching and arguably more relevant to the day-to-day management of tenancies.
The legislation is designed to create a fairer, more transparent rental market – but that comes with new obligations for landlords who must now follow stricter rules about when and how they can raise rents, what processes they must follow, and how disputes will be handled when tenants push back.
The End of Fixed-Term Tenancies as Standard Practice
One of the foundational changes underpinning the new rent rules is the shift away from fixed-term assured shorthold tenancies (ASTs). Under the Renters' Rights Act, all new tenancies will be periodic from the outset – typically rolling on a monthly basis. This seemingly structural change has a direct knock-on effect for rent reviews.
Previously, landlords could use the end of a fixed term as a natural point to reset rent to market levels or negotiate a new figure. That mechanism no longer exists. Instead, landlords must use specific, prescribed routes to review or increase rent, making forward planning all the more important.
How Rent Increases Must Now Be Handled
Under the new framework, landlords are limited to one rent increase per year. This isn't just a best-practice guideline – it is a legal restriction. To implement a rent increase, landlords must use a formal notice procedure, specifically a Section 13 notice, which must be issued to tenants with a minimum of two months' written notice before the new rent takes effect.
The notice must clearly state the proposed new rent and the date from which it will apply. Crucially, rent cannot simply be raised by issuing a new agreement or through informal negotiation – the statutory process must be followed. Any attempt to increase rent outside of this framework could be unenforceable and may expose landlords to challenge or financial penalty.
What Counts as a Valid Section 13 Notice?
Not all notices are created equal. A valid Section 13 notice must be served using the prescribed form, include the correct notice period, and align with the anniversary of the tenancy if applicable. Errors in the notice – whether in the dates, the amount, or the form itself – can invalidate the process entirely, meaning the rent increase does not legally take effect.
Landlords who have previously relied on informal arrangements or simply told tenants verbally about a rent rise will need to update their processes significantly.
Tenants Now Have Stronger Rights to Challenge Rent Increases
The Renters' Rights Act doesn't just change how landlords raise rents – it also strengthens tenants' ability to dispute them. If a tenant believes a proposed rent increase is above the market rate, they can refer the matter to the First-tier Tribunal (Property Chamber) for an independent assessment.
Importantly, the tribunal's role is to determine what the market rent for the property actually is – not simply to rubber-stamp the landlord's figure. If the tribunal finds that the proposed rent is above market level, it can set a lower figure. If it finds the landlord's proposed increase is fair and in line with the market, the increase will be confirmed.
This means landlords need to be confident that any rent increase they propose is grounded in current local market evidence. Keeping records of comparable rental values in your area, and being able to justify your figures, is now more important than ever.
Rent in Advance and Upfront Payments: New Restrictions
The Act also introduces restrictions on how much rent a landlord can request upfront. Landlords are now limited to asking for one month's rent in advance – the practice of requiring several months' rent upfront as a form of security or financial screening is no longer permitted. This has implications for cash flow management and the way landlords assess prospective tenants' financial suitability.
Practical Steps Landlords Should Take Now
Given the breadth of these changes, landlords should take proactive steps to ensure their current and future tenancies are compliant. Consider the following priorities:
- Review your rent review processes: Ensure you are using the correct Section 13 notice procedure and have the right template in place before you need to use it.
- Document your market research: Keep records of comparable rents in your area so you can justify any increase if it is challenged at tribunal.
- Update your tenancy paperwork: Any standard tenancy documents that reference fixed terms or informal rent review clauses will need to be updated to reflect the new periodic tenancy framework.
- Reconsider upfront payment policies: If you have historically requested multiple months' rent in advance, you will need to revise your lettings process immediately.
- Seek professional advice: If you are unsure how these changes apply to your specific circumstances, speaking with a qualified letting agent or property solicitor can save you from costly mistakes.
The Bigger Picture: Adapting to a Changed Rental Landscape
The Renters' Rights Act is not going away, and neither is the regulatory direction of travel it represents. For landlords who adapt early and build compliant, well-documented processes into their management routines, the changes need not be unmanageable. For those who continue to rely on informal arrangements or outdated practices, the risks – including unenforceable rent increases, tribunal referrals, and potential financial penalties – are real and growing.
Staying informed, investing in the right documentation, and working with professionals who understand the new landscape is the most effective way to protect your investment and maintain positive, legally sound tenancies going forward. The rules around setting rents have become more complicated – but with the right approach, compliance is entirely achievable.