If you let a property in Shropshire or Worcestershire, the way you raise the rent changed on 1 May.
There is now one lawful route, the Section 13 notice, and you can use it once every twelve months, with two months’ notice. Your tenant then has the right to ask the First-tier Tribunal, the panel that settles rent disputes in England, to look at your figure and decide whether it reflects the open market.
Most landlords know that much. Rather fewer have thought through what it means for how you arrive at the number in the first place.
Your tenant has very little to lose by challenging you
Here is the part that changes the job.
The Tribunal cannot set the rent higher than the figure you put on your Section 13 notice. It can agree with you, or it can come in below you. It cannot go above.
So for your tenant, a challenge costs £47 to apply and carries no risk of ending up worse off than your notice already proposed. As these rules bed in, it would be surprising if challenges did not become a good deal more common than they have been.
Which means your figure is no longer simply a proposal. It is a position you may have to defend, in writing, to a panel that includes a qualified surveyor.
A first ruling on what actually counts as evidence
A recent Tribunal decision in London, highlighted by property lawyer David Smith, gives the first useful indication of how those panels are thinking.
Both sides brought comparable properties. The tenant’s evidence came largely from rents being advertised on similar homes. The landlord’s evidence was different. It was actual rents agreed on comparable properties, with the figures and the dates attached.
The Tribunal gave the advertised comparables less weight, on the basis that an advertised rent does not show what was ultimately achieved. The landlord’s increase was upheld.
Two caveats, and they both matter. This is a single First-tier Tribunal decision and it does not bind any other panel. And it is very early in the life of these rules. But it is the first real signal we have, and the signal is clear enough. What a property was advertised at is not proof of what it is worth. What it let for is.
The portals have become a weaker guide than they used to be
There is a second reason this matters now, and it is one most landlords have not yet joined up.
Under the new rules you cannot accept an offer above your advertised rent. Rental bidding has gone. Which means the advertised figure is no longer an opening position. It is a ceiling.
Advertise too low and you are stuck with it. So asking rents across the market are being pitched at the optimistic end, quite deliberately, because they have to be.
The consequence is that the gap between what is advertised and what is agreed is widening, and it is widening in one direction. A landlord who checks the portals, sees three similar houses advertised at £950, and puts £950 on a Section 13 notice may be proposing a figure the market has never actually paid. That is a difficult position to defend. It is also, more or less, the position the tenant argued from in this case, and lost.
What good evidence looks like
The answer is not complicated, but it does take work.
You want rents actually agreed rather than rents advertised. You want properties that are genuinely comparable, which means location, size, condition and specification, not simply the same number of bedrooms in roughly the same postcode. You want recent lettings rather than figures from a year or two ago, because the market has moved since. You want to account honestly for the differences between your property and your comparables, whether that is parking, a garden, furnishings or something else, because the panel certainly will. And you want it from a source that will hold up if somebody questions it.
Very little of that is available on a property portal.
Where the numbers actually come from
This is the point at which having a managing agent stops being about admin and starts being about evidence.
We let and manage property across Bridgnorth, Telford, Ludlow, Shrewsbury and Kidderminster. So we know what comparable homes in your area actually let for, when they let, and what was included, because we agreed those tenancies ourselves. Not what somebody hoped to get. What a tenant signed for.
When we recommend a rent for your property, the figure is therefore not an estimate dressed up as a valuation. It is built from lettings we can point to. And if your tenant does challenge it, that is the difference between a number you have to justify and a number that justifies itself.
This is one early decision rather than a settled position, so we will keep watching how Tribunals approach the question as more rulings come through, and we will tell you if the picture changes.
Find out what your property should be letting for
If you have not reviewed your rent recently, or you are considering a Section 13 notice, the time to get the figure right is before you serve it rather than after.
A rental review takes very little of your time. We will tell you what your property would let for in today’s market, how that compares with what you are receiving now, and what evidence sits behind the figure.
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