Property solicitor warns of costly mistake landlords can’t afford to make
Key Points:
- Property law expert warns UK landlords about failing to include a rent review clause in tenancy agreements
- Why landlords must include an explicit rent review clause in tenancy agreements and the risks of failing to do so
- Expert stresses the importance of clarity to protect both landlords and tenants in the current economic climate
Rising costs are affecting everyone, and landlords are no exception. With increasing maintenance expenses, higher interest rates, and inflation driving up the cost of living, it’s no surprise that landlords may need to raise rent during a tenancy. But there’s one crucial detail that could stop them in their tracks.
Laura Albon, joint head of property litigation at Helix Law, a UK-based law firm specialising in complex litigation and dispute resolution, has a warning for landlords: “If your tenancy agreements don’t specifically allow for rent increases during the tenancy, you may be barred from making any adjustments, leaving you locked into below-market rents.”
Below, Laura explains how to avoid this costly mistake.
The Clause Every Landlord Needs
“If landlords want the flexibility to adjust rent during a tenancy, their agreements must contain a rent review clause,” says Laura. “This clause must clearly outline the conditions under which rent increases can occur, the notice period tenants will be given, and the method that will be used to determine the new rent amount.”
Without this clause, a landlord can only raise the rent if the tenant agrees or at the end of the fixed term. In a time of soaring costs, that’s a risky position to be in.
Why Would A Landlord Need To Raise Rent Mid-Tenancy?
Landlords typically don’t want to raise rents unnecessarily, but sometimes, it’s unavoidable. Property maintenance, service charges, and mortgage repayments have all become more expensive. For landlords who rely on rental income to cover these costs, being unable to adjust rent when needed could mean operating at a loss.
“Failing to future-proof tenancy agreements can lead to difficult conversations with tenants or even cause enough financial strain to force a landlord to sell up,” says Laura. “The knock-on effect is having fewer rental properties available on a market where demand already outweighs supply.”
The Risks Of Overlooking This Detail
For landlords who haven’t updated their tenancy agreements, the consequences could be serious. “If you try to enforce an unauthorised rent increase, tenants can challenge it, leading to disputes and even legal action,” says Laura. “You could find yourself unable to cover rising costs, making it harder to maintain properties to a good standard and potentially forcing a sale to avoid further losses.”
Laura Albon, a property litigation solicitor at Helix Law, commented:
“Landlords might assume they have the right to increase rent whenever costs rise, but legally, it’s not that simple. A well-drafted tenancy agreement should always include a clear and fair rent review clause. This protects landlords from financial strain and provides transparency for tenants as they understand their rights from the outset.
“With the current economic climate putting pressure on both landlords and tenants, clarity is more important than ever. Landlords should seek legal advice when drafting tenancy documents to make sure their agreements are watertight and compliant with regulations. A failure to do so could result in significant financial losses and, in extreme cases, difficulties in sustaining their rental business altogether. As specialist litigation solicitors we get involved where relationships have fallen apart, usually where some disagreement leaves the landlord seeking to recover possession of the property”.
