Q. Hi, I am buying a property which has a couple of tenants living there. The vendor has recently increased the rent, but I want to increase it further as I think it is still too low. As I am a new landlord, am I able
to do this?
A. When you buy a property with sitting tenants, you are said to ‘stand in the shoes’ of the former landlord. This means that you have mostly the same rights and all of the obligations of the former landlord.
In particular, you cannot use your status as a new landlord to increase the rent. You will only be able to increase the rent if the outgoing landlord would have been able to increase the rent.
So, if the tenancy is within its fixed term, you will only be able to increase the rent if there is a valid rent increase clause in the tenancy agreement. And (if there is) provided you follow any requirements set out in the clause carefully.
If there is no rent increase clause, then you will only be able to increase the rent after the fixed term has ended. This can either be done by:
◆ Giving the tenants a new tenancy agreement to sign at the new increased rent, or
◆ Under the notice procedure under s13 of the Housing Act 1988 – which will require the proper prescribed form.
Note that tenants cannot be forced to sign a new tenancy agreement if they do not want to – but they will then be at risk of you deciding to evict them under section 21.
If you use the notice procedure to increase rent, the tenants can challenge this by referring it to the First Tier Tribunal. The Tribunal will then consider whether your proposed rent is a proper market rent.
If they think it is too high, they will lower it, but if they think it is too low, they may increase it. Which is why it is always a bit of a risk for tenants to challenge rent in this way.
Q. I am buying a property with a sitting tenant, Mr A. There is also a friend of the tenant, Mr B, living there who is not on the tenancy agreement. I want to issue a new tenancy agreement. Should I add Mr A to the agreement, or should I give him his own tenancy agreement?
