The Government may want to give tenants more power to challenge rent increases but it doesn’t appear to have any data to backup why this is required.
It comes as Reapit made a Freedom of Information (FOI) request to the Ministry of Justice (MoJ) to find out the numbers and types of rent increase cases heard by the First-tier Tribunal (Property Chamber).
The proptech supplier queried how many rent increase cases the tribunal had ruled on over the last 12 months, how many inspections had been undertaken, and the outcome of those cases.
In its response, the MoJ said it does not “hold any information in the scope” of the request and that “this is because there is no legal or business requirement to do so.”
Dr Neil Cobbold, commercial director for Reapit, said: “It is worrying that the Ministry of Justice has not been keeping track of the number of market rent cases to assess demand before the Renters’ Rights Bill becomes law. And it is most concerning that it feels there is no business requirement to do so since the Renters’ Rights Bill has the potential to significantly increase the demand for First-tier Tribunal hearings.”
He warned that under the Renters’ Rights Bill, there is every incentive for tenants to challenge an increase, adding: “The rent increase can either be discounted if ruled above market rates, or delayed until there is a ruling from the tribunal. This could leave landlords, tenants and agents in limbo and England’s tribunal system log-jammed with pending cases.
“That is why we’ve written to peers suggesting an amendment to the Bill – tenants should not be able to challenge rent increases at tribunal if the increase matches the rent increases published by the ONS or is no higher than CPI inflation +2%.
“This would help manage demand for tribunal hearings, reduce the number of cases that have no merit and provide certainty for tenants, landlords and agents.”
Reapit is cautioning that if something is not done to either manage demand or increase capacity, not only will market rent cases leave some in the PRS in limbo – but it will also create knock-on delays for other important tribunal cases including disputes over leasehold, park homes, HMOs, land registry changes, agricultural drainage and applications under the Buildings Safety Act.
Dr Cobbold said: “A lack of a swift resolution on these types of cases could potentially delay housing developments and property sales across the country.”
However, he said Section 13 rent increases notices will be a new process for many landlords and therefore represents a significant opportunity for agents to demonstrate their market knowledge in advising landlords on what a fair market rate for their property is. Avoiding a tribunal case is in everyone’s interest.
He added: “To support agents with this, Reapit is developing new rent review tools that will enable agents to provide and store comparable evidence on similar properties. This will help them to demonstrate to landlords and tenants that their rent increases align with market rates.”
