What is a Section 13 Notice?
Section 13 is a way for landlords to increase the rent they charge for a property. It refers to Section 13 of the Housing Act (1988).
Landlords can only use Section 13 for assured periodic tenancies. These are tenancies that are not within a fixed term. For example, the fixed term may have expired, meaning the tenancy has automatically become a periodic tenancy.
The rent increase being proposed by the landlord must be fair and realistic. It must also be in line with the average local rent.
Before looking in detail at how to increase the rent using Section 13, it is important to note that two other ways of increasing the rent can be used.
These are as follows:
1. Increasing the Rent by Mutual Agreement:
The landlord and tenant can agree to for an increase in the rent simply by mutual agreement. In this case, there’s no need to use the formal Section 13 process.
A written agreement should be prepared by the landlord. This can be done via email with the tenant and should outline clearly the new rent increase agreed by both parties and the date from which the increase in rent will commence.
Both the Landlord and the tenant will need to sign and date this letter. Both parties should retain a copy of the same for their records. Once the new rent is paid once, this will be the ongoing rent for the property.
2. Increasing the Rent with a Rent Review Clause:
Tenancy agreements can include clauses that can be used to increase the rent during the fixed term.
For instance, if a 24-month fixed term agreement is given to the tenant, the rent may be agreed at £1,000 per calendar month for the first 12-month period and £1,100 per calendar month for the following 12-month period.
They can also be used to increase the rent after the fixed term has ended. If the tenancy agreement specifies that the tenancy shall become a contractual periodic tenancy after the fixed term ends, and also has a rent review clause for this situation, then that clause must be used to increase the rent.
Section 13 cannot be used in cases where a rent review clause is included in a contractual periodic tenancy.
Increasing the tenant’s rent by serving a Section 13 Notice:
Section 13 is a common way to increase the rent when you can’t agree with the tenant in writing. This is a formal process and requires a prescribed form (called Form 4) to be completed and served on the tenant.
Here we will describe how to use Section 13, including:
- When Section 13 can be used.
- How to fill in and serve Form 4.
When can the Section 13 Notice be served:
A Section 13 Notice can only be served in a periodic tenancy. It can only be served once every 12 months.
The minimum notice period for tenancies with a period equal to or shorter than monthly (e.g. fortnightly or weekly) is one month. For tenancies where the rent is paid yearly, the minimum notice period is six months. In all other cases, the minimum notice is equal to the rental period.
Once the form has been correctly completed in full, the notice must be served on the tenant. The Section 13 Notice cannot be served on the tenant during the fixed term tenancy period. The Notice must be served once the agreement falls into a periodic tenancy.
The new rent must begin on the beginning of a rental period. For example, with a monthly tenancy running from the 10th of the month, the new rent must be payable from the 10th of the month.
If there is no written agreement in place for the tenancy, and therefore no fixed term, then Section 13 cannot be used within 52 weeks of the beginning of the tenancy. In other words, it can’t be used during the first year of a tenancy that doesn’t have a written tenancy agreement.
As mentioned above, if you have a contractual periodic tenancy that includes a rent review clause, then the terms of that clause must be adhered to and Section 13 will not be able to be used.
How to Fill in Form 4 to Use Section 13 to Increase the Rent
To use Section 13, you must fill out Form 4 and serve it on the tenant. You can download Form 4 from the Gov.uk site.
The form tells you exactly what to write in each field and has guidance notes at the bottom to help landlords fill it in correctly. Here we go over some common mistakes to avoid.
Common Mistakes to Avoid on Form 4:
- Make sure you meet all the criteria specified in the above section. If you serve this notice without meeting the criteria (e.g. having served one in the past 52 weeks) then the notice will not be valid.
- Make sure the new rent is payable from the beginning of a rental period.
- Use the correct notice period depending on whether your rental period is monthly, weekly or yearly.
- The Landlord or the Agent acting on behalf of the Landlord must sign and date the notice. If there are Joint Landlords, then both must sign the Notice unless there is an agreement where one of the landlords can sign for both.
- Be absolutely sure to spell the names of all tenants correctly.
- Make sure you get the property address correct.
How to Serve the Notice on the Tenant
Once you have filled out Form 4, you will need to serve it on the tenant.
The Notice can be served via first class post, hand delivery, or via a process server unless there is a specific provision in the tenancy agreement which outlines the method of service for notices.
What Happens After the Section 13 Notice Is Served?
If the tenant accepts the proposed rent increase, they simply need to pay the new amount on the next rent day.
If they do nothing then the rent increase is deemed to be agreed by both parties. In this case, the rent will be payable from the beginning of the next rental period.
The tenant can challenge the rent increase. This is done by referring the increase to the first tier tribunal (also known as the Property Chamber), which handles disputes over property and land. The tenant must do this before the starting date of the proposed new rent.
The tribunal considers the tenant’s application and decides what rent the landlord could expect if the tenancy were offered to the market on the same terms as those being offered to the tenant. The tribunal can order that the rent remain unchanged, be increased by a different amount, or even set a lower rent.
Clarifications and Common Questions:
If the tenant pays the new rent once, it is implied that they have agreed to the rent increase going forward. The consent of both parties or a Section 13 notice would be needed to change the rent again. But remember Section 13 can only be used once every 52 weeks.
If the tenant does not make an application to the tribunal before the new rent is due, it is also implied that the rent increase has been accepted.
As soon as the fixed term comes to an end, and provided there are no provisions regarding rent review in the tenancy agreement, then the notice can be served the following day with the increase beginning in the next rental period.
Landlords can serve a section 21 Eviction Notice and a Section 13 Rent Increase Notice at the same time.
Have more questions? Ask them in the comments and we’ll answer them and put them in this section!
By Paul Shamplina, Founding Director of Landlord Action.
Landlord Action is the recommended Legal Partner of OpenRent and is Regulated by The Solicitors Regulation Authority.