Record number of landlords face legal action over rent increases

Analysis from estate agency Hamptons shows property tribunals handed down 166 market rent decisions in July, almost four times the 44 recorded during the same month last year.

Around 60 per cent of the cases decided in July were brought after the new legislation took effect. The remaining cases had been lodged before May but were decided during the month.

The increase follows a significant shift since the reforms were introduced.

Property tribunals had averaged just 42 market rent decisions a month during the year before the Act came into force.

That figure jumped to 109 in May before rising again to 129 in June and 166 in July.

The Renters’ Rights Act made major changes to the balance between landlords and tenants, including abolishing Section 21 “no-fault” evictions.

Under the previous system, landlords could use Section 21 to regain possession of their property by giving tenants two months’ notice without needing to establish a specific reason.

Its abolition means landlords can no longer use that route to regain possession, while tenants may feel more confident challenging proposed rent increases without fearing that they could subsequently receive a Section 21 notice.

The Act has also changed the financial consequences of taking a rent dispute to tribunal.

Previously, if a tribunal approved a higher rent, the new amount could be backdated to when the increase was originally due to take effect.

This meant tenants risked building up a sizeable bill while waiting for their case to be decided.

Under the new rules, tenants who challenge an increase and lose generally only have to pay the higher rent from the date of the tribunal’s decision.

This reduces the financial risk for tenants when challenging an increase, while potentially leaving landlords waiting longer to receive the higher rent if the tribunal ultimately finds that the increase is justified.

Tenants now have to pay £47 to lodge a tribunal case, however, whereas bringing a challenge was previously free.

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The figures suggest landlords could face significantly more scrutiny over rent increases under the new system, with tribunal decisions already running at several times the levels seen before the reforms.

Chris Norris of the National Residential Landlords Association pointed out that tenants have little to lose by trying. “The system means that the worst outcome for the tenant is they have to pay the rent that the landlord has asked for,” Mr Norris told The Times.

The NRLA has previously cautioned that the abolition of section 21 could leave courts struggling under unsustainable volumes of cases.

David Fell, an analyst at Hamptons, said the new rules had raised the tribunal’s profile considerably.

“The changes that have been introduced through the Renters’ Rights Act have upped the tribunal’s profile and we are definitely seeing significantly more tenants using it as a route to challenge rent increases,” Mr Fell said. “I think as awareness grows, we will continue to see these numbers increase.”

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Despite the flood of new cases, the system is getting faster. The average wait from application to decision dropped to 80 days in July, compared with 113 days in May and 172 days in April.

The Ministry of Justice has set itself the goal of recruiting more than 1,000 judges and tribunal members each year, with property tribunals singled out as a priority.

The property tribunal’s remit extends well beyond rent disputes. It also deals with service charge disagreements, leasehold extensions and rent repayment orders.