How to serve section 13 notices (quickly and compliantly)

Section 13 will be the only way for landlords to raise rents when the Renters’ Rights Bill becomes law. Here’s how to prepare for the changes.

Serving a Section 13 notice is one of several ways landlords can raise the rent under the Housing Act of 1988. But when the Renters’ Rights Bill becomes law, that’s going to change. 

The shift away from fixed-term and towards periodic tenancies means that Section 13 notices will be the only mechanism landlords/agents can use.

This will increase the pressure on letting agents and landlords managing their own properties.

Here’s a few hints and tips to help you navigate what lies ahead!

In this blog, we’ll explore the implications of the reforms.

• What is a Section 13 notice?
• How can you serve a Section 13 notice?
• How will Section 13 change under the Renters' Rights Bill?
• How will these changes affect landlords and agents
• Conclusion

What is a Section 13 notice?

A Section 13 notice is a legal document that notifies tenants of a rent increase. They apply to periodic tenancies and not fixed-term tenancies. You can only use a Section 13 notice once per year, even if a fixed-term tenancy converts to a periodic tenancy.

Any rent increases proposed in a Section 13 notice must align with local market rates. Tenants can dispute rent increases through the First-tier Property Tribunal if they think that the increase is unfair.

How can you serve a Section 13 notice?

Landlords — or letting agents on behalf of landlords — can serve a Section 13 notice by filling out Form 4 on the Government website with the following details:

• Tenant’s name and address
• Landlord/letting agent’s name, correspondence address, and contact number
• New proposed rent and the frequency it’ll be charged (week/month/year)
• Existing rent and the frequency it’s charged (week/month/year)
• The first date when rent increased (unless the tenancy is new)
• Starting date for the new rent increase (must not be earlier than 52 weeks after the date the last time rent increased)
• Current and updated council tax, water, and fixed service charges (if included in the rent)
• Landlord or landlord’s agent’s signature
• Date

How else can private landlords currently increase rent?

In the current landscape, landlords can increase the rent in a few ways besides Section

13. These include:

• Rent review clauses - landlords can include these in fixed-term contracts so they can raise the rent during the tenancy
• Renewed fixed-term tenancies - landlords can increase the rent in a new fixed-term contract with the same tenants
• Written agreements - during a tenancy, the landlord and tenant can mutually agree to a rent increase with a written record of that agreement

Each of these avenues gives landlords the flexibility to raise rents at different intervals. In other words, they can respond quickly if their costs rise.

How will Section 13 change under the Renters' Rights Bill?

When the Renters’ Rights Bill becomes law, periodic tenancies will replace all fixed-term tenancies. Put simply, this means that landlords will only be able to raise the rent through Section 13.

Previously, landlords only needed to give one month’s notice of a rent increase in a Section 13 notice. Under the new legislation, however, they must provide two months’ notice.

Why is the Government proposing reform to rent increases?

In its Guide to the Renters Rights Bill, the Government says its core motivation for proposing these changes is to “prevent unscrupulous landlords from using rent increases as a backdoor means of eviction while ensuring rents can be increased to reflect market rates.”

In theory, the Government’s changes help to level the playing field between landlords and tenants, while simplifying the process of raising rents. But some are concerned that increased tenant flexibility could turn the sector into “Airbnb Lite”.

In a Guardian piece, Chris Norris of the National Residential Landlords Association (NRLA) said: “If you need a place for two months you could go to a private rented sector landlord, [sign a tenancy agreement] and then immediately serve notice.”

To counteract this perceived instability, landlords could reportedly raise rents by up to 10% per year.

Generation Rent’s Dan Wilson Craw, however, maintains that tenants who are looking for short-term lets are still more likely to use platforms like Airbnb, rather than signing tenancy agreements.

How will these changes impact agents and landlords?

These changes are likely to impact letting agents in a few important ways.

More Section 13 notices means more admin for agents and landlords who manage their own properties. ​​As a result of the new legislation, agents/landlords will also need to notify a tenant’s guarantors about the increase, making matters worse.

Letting agents need to do everything possible to safeguard their landlords from appeals to rent rises. This is because court backlogs are likely to increase exponentially due to the Renters’ Rights Bill.

These factors make it essential that you or your agent are:

• Confident of serving Section 13 notices
• Enabled with the right technology

Conclusion

The Renters’ Rights Bill will have a transformative impact on the lettings industry. And the reforms to Section 13 are only a small part of that.

Working with a trusted Letting Agent can help you stay compliant, ensuring you’re ready to adapt to:

• Increased admin
• Increased obligations
• The abolition of Section 21
• Changes to periodic tenancies

Paul Flitter MNAEA