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The Knimbies who say No

Rent Increase Of 5% Per Month On Statutory Periodic Contract

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Hello,

Just perusing a new rental agreement, a clause relating to the expiry of the initial AST term states that:

Inform the agent at least one month prior to the fixed term expiry date of the intention to

renew for a further term, a compulsory renewal fee of £50 will be chargeable. If no

intention is given the rent will be increased by 5% Per Calendar Month or equivalent
to

whichever frequency the rent is demanded will apply to commence at the start of a new rent

due period. The tenancy will be deemed as a Statutory Periodic Tenancy.

Thoughts? I think it says the agents don't want anyone on periodic tenancies. Is this enforceable as worded? Had to laugh out loud, but it's not funny really.

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It's really badly worded, but an alternative interpretation is that they'll increase your rent by 5% to a new £pcm value which sticks during the Periodic Tenancy, not that they'll increase it by 5% every month.

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As soon as the initial AST ends, it will automatically convert to a periodic tenancy. I don't think its legally valid for terms in the expired AST to apply and retroactively change the rent due, effectively that would become a rental contract with no end and an exponentially rising rent. If you started off paying just £500 per month then after 4 years it will be £4,952 per month nobody in their right mind would sign a contract thats potentially locking them into payments like that.

I would just score a line through that term, if they aren't prepared to go without it then walk away.

Edited by oligotroph

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It's really badly worded, but an alternative interpretation is that they'll increase your rent by 5% to a new £pcm value which sticks during the Periodic Tenancy, not that they'll increase it by 5% every month.

Upon rereading you may be right, thanks for your view. As said elsewhere it is a tacit ban on a periodic contract in order to scoop renewal fees. Surprisingly, the agent's representative made no mention of this when they were trying (unsuccessfully) to beat me down to their standard 6 month AST term from a longer initial term...

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Actually I would just walk away regardless, these agents sound like trouble.

In other respects they have been ok, but I need to clear up the exact phrase here. And, of course, the timescales involved in getting vetted, giving notice and making moving arrangements etc mean there is little other option at present, although I will try and find a couple of candidates in case it goes pear shaped.

Parliamentarians ought to hang their heads in shame at the sorry state of the UK rental market.

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If no intention is given the rent will be increased

So tell them of your intention to go onto periodic and you're fine!

Terribly worded, which indicates a solicitor was not involved and some gelled monkey crowbarred that in. So Id say the legality is questionable. But I believe the meaning to be that the rent increases by 5% when you go onto periodic. Perhaps you should just offer 5%+ under their asking price, end enjoy your 12/6 month discount.

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Japanese knotweed does not seem to affect european houses at all, neither does lack of a damp proof course.

I wonder if it is due to a lack of building regulations or the lack of a tabloid press. Especially the Daily Mail.

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I am not surprised the OP laughed as the drafting is amateurish. To cover every point would take far too long. As to the main point of the rent increasing, where the tenancy is an assured tenancy, no provision as to an increase in rent after a fixed term* ends can ever be effective. This is because when a fixed term* assured tenancy ends the terms do not carry on but end with the tenancy. What you have is a new tenancy on the same terms (except as to any provision for bringing the tenancy to an end). So, when the fixed term ends and a statutory periodic tenancy kicks in what you have is a new tenancy at the same rent as applied at the end of the fixed term. Any term which purports to provide for what happens when the tenancy ends applies when the new tenancy ends.


*The fixed term has to be "straight" i.e. not expressed to continue as periodic.

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I am not surprised the OP laughed as the drafting is amateurish. To cover every point would take far too long. As to the main point of the rent increasing, where the tenancy is an assured tenancy, no provision as to an increase in rent after a fixed term* ends can ever be effective. This is because when a fixed term* assured tenancy ends the terms do not carry on but end with the tenancy. What you have is a new tenancy on the same terms (except as to any provision for bringing the tenancy to an end). So, when the fixed term ends and a statutory periodic tenancy kicks in what you have is a new tenancy at the same rent as applied at the end of the fixed term. Any term which purports to provide for what happens when the tenancy ends applies when the new tenancy ends.

*The fixed term has to be "straight" i.e. not expressed to continue as periodic.

Hello Damocles, I was hoping you'd be able to offer your expert opinion- thanks for taking the time to do so.

The term of the agreement is just listed as '12 months', and the following clause appears in the paperwork which I guess qualifies the fixed term on the basis you mention:

Give at least one months notice in writing of his intention to vacate at the end of the fixed

term, such notice to be given prior the rent due date. It is accepted that nothing in this

agreement shall give the Tenant any right to continue this tenancy after the expiry of this

Agreement, however, where the tenancy is a continuation or a statutory periodic tenancy

the Tenant will be required to give one full months notice of his intention to vacate. Such

notice to expire at the end of a rent period. Failure to provide such notice will leave the

Tenant liable for rent and other outgoings up to the end of the following rent period.

Although I laughed, it was more out of wonder at the brazen nature of its inclusion rather than any particular confidence that it was likely to be illegitimate. So thanks again.

Will update in due course.

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Give at least one months notice in writing of his intention to vacate at the end of the fixed

term, such notice to be given prior the rent due date. It is accepted that nothing in this

agreement shall give the Tenant any right to continue this tenancy after the expiry of this

Agreement, however, where the tenancy is a continuation or a statutory periodic tenancy

the Tenant will be required to give one full months notice of his intention to vacate. Such

notice to expire at the end of a rent period. Failure to provide such notice will leave the

Tenant liable for rent and other outgoings up to the end of the following rent period.

The above does not create a fixed term tenancy which continues as a contractual periodic tenancy. The requirement to give notice of intention to vacate is essentially of no effect. The notice provision is of no effect so long as any succeeding tenancy is an assured tenancy. Of course you will have to give notice to end a statutory periodic tenancy and the general law applies i.e. (assuming a quarterly, monthly, four-weekly or weekly tenancy) a period of notice equal to a period of the tenancy subject to a minimum of four weeks, such notice to end at the end of a period of the tenancy - not necessarily a rent day.

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The above does not create a fixed term tenancy which continues as a contractual periodic tenancy. The requirement to give notice of intention to vacate is essentially of no effect. The notice provision is of no effect so long as any succeeding tenancy is an assured tenancy. Of course you will have to give notice to end a statutory periodic tenancy and the general law applies i.e. (assuming a quarterly, monthly, four-weekly or weekly tenancy) a period of notice equal to a period of the tenancy subject to a minimum of four weeks, such notice to end at the end of a period of the tenancy - not necessarily a rent day.

Thanks for the additional reply Damocles, although having thought about it for a couple of days I'm out of my depth regarding the exact type of tenancy.

However, it has been agreed that the clause will be removed, along with some other pieces which seem to me to be in clear breach of OFT guidelines e.g. transfer of liability for repairing parts of the building as a result of events outwith the control of the tenant- "replace broken window glass, whatever the reason for the breakage". I am minded to contact the OFT regardless, once we have signed, as I do not believe that the landlord was the instigator of these clauses, and even if they were a competent agent with a grasp of the law surely wouldn't allow it to be inserted. I expect many of their ASTs have the same clauses.

This group of estate agents, letting agents and auctioneers are one of the largest in the region and I could believe they manage a large number of tenancies (Numbers in the hundreds wouldn't be an unreasonable ballpark guesstimate imo).

Edited by Joan of The Tower

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snip

The rent will be the same and the terms will be the same as the terms and conditions of the preceding fixed term tenancy agreement

This is by law, and overcomes anything the agent might add...so no, a 5% increase is not applicable, whether monthly or annually.

Leaseholds could have an increasing rent, but only during the term.

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snip

The rent will be the same and the terms will be the same as the terms and conditions of the preceding fixed term tenancy agreement

This is by law, and overcomes anything the agent might add...so no, a 5% increase is not applicable, whether monthly or annually.

Leaseholds could have an increasing rent, but only during the term.

Yes, I got it struck out.

Did their other hundreds of tenants?

I am trying to find an organization who might be interested in the possibility that a High Street business might have exercised an illegal clause present in (potentially) hundreds of tenancy agreements, to the detriment of their clients(I guess most tenants leave if the rent is hiked like that) and their tenants.

Who might be interested in this? No-one, that's who.

Meanwhile, if your kettle breaks after 2 years, or your internet is slow, or your flight is an hour delayed, form an orderly queue...

Edited by Joan of The Tower

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It's really badly worded, but an alternative interpretation is that they'll increase your rent by 5% to a new £pcm value which sticks during the Periodic Tenancy, not that they'll increase it by 5% every month.

That's what I would think. EAs and letting agents are not renowned for their standards of English.

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That's what I would think. EAs and letting agents are not renowned for their standards of English.

It wouldnt surprise me if it was in there to "encourage" people to renew their AST with appropriate fees to the tenant and landlord for the photocopy work.

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