You can’t go anywhere these days without hearing about what a mess the economy is in. In the last few weeks, the main focus has shifted away from energy bills and to the interest rate, which people are concerned is going to rise so high that it’s going to have a drastic impact on mortgages.
With experts predicting a recession on the horizon and banks pulling mortgage offers, you might feel lucky if you’re not on the housing ladder right now, but the unfortunate truth is that if your landlord has a mortgage there is every chance they’re going to need to review the rent you pay them on your commercial or residential lease.
Rents at the moment are the highest they have ever been. The median monthly rent in England in the years 2021 and 2022 was £795 according to the Office of National Statistics, and that is higher than any other month ever. Rent prices are also increasing at the fastest rate in 16 years, which means they’re set to continue going up.
With 4.4 million households using the private rented sector in England, 340,000 in Scotland and 200,000 in Wales, this is an incredibly stressful time for renters.
Can my landlord put my rent up because of the recession?
When you signed up to live in your home or work in your rental property, your landlord will have given you a contract, and that contract will include information about the rent you are expected to pay. During the duration of this contract, known as your fixed term, the landlord cannot raise your rent, even if their mortgage repayments have increased.
If your agreement says your rent can be increased, your contract must include a section about when and how it will be done. This is known as having a ‘rent review clause’.
If your fixed term ends and your landlord wants to raise your rent, they can.
Still, your landlord might come to you and ask you if they can increase your rent because they are struggling, and it might be in your best interests to negotiate with them and agree, especially if you want to stay where you are. The rental market is very difficult for tenants at the moment, so you might struggle to find somewhere else to live or work. Things are set to get worse, so it makes sense to try to stay where you are if you can.
Other changes we might see
The rise in fuel prices mean tenants who pay one fixed fee for their rent and their bills might find their landlord wants to alter the arrangement when the fixed term contract is over. Landlords are likely to feel nervous about accepting one monthly payment from tenants who can then use as much gas and electricity as they want without paying an additional cost, since the cost of heating homes is expected to border on extortion this winter.
If you’re a landlord…
Recessions cause many issues and you might find your tenants are struggling to pay their rent or their bills. We’re sure you’ve thought about this already, but you should also consider that recession is a key time for fraud.
Fraud in rental markets looks like doctored and falsified documents (bank statements, residency documents and references).
Currently, the demand for rental properties still outstrips supply, so people are really desperate. This means people are even more likely to falsify financial documents in particular to secure a rental property. You should be careful; once a tenant is in your home, getting them to leave – even if they are not paying their rent – is very difficult. If you’re relying on their rental payments to cover the cost of the mortgage, you need to be extra careful.
The fluctuating market also presents a problem for people letting commercial properties, since many businesses are predicted to go bust during these very difficult times. You could be left with an empty rental property and significant rent arrears if you are not careful.
JMR Solicitors can help
Whether you are a landlord or a tenant, JMR Solicitors can help you navigate issues with your rent during these difficult times.
We’re an award winning law firm based in Manchester. A dedicated member of our team would be thrilled to talk through your individual circumstances, no matter how difficult, and help conclude the case in the best way possible for you.
We work with businesses and individuals stuck in all sorts of tricky situations. Our exceedingly knowledgeable team are friendly and professional, and we’re proud that our clients return to us any time they need legal support and advice.
Call 0161 491 3933 for more information, or email info@jmrsolicitors.co.uk. We look forward to supporting you.