The Ministry of Justice (MoJ) has admitted it has no details about the
volume or nature of rent hike disputes adjudicated by the First-tier
Tribunal (Property Chamber).
The revelation comes in response to a Freedom of Information (FOI) inquiry
lodged by proptech firm Reapit.
It wanted to gauge the potential burden on the tribunal system should
tenants opt to challenge a rent rise.
Under the
forthcoming Renters’ Rights Bill
, which is making its way through the House of Lords, landlords or their
agents must issue a Section 13 notice for all annual rent rises.
Figures on tribunal decisions
Reapit’s request specifically asked for figures on tribunal decisions over
the past year and the number of property inspections carried out.
It also wanted to know the results of those proceedings.
However, in response, the MoJ stated it does not ‘hold any information in
the scope’ to answer the inquiry.
The statement explained ‘this is because there is no legal or business
requirement to do so’.
Number of market rent cases
The firm’s commercial director, Dr Neil Cobbold, said: “It is worrying that
the Ministry of Justice has not been keeping track of the number of market
rent cases to assess demand before the Renters’ Rights Bill becomes law.
“And it is most concerning that it feels there is no business requirement
to do so since the Bill has the potential to significantly increase the
demand for First-tier Tribunal hearings.”
Evidence from Scotland, where similar tenancy changes were enacted in 2019,
underscores Reapit’s concerns.
There, the shift to open-ended tenancies drove rents higher, with a
Nationwide Foundation and Indigo House study revealing that tenants facing
yearly hikes climbed from 23% in 2019 to 28% in 2024.
Should England, which is home to 4.7 million private renters according to
the Office for National Statistics, follow suit, the tribunal could be
inundated with as many as 1.3 million cases annually.
Incentive to challenge an increase
Mr Cobbold said: “Under the Bill, there is every incentive for tenants to
challenge an increase.
“The rent increase can either be discounted if ruled above market rates or
delayed until there is a ruling from the tribunal.
“This could leave landlords, tenants and agents in limbo and England’s
tribunal system log-jammed with pending cases.”
He added: “That is why we’ve written to peers suggesting an amendment to
the Bill – tenants should not be able to challenge rent increases at
tribunal if the increase matches the rent increases published by the ONS or
is no higher than CPI inflation +2%.
“This would help manage demand for tribunal hearings, reduce the number of
cases that have no merit and provide certainty for tenants, landlords and
agents.”
Leave the PRS in limbo
However, the Bill’s impact won’t just affect the PRS, Reapit says, there’s
also the impact on all tribunal cases.
Mr Cobbold said: “If something is not done to either manage demand or
increase capacity, not only will market rent cases leave some in the PRS in
limbo – but it will also create knock-on delays for other important
tribunal cases including disputes over leasehold, park homes, HMOs, land
registry changes, agricultural drainage and applications under the
Buildings Safety Act.
“Lack of a swift resolution on these types of cases could potentially delay
housing developments and property sales across the country.”
He adds: “Section 13 rent increase notices will be a new process for many
landlords and therefore represents a significant opportunity for agents to
demonstrate their market knowledge in advising
landlords
on what a fair market rate for their property is.
“Avoiding a tribunal case is in everyone’s interest.”
Swamp the First-tier Tribunal
Simon Thompson, the managing director Accommodation for Students, said:
“For student landlords, the unfolding saga of the Renters’ Rights Bill
signals both challenges and opportunities.
“But with the Ministry of Justice confessing it doesn’t have data on rent
disputes, the looming legislation threatens to swamp the First-tier
Tribunal with cases.
“And that could see landlords not putting rents up to market levels just to
avoid a rent challenge.”
He added: “With this news and tenancies moving to periodic contracts means
more student landlords will consider whether it’s worth continuing in the
PRS – but demand from students is high and the sector is thriving.”
