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Everything you need to know about the cost-of-living crisis and your property

Every day on the news we hear more and more about the ever-mounting cost-of-living in the UK, and households are now more focused on their outgoings than before.

The inevitable is that some families and people will struggle with keeping up with costs relating to their homes.

So, whether you’re a homeowner or tenant, if your finances are already tight and you feel that further inflation could severely affect your ability to afford your mortgage or rent, then it’s best to plan ahead and be informed of your options for relief could be.


The crisis and how it might affect homeowners

After years of very low-interest rates, The Bank of England allegedly has been increasing interest rates in a bid to bring inflation down. If you have a mortgage already, then these rate increases will be passed on to you as the borrower, thus pushing your monthly payments upwards.

This increase may have become more notable if you’re currently on an introductory offer such as a fixed-rate mortgage and you may struggle to find competitive new deals to switch to when it expires – all of which makes it very challenging for any homeowner to avoid mortgage payment increases.

If your payments should start to get out of hand – even after making economies in your other spending – it is advisable to speak to your mortgage lender sooner rather than later. This may be daunting, but it is best to start a dialogue with them early as it may help prevent unauthorised mortgage arrears.

You certainly won’t be alone, and lenders, fortunately, have plans in place to assist borrowers with navigating such a difficult time.

How the crisis may affect tenants

If you’re a tenant, your landlord may look to increase your rent to keep it in line with inflation, however, depending on the nature of your tenancy, there may be limitations on how soon they can do this, and the amount of the increase.

If your rent becomes too hard to afford, the first step would be to review your tenancy agreement which will outline what right your landlord has to increase your rent. If your tenancy agreement is on a fixed-term agreement, then you will need to find the date your tenancy ends, as well as the dates and frequency of any rent reviews. This should help you anticipate how long you have at the current level before your rent may increase.

Your landlord is not permitted to raise your rent until the end of that term if you are still within a fixed term of a tenancy agreement, and the terms within also do not contain a rent reviews clause. Alternatively, of your tenancy contract does contain a rent review clause, then any rent increase can only be increased a maximum of what would be considered “market rent”. This means that the rent can be similar to other rental properties in your local area.

Should you find yourself at the end of your fixed term, your landlord may request that you sign a new fixed-term agreement, again at this point your rent can be raised, and you should check your rent clauses within your tenancy agreement carefully prior to signing.

In certain circumstances, if there is no rent review clause and your contract is now out of fixed term, then your landlord can still increase your rent, however, they are legally required to do so by using a prescribed notice form known as a “section 13” notice which must be completed correctly, otherwise, the notice can be deemed invalid.

Your landlord may also have grounds to increase rent if the date of a potential review is near. There is no legal limit on how much they can increase your rent by, although government guidance stipulates that it should be fair. Increasing the rent by too much could make it uncompetitive, which would make it harder for your landlord to find another tenant if you left, especially in the current economic climate.

Your landlord should give you reasonable notice of any increases and typically this might be six months’ notice for an annual tenancy, although with the abrupt increase in the cost-of-living, landlords could argue that a shorter notice period is justified.

It’s important to remember that you are always entitled to a notice period prior to your rent increasing and how long your notice will be is dependent on your tenancy agreement. If you are now out of fixed term, and your rent payments are made monthly, then your landlord is required to provide you with one month’s notice of the rent increase.

If your tenancy is yearly, then you would be entitled to 6 months’ notice. Should your landlord be required to use a section 13 notice to inform you of a rent increase, then they will only be able to increase your rent once within a 52-week period.

You may prefer not to speak to your landlord in advance, because raising the subject may simply remind them to review your rent. If they should raise the subject with you first, it is best to discuss things with them amicably.

If they should increase your rent and you think it is unfair, you may decide to challenge it. Paying the increased rent may constitute acceptance of it, which makes it much harder to argue later on that you can’t afford your increased rent. However, you should still at least pay the previous level of rent, to show that you have kept your commitments under the tenancy.

If you’re unable to reach an agreement with them, or if you should fall behind on your rent, then your landlord may provide you with a notice for non-payment of rent once you have fallen behind on rent by at least 2 months. It is therefore essential that you continue to communicate with your landlord, to demonstrate that you are making all efforts necessary to make your rent payments, as you are now at risk of losing your home.

Practice shows that it is usually a lack of communication by the tenant which then results in the landlord issuing the notice to evict a tenant. Most landlords would much rather prefer resolving arrears by way of a rent repayment schedule, as the cost of eviction and finding a new tenant can be significant and damaging.

Eviction is a very big step to take though and there are rules that your landlord must follow in order to evict you legally. At this stage and having tried to resolve things amicably, you may benefit from specialist legal advice to help you resolve the dispute.

Better times ahead

Whether you’re a homeowner or tenant, we hope that this article has helped you and that you’re able to manage the rise in the cost of living without it affecting your home. As with any legal issue, trying to resolve things amicably first is the best approach.


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