open market rent
📖 What is open market rent? Meaning and definition
When a landlord proposes a new rent for a property under an Assured Shorthold Tenancy, and the tenant believes the proposed rent is too high, they can refer the matter to a Tribunal. The Tribunal's role is to determine the 'open market rent' for that specific property. This determination is made in accordance with section 14 of the Housing Act 1988, following an application made by the tenant under section 13(4) of the same Act.
The Tribunal considers various factors to arrive at this figure. This often involves inspecting the property itself, taking into account its condition, size, number of bedrooms, and location, such as proximity to local shops and bus routes. They also review evidence submitted by both the landlord and the tenant.
The determined open market rent then becomes the new legal rent for the property, effective from a specified date. This process ensures that rent increases are fair and reflect current market conditions, preventing landlords from imposing excessively high rents that are not justified by the market.
📋 Requirements
- An Assured Shorthold Tenancy must be in place.
- The landlord must have issued a notice proposing a new rent under s13 Housing Act 1988.
- The tenant must have referred the landlord's notice to the Tribunal for a determination of market rent.
- The Tribunal determines the open market rent in accordance with section 14 of the Housing Act 1988.
📝 Procedure
- The landlord issues a notice proposing a new rent to the tenant.
- The tenant refers the notice to the Tribunal.
- The Tribunal notifies both parties.
- The Tribunal inspects the property, either internally or externally.
- The Tribunal holds an oral hearing where parties may make submissions.
- The Tribunal determines the open market rent and sets an effective date.
💡 Examples
- A landlord proposed increasing the rent for a Manchester property from £162.50 to £181.25 per week, and the Tribunal determined the open market rent to be £181.25 per month.
- For a property in Bury, the landlord proposed a new rent of £1,250 per month, but the Tribunal determined the open market rent to be £900 per month.
- A tenant referred a landlord's notice proposing a rent of £995 per calendar month for a 4-bedroom stone built inner terrace house in Bradford, and the Tribunal set the open market rent at £800 per calendar month.
- The Tribunal inspected a property to gather findings, alongside evidence submitted by both parties, to determine the open market rent.
📚 Legal basis
- Housing Act 1988
❓ Frequently asked questions
What is the purpose of determining open market rent?
The purpose is to establish a fair rent for a property that reflects current market conditions, especially when a landlord proposes a rent increase that a tenant disputes.
Who determines the open market rent?
The First-tier Tribunal (Property Chamber) determines the open market rent, usually following an application from a tenant.
What happens if I don't agree with the landlord's proposed rent increase?
If you are an assured shorthold tenant and receive a rent increase notice under Section 13 of the Housing Act 1988, you can refer the notice to the Tribunal for them to determine the open market rent.
What factors does the Tribunal consider when determining open market rent?
The Tribunal typically considers the property's size, condition, location, and any services provided, often conducting an inspection and reviewing evidence from both parties.
When does the Tribunal's decision on open market rent take effect?
The Tribunal's decision will specify an effective date from which the determined open market rent applies to the tenancy.
Can the Tribunal set the rent higher than the landlord's proposed rent?
The excerpts do not explicitly state whether the Tribunal can set the rent higher than the landlord's proposed amount, only that it determines the open market rent.