Rent

istock_money_house

One of the most considerable obligations of the tenant under the tenancy is the obligation to pay rent.

Rent is generally defined as a contractual sum payable by the tenant as compensation for the tenant’s right to possession of the property for the term of the tenancy. The obligation to pay rent is implied in all leases.

The normal inference to be drawn from payment and acceptance of rent is that there is a tenancy. Street v Mountford [1986].

Money payable to the landlord for services supplied to or consumed at the property (such as water gas and electricity) do not, at common law, count as rent. Similarly, capital sums payable at the commencement of the tenancy, such as a holdings or dilapidations deposit, are not rent. Where the sum of money taken prior to granting the tenancy is non-refundable, this is generally referred to as a ‘premium’.

Rent quantum

Despite the fact that payment of rent is considered to be a key ingredient in establishing a tenancy, it is not strictly necessary to pay rent. However, there should be an intention to create legal relations and payment might be provided by some other consideration.
There is no maximum rent that can be charged for residential tenancies.

Housing Act 1988 Tenancies

However, there are minimum and maximum thresholds of rent in relation to assured or assured shorthold tenancies. A tenancy cannot be an assured or assured shorthold tenancy where the rent is:

  • under £1,000 per annum in Greater London, and under £250 elsewhere (figures at time of writing).
  • over £100,000 per annum (or the equivalent pro-rate per month).

Such tenancies must be set up as a simple contractual or common law tenancy, and will not be subject to the Housing Act provisions.

Rent must be certain

One important requirement of the tenancy agreement is that rent payable under the tenancy must be either certain, or capable of being calculated with certainty. Rent should be defined as accurately as possible and notice of any increase should be given in time for a tenant to pursue alternative accommodation.

If the rent may fluctuate, the tenant must be able to terminate the agreement if they choose to.

Rent may not be in money; a tenancy can also be paid in the form of services rendered in kind, for example.

Rent period

Generally, the tenancy agreement will specify the rent as a regular periodic payment, such as £100 per week or £500 per month. The length of time between rent periods is known as the rent period, or the period of the tenancy.

Rent payment date and terms

Landlords commonly require that the rent is paid in advance at the beginning of each rent period. This condition should be stated in the tenancy agreement, and the timing of how rent payments should also be specified.

If the rent payment date is not specified, at common law the rent becomes payable on the last day of each tenancy period.

If not otherwise stated, the common law rule that rent is due on the morning of the day specified for payment applies. The tenant has until midnight on the day specified to pay the rent, but if the rent is unpaid by midnight then it becomes overdue or owing, and the tenant is in rent arrears.

Within reasonable bounds, the tenancy agreement may specify a method of payment. Many professional letting agents or landlords find it most efficient to collect rent by standing order, and this payment method can be made a term of the tenancy agreement.

Rent control

Rent control constitutes inference or regulation by government to prevent unscrupulous landlords charging excessive rents in time of shortage or forcing unfair rent increases in existing tenants (sometimes with the conscious intention of evicting the tenant).

The rent control system under the Housing Act 1988 replaces the previous system of fair rents. It is a more restrained system which allows the landlord to charge a reasonable market rent for his property, but it prevents him imposing unreasonable rent levels and rent increases on the tenant. For further information see Letting Factsheet 13 - Procedure for increasing rents in England and Wales.

Set-off of rent

Where the landlord is in breach of his repairing obligations, the tenant has a common law right to do the repair themselves and deduct the cost of this from the rent. However, this may only be done in very specific circumstances.

To use rent to pay for repairs, or to offset the cost of repairs against arrears, the tenant must carefully follow the steps below (in order):

  • give the landlord notice of the repair and a reasonable time to remedy it, then
  • inform the landlord (preferably in writing) that the tenant will do the repair themselves unless the landlord complies with his obligations, then
  • allow a further reasonable period for the landlord to do the work, then
  • obtain three estimates for the cost of the work from reputable builders, then
  • write to the landlord again, enclosing copies of the estimates and reminding him of his obligation to do the work, giving a further reasonable period to carry it out. The letter should warn that, otherwise, the tenant will do himself and deduct the cost from rent, then (if there is no response)
  • arrange for the contractor who gave the lowest estimate to do the work, and obtain (and send to the landlord) receipts, with a request for payment; then
  • if the landlord does not pay, the tenant may deduct the cost from the rent (but not other charges such as service charges) and then send the landlord a breakdown of the amount and period of the rent to be withheld.

Lee-Parker v Izzet [1971]

The tenant can only withhold the amount of the repair, and not an amount for recouping damages or generally withhold rent pending completion.