A new online market rent calculator aims to support landlords and tenants in rent negotiations once the Renters’ Rights Act comes in.

The tool - www.marketrent.co.uk - lets them download a free report showing an indexed market rent, based on ONS data for each region and property type.

Under the Act, rent increases must not exceed the market rent, but according to developer Rajeev Nayyar (pictured above), this only exists when a property is available on the open market, with vacant possession, and when a landlord and prospective tenant can freely agree a rent through competition.

Landlords will likely be incentivised to advertise higher figures, then agree a lower rent, he says. Over time, this means advertised rents will become overstated, they won’t reflect the true market and can’t be used confidently as evidence of market rent.

Months

After 1^st May, rents can only be increased once every 12 months with two months’ notice and must match the true market rent. Landlords have to use the Section 13 process, and all rent-review clauses will become invalid. Tenants can challenge this at the First Tier Tribunal which can’t set a rent higher than the landlord’s proposal, and any increase will only apply from the date of the decision, not retrospectively.

Nayyar, who previously set up Fixflo, the property repairs and maintenance software for letting agents, tells LandlordZONE that the Act doesn’t think through some of the commercial consequences. “There were 800 challenges last year – there will likely be at least tens of thousands after 1^st May. I’m hoping we can provoke a debate with MHCLG to make this law workable in practice.”

Website

He adds: “We built this website to give everyone - landlords, tenants, and advisers - a fair, accessible, and evidence-based starting point for understanding rent changes, without relying on opaque algorithms or incomplete market data.”

It follows the government’s failure to provide any more information about how appeals over Section 13 rent increases will work in practice. In response to Shadow Housing Secretary Kevin Hollinrake’s questions, Justice Minister Sarah Sackman couldn’t answer how long it took to determine a market rent application from receipt to decision in the First-tier Tribunal or how many applications for market rent determinations were received in the last year.

Property lawyer David Smith (pictured left) says having no idea about the current costs of and time taken to deal with rent increase applications and no particular plan to measure that and establish the effects of the changes is putting the government at huge risk if a legal challenge is made.

Smith, at Spector Constant & Williams adds: “The government could do a lot to deal with this issue in relatively short order by providing baseline data on the workload in the FTT for rent increase appeals (which they could work out) and making some sensible projections for changes. This is perfectly possible, and not even all that difficult!”

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