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Context: United Kingdom, South-East, West of London

I have made an offer for a rental property: 2 year tenancy with a 6 month break clause at £XXX/month. This offer was accepted and I paid a holding deposit of ~£200 to the rental agency.

I have just received the proposed tenancy agreement (which I haven't signed yet), running from 15th November 2019 to 14th November 2021, and I am baffled to see the following clause:

The rent will increase to £YYY per calendar month with effect from 5 November 2020 and by 5% per annum thereafter.

In other words, they want to increase the rent by 5% every year starting midway through the tenancy.

My thoughts are:

  • The accepted offer was for 2 years at the offered rent, and although we did not state it explicitly, we assumed the rent would be fixed for the duration of the tenancy!
  • 5% seems arbitrary and quite generous, given that annual inflation in the UK has been between 1 and 3% for several years.

My questions (edited):

  1. Is there a reason why the agency is asking for 5% in particular. Is it reasonable? Is there a standard for annual rent increase in the UK?

  2. Am I correct to assume that the offer was for a fixed rent, even though not explicitly stated?

  3. If the agency does not bulge, I am prepared to walk away. The holding deposit is advertised as "non-refundable", however in that case I consider that the proposed tenancy agreement is not in line with the accepted offer, so I would expect to be refunded anyway. Is that reasonable? If they refuse to refund me, is there a higher authority or ombudsman I can turn to?

I will of course contact the agency and negotiate, but I wanted to know my options first.

  • 1
    I don't know the answer, but if you don't get an answer here then either Citizen's Advice Bureau or Shelter might be able to help. – Vicky Nov 5 '19 at 17:01
4

You are doing the right thing in contacting the agency and negotiating. Unfortunately, you do not have that many options in the London rental market.

Is there a reason why the agency is asking for 5% in particular.

No. This is an arbitrary decision.

Is it reasonable?

There is no such thing as reasonable in the UK rental market, especially in London. ;-)

Is there a standard for annual rent increase in the UK?

No.

Am I correct to assume that the offer was for a fixed rent, even though not explicitly stated?

The verbal agreement or lack thereof does not matter. The only thing that matters is what is in the contract (and the law).

If the agency does not bulge, I am prepared to walk away. The holding deposit is advertised as "non-refundable"

The holding deposit is a small deposit (maximum, 1 week) that an agency can take to take the property off the market while the rental agreement is negotiated, finalised, and signed; references are checked; the old tenants (if any) leave the property, the property is updated, and the new tenants come in. In exchange of receiving this deposit, the agent does not advertise and does not show the property to other prospective tenants. This deposit is typically non-refundable unless you have agreed something else.

I would expect to be refunded anyway. Is that reasonable?

Holding deposits do not have to be protected in a deposit protection scheme (unlike tenency deposits) so it will be difficult to get it back if you decide you no longer want to rent the property.

The only exception may be if the deposit is higher than 1 week's rent.

If they refuse to refund me, is there a higher authority or ombudsman I can turn to?

Yes.

| improve this answer | |
  • Thanks! FYI the agency had no problem postponing the rent increase to 2021 given that our offer was for 2 years at a fixed rent. They explained the clause standard and is actually a protection for the tenant as it limits the increase available to the landlord... In any case, I expect to terminate that tenancy agreement in 2 years and renegotiate the rent if we want stay. – asac Nov 6 '19 at 16:57
  • I feel like your answer ignores the fact that the holding deposit is only paid after a formal offer from the prospective tenant has been accepted by the landlord. This offer has always been asked in writing by the agency. Everything starts once the offer is accepted and the holding deposit is paid. It feels like a very formal process so I find it hard to believe that the offer is basically useless. An offer often contains conditions and is already subject to negotiations. You're saying the agency can turn around and ignore the offer, then proceed to keep the deposit when the tenant complains? – asac Nov 7 '19 at 8:27

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