Why Evidence Matters When Setting Prime Central London Rents

For landlords reviewing an existing tenancy, that judgement is becoming more important. Under the Renters' Rights Act, rent increases are subject to a more formal process and tenants have the ability to challenge a proposed increase if they believe it sits above the property's market value.

Recent Tribunal decisions provide an interesting insight into what happens when landlord and tenant disagree. Across the cases examined in recently published data, rents were set below the landlord's proposed figure in 59% of decisions. London proved harder for tenants seeking a reduction, with fewer than half of the cases examined resulting in one, but where rents were reduced the median difference was £150 a month.

For Prime Central London landlords, the lesson is less about avoiding rent increases and more about being able to demonstrate why a new rent reflects the market.

Asking rent and market rent are not always the same thing

Anyone following the Prime Central London lettings market will regularly see properties advertised at impressive figures. But an asking rent is exactly that: an asking rent. It does not necessarily tell us what a tenant eventually agreed to pay.

That distinction has become particularly important when a rent increase is challenged. The Tribunal considers the open-market value of the property in its current condition, looking at what a willing tenant might reasonably pay. Advertised rents are not treated as evidence in the same way as comparable rents that have actually been achieved.

This matters in neighbourhoods such as Chelsea, Kensington, Knightsbridge, Notting Hill and South Kensington, where seemingly similar properties can command very different rents.

A beautifully refurbished apartment with a lift, porter and good natural light cannot automatically be compared with another flat of the same size nearby. Equally, a house with outside space, excellent bedroom proportions and a particularly good position may sit in a different rental bracket from a property a few doors away.

Good rental evidence therefore needs to be genuinely comparable, rather than simply geographically close.

Why local knowledge becomes more valuable

The Tribunal data suggests that evidence is one of the areas where landlords can run into difficulty. According to the research cited in the source material, shortcomings in the evidence provided were mentioned in nearly half of the reasoned decisions reviewed.

For a Prime Central London landlord, this highlights the importance of understanding what has actually been happening in the immediate rental market.

Recent achieved rents for comparable homes can help establish the case for an increase. So can evidence of meaningful improvements to the property, supported where appropriate by photographs, records of work or other documentation. Previous Tribunal decisions involving genuinely comparable properties may also be relevant.

The important point is that the evidence should relate to the home itself. A general story about rents rising across London is unlikely to be as persuasive as recent evidence showing what tenants have actually paid for comparable properties nearby.

Condition can influence the rent

This also brings the condition of the property into sharper focus.

Prime Central London tenants are accustomed to comparing homes carefully. A landlord may reasonably feel that the market has moved since the tenancy began, but the tenant will also be considering whether the property itself justifies the proposed figure.

A home that has been well maintained and improved during a long tenancy may have a stronger case than one where decoration, appliances or bathrooms have gradually fallen behind competing properties.

That does not mean landlords need to undertake expensive refurbishments whenever a rent is reviewed. It does mean the property's condition should form part of the conversation about value.

For landlords who own for the long term, regular maintenance can therefore serve two purposes. It protects the underlying property while also helping it remain competitive in the rental market.

The value of getting the rent right

There is a natural temptation in a rising rental market to concentrate on achieving the highest possible figure. For an existing tenancy, however, the calculation can be more nuanced.

A good tenant who has looked after a property and wants to remain may have considerable value to the landlord. Pushing the rent too far can create disagreement or encourage the tenant to leave, potentially introducing a void period and the costs involved in preparing and marketing the property again.

Setting the rent too low has an obvious cost as well, particularly over a long tenancy. The objective is therefore to arrive at a figure that reflects the property's genuine market position and can be supported by evidence.

This is especially important now that the formal process can take time. The source data found a median wait of 96 days for Tribunal decisions across the regions examined, rising to 142 days in London. Some cases took considerably longer.

Avoiding unnecessary disputes can consequently have a practical financial value as well as helping to maintain a good landlord and tenant relationship.

A more considered approach to rent reviews

The changing rules do not mean Prime Central London landlords should be reluctant to review rents. They do mean the reasoning behind an increase needs to be stronger.

That starts with understanding the individual property. What have comparable homes actually achieved? Has the condition of the property changed? How does it compare with the alternatives currently available to tenants? And does the proposed increase fairly reflect those differences?

Prime Central London is too varied for broad rental averages to answer those questions on their own. Market evidence is most useful when it becomes local, recent and relevant to the property being considered.

For landlords, that may ultimately be one of the more positive consequences of the new approach. Rent reviews become less about choosing a percentage increase and more about understanding what the property is genuinely worth in today's market.

In a part of London where two apparently similar homes can perform very differently, that distinction has always mattered. It now matters rather more.