Agents told to set ‘tracker’ rents that rise with interest rates

Two letting agents have been quoted in a newspaper report as saying landlord clients have instructed them to create ‘tracker’ rents for tenants.

These are rents that rise in line with landlord mortgage payments in response to Bank of England rate rises.

Marc von Grundherr, director at London-based agency Benham and Reeves, told the i newspaper that landlords are increasingly asking him to include such clauses in tenancy agreements. 

He says he has drafted two agreements that state rents can be increased if the Bank of England raises its rate.

Most recently, it agreed a three year contract that allows the landlord to increase the rent each year by a minimum of eight per cent, or more if the rate of inflation is higher, while also including a clause that states the rent can be raised further if the Bank of England raises its base rate by more than two per cent.

Von Grundherr is quoted as saying: “Actually the tenant is willing to accept that because they understand not every single landlord is the Duke of Westminster with no debt.”

However James Lindsay, a lettings agent based in Liverpool, told i that he refused to do the same for one of his landlord clients.

“I just outright refuse to do it. It’s the nature of the game. If I put all of my money on the stock market tomorrow and the stock market plummets then tough; I’ve lost all my money. They’re trying to load the game so far in their own favour” he is quoted as saying.

The i admits it is unclear how widespread the practice of such rent tracker contracts is and even a spokesperson for tenants body Renters’ Rights London tells the paper it is still “unusual” to see tenancy agreements with such clauses, adding that these typically only apply to agreements that last longer than one year.