The amount of rental increase will be equal to the increase in the rental value of the subject holding, directly attributable to the improvement made.
The landlord must give notice to the tenant within six months of completion of the improvement, however the increase will become applicable from the completion date of the improvement.
If the landlord has carried out the improvement partly using grant funding, then there is no increase in rent for the grant funded element of the improvement and as such the tenant receives the benefit of the grant if applicable.
If the tenant contributes to the cost of the improvement or provides a benefit in kind to the landlord, this will also be taken into consideration.
Improvements subject to this provision would include:
– An improvement carried out at the request or in agreement with the tenant
– An improvement carried out under a direction from the First-tier Tribunal/Agricultural Land Tribunal under Section 11 of the Agricultural Holdings Act 1986
– An improvement carried out in pursuance of a notice served by the landlord under Section 67 (5)
– An improvement carried out in compliance with a direction given by the Minister under powers conferred on him by or under any enactment
– Works executed on a holding for the purpose of complying with the requirements of a notice under Section 3 of the Agriculture (Safety, Health and Welfare Provisions) Act 1956
– An improvement carried out in compliance with an improvement notice served, or an undertaking accepted, under Part VII of the Housing Act 1985 or Part VIII of the Housing Act 1974
If a landlord fails to adhere to the provisions of Section 13 and fails to agree conditions for the carrying out of the improvement, that interest shall be charged, at a specific rate, or he fails to serve notice within six months from completion of the improvement, he does not lose any benefit from the improvement indefinitely, but rather, has to wait until the next rent review date under Section 23 before any income in respect of the improvement can begin to be recovered.
Kathryn Williams is director and RICS registered valuer at Davis Meade Property Consultants