How to Handle a Rent Increase as a Landlord

Rental demand has soared in recent years, thanks to the fact mortgage lenders are asking for so much deposit these days. At the same time, local authority housing stocks are dwindling. What it means, in effect, is that there is a housing crisis. 

Your tenants probably feel grateful that they’ve found somewhere decent to rent that doesn’t cost the earth. So, how do you introduce a rent rise to them? And are you legally entitled to do so anyway? 

Can Landlords Increase Rent During Fixed Term Tenancies?

The only way you can legally increase the rent during a tenancy is if there is a clause in the Tenancy Agreement that states this is the case. Otherwise you’ll have to wait until the tenancy comes to an end and then put the higher rent into the new Tenancy Agreement. Of course, your tenants may simply agree to the rent rise, but don’t count on it. 
 

For rolling tenancies (ie month by month) it’s only possible to increase the rent once a year. And even then, you must give tenants official notice via Section 13 of the Housing Act 1988. It’s one month’s notice if your tenants have been in for less than a year, and six months’ notice for longer than that.

How Much Can a Landlord Increase the Rent By? 

If you increase the rental price so that it’s higher than similar properties in the same area means your tenants may move out. You’d possibly also find it harder to re-let. 

If your tenants feel the rise is unfair they can apply to a tribunal for a hearing. If the tribunal rules against you then legally you’ll have to wait 12 months before attempting to increase the rent again. 

How Do You Notify Your Tenants of a Rent Increase?

Ideally your tenants will agree to the raise. This is great news if you have a good tenant – landlord relationship and don’t want it severed. But you are running a business so don’t feel guilty about doing it, especially if you are currently charging lower than what is standard for your area. 
 
Let your tenants know why you’re increasing their rent. It could be that the letting agent has put up the fees or the rent is low considering the rest of the market because you haven’t put the cost up for years. You can back up your point of view by referring the tenants to properties online. That way they’ll realise there’s no point in moving if they want to stay in the same location. 

It may be that you have to negotiate the new rental price – or when you are going to implement it. Certainly, if you want to keep your ‘good’ tenants then it may be worth doing this. And, anyway it gives them time to budget for the rent increase.  

To persuade your tenants to agree to the increased rent you could always give them a longer fixed tenancy next time ie for two years. Or, you could promise to redecorate or purchase a new freezer or fireplace etc.  

If you can’t fancy telling your tenants their rent is increasing, then get a letting agent to do it via a letter. You’ll have to pay for this, of course, but it keeps it all official and impersonal. 

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