Rent increases are an essential part of property management, but the process requires an understanding of legal obligations and how to implement best practices.
Here’s a guide for landlords on when and how to increase the rent on your property:
Understanding legal requirements
Before increasing rent, landlords must ensure compliance with UK laws to avoid disputes. The legal steps differ slightly depending on whether the tenancy is fixed-term or periodic:
1. For fixed-term tenancies:
- • Rent can only be increased if the tenancy agreement includes a rent review clause or if the tenant agrees to the change.
- • If the fixed term is ending, landlords can propose a new tenancy with an updated rent amount.
2. For periodic tenancies:
- • Use a Section 13 notice to propose a rent increase. This formal process notifies tenants of the new rent amount and effective date.
- • Provide sufficient notice: at least one month for monthly periodic tenancies or six months for yearly tenancies.
3. Fair price:
- • The rent increase must be fair and realistic, which means in line with average local rents. Look online at how much similar properties cost to rent in the area.
If your tenants think the rent increase is unfair, they can ask the First Tier Property Tribunal to decide the right amount.
The Renters’ Rights Bill is a reform that is scheduled to become UK law next year, which will limit rent increases to once per year to the market rate. Read our blog for what you need to know about the Renters’ Rights Bill.
When to increase rent
Timing plays a crucial role in how well tenants accept rent adjustments. Some times to consider include:
1. At renewal: Proposing an increase when renewing a fixed-term agreement is common practice.
2. After improvements: If significant upgrades, like new appliances or energy efficiency enhancements, have been made, an increase may be justifiable.
3. Market conditions: Review rental market trends annually to ensure rents remain competitive while meeting your financial goals.
Best practices for increasing rent
To make the process smoother, these tips could help you to maintain a good relationship with your tenants:
1. Transparent communication: Explain why the increase is necessary, such as rising maintenance costs or inflation. Most tenants appreciate openness and honesty.
2. Be reasonable: Avoid large, sudden increases that could cause financial stress for tenants. A smaller, regular adjustment is usually better received.
3. Provide value: Explain that the property’s quality and services justify the increase. Keeping the home well-maintained strengthens the landlord-tenant relationship.
4. Plan ahead: Notify tenants well in advance and ensure you meet legal notice periods to give them time to adjust their budgets or discuss concerns.
Can tenants refuse or negotiate rent increases?
If tenants disagree with a rent increase, they can discuss alternatives with the landlord, such as a smaller increase or a gradual increase over time. Open communication can often lead to a reasonable compromise. Tenants cannot withhold their rent payments without risking eviction for non-payment of rent.
How Letting Agents can help
A thoughtful and legal approach to rent increases not only protects your interests but also builds lasting relationships with your tenants. Make the process smooth and stress-free by planning ahead and seeking expert guidance.
At Jacobs Steel, we specialise in property management and can help you navigate rent reviews with confidence. Get in touch with our Lettings Team today to learn how we can help you in maintaining a successful rental portfolio.
Disclaimer: While we aim to provide accurate information, this article is intended as a general guide and doesn’t constitute professional advice. Always consult with a qualified professional for specific guidance.