What is a fair rent increase in the UK?
Periodic tenancies
In periodic tenancies—where rent rolls on weekly or monthly basis - a landlord can typically increase rent once a year. However, this can only happen with the tenant's agreement.
Fixed-term tenancies
During fixed-term tenancies, which have a set duration like six months, rent can only be increased if the tenant agrees to it. If not, the rent can be raised after the fixed term ends.
Review clauses
Landlords may include a rent review clause in tenancy contracts. This clause specifies when the increase will occur, the notice period provided to the tenant, and the method for calculating the increase.
Haybrook’s Rent Collection Service can help you manage payments and build tenancy contracts when you’re looking for new tenants.
Understanding Section 13 notices
If a tenancy agreement lacks a rent review clause or has expired, landlords can use a Section 13 notice to propose a rent increase. This notice can be served once a year, with varying notice periods depending on the agreement's duration.
A landlord can issue the notice during the fixed term of a tenancy, but the rent increase will only take effect after the fixed term ends. If the tenancy began without a fixed term, a Section 13 notice cannot be used during the first year.
For a comprehensive guide on rent increases and related legislation, visit gov.uk.
What is a reasonable rent increase?
Landlords must obtain the tenant’s permission for any increase beyond previously agreed amounts. The increase should also align with local average rents and property sizes.
For instance, if the rent for a one-bedroom flat in the area is approximately £600 per month, a landlord cannot reasonably expect to charge £900 per month for a similarly sized property in the same location.
Private rental prices in the UK rose by 6.1% in the 12 months to October 2023.
Notice periods
Before increasing rent, landlords must provide sufficient notice. This typically ranges from one month for weekly or monthly agreements to six months for yearly tenancies.
As mentioned earlier, a landlord cannot raise the rent during a fixed-term tenancy unless the tenancy agreement includes a rent review clause. Most assured shorthold tenancies begin with a fixed term, which means the rent cannot be increased during the first year.
How to increase the rent?
Landlords can propose a rent increase by:
- Renewing the tenancy agreement with the new rate
- Reaching an agreement with the tenant on a rent increase and obtaining a written record of the agreement signed by both parties
- Using a form called the “Landlord’s notice proposing a new rent” to increase rent after the fixed term ends
Tenant rights
Tenants have the right to refuse a rent increase and can appeal to a tribunal to challenge it. However, they must continue paying the existing rent until a decision is made.
For advice on handling a rent increase dispute, tenants can refer to Shelter England’s guide.
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