Costs are increasing in almost every area of our lives and landlords are not excluded from this. When considering a rental pricing review, it’s important to follow the correct steps. Here’s what landlords need to know.
How and when rental pricing can be reviewed
The tenancy agreement between you and your tenant(s) should include how and when the rent will be reviewed and it’s important to note that there are special rules for increasing protected (sometimes known as ‘regulated’) tenancy rents.
For a periodic tenancy (rolling on a week-by-week or month-by-month basis) landlords cannot normally increase the rent more than once a year without agreement from the tenant.
For a fixed-term tenancy (running for a set period) landlords can only increase the rent if agreed by the tenant. If the tenant does not agree, the rent can only be increased when the fixed term ends.
Rules around rent increases
For any tenancy:
- you must get permission from a tenant if you want to increase the rent by more than previously agreed
- the rent increase must be fair and realistic, which means in line with average local rents
How landlords must propose a rent increase
If the tenancy agreement lays down a procedure for increasing rent, you must stick to this. Otherwise, as a landlord you can:
- renew the tenancy agreement at the end of the fixed term, but with an increased rent
- agree a rent increase with the tenant and produce a written record of the agreement that you both sign
- use a ‘Landlord’s notice proposing a new rent’ form, which increases the rent after the fixed term has ended
It is important to note that you must give tenants a minimum of one month’s notice (if they pay rent weekly or monthly). If you have tenants with a yearly tenancy, you must give them 6 months’ notice.
Is your rental pricing appropriate?
Choosing to be a landlord is often for investment purposes and rent is how landlords make a return on their investment. When costs increase it’s inevitable that rent will need to. However, to maintain strong tenant / landlord relationships it’s important that rent increases are appropriate and not disproportionate in order to increase profit.
For landlords, it can be a tricky task keeping up with property pricing and specifically whether you’re charging appropriate rent for their property. Navigating what’s going on in the local market is a good starting point. Aim to understand what rental prices surrounding your property are and what fluctuations there are in supply and demand.
Private rental prices paid by tenants in the UK rose by 4.9% in the 12 months to March 2023, up from 4.8% in the 12 months to February 2023. Annual private rental prices increased by 4.6% in England, 4.4% in Wales and 5.1% in Scotland in the 12 months to March 2023. Within England, the East Midlands saw the highest annual percentage change in private rental prices in the 12 months to March 2023 (5.1%), while the South East saw the lowest (4.2%). London's annual percentage change in private rental prices was 4.8% in the 12 months to March 2023, above the England average and its highest annual rate since December 2012.*
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*Source: Index of Private Housing Rental Prices, UK: March 2023