Rent increase notices: What is a fair rent increase?
All tenancy agreements should include information on how and when rent will be reviewed. A lot will depend on the type of tenancy that is being used for the property.
When can a landlord increase rent during periodic tenancies?
This depends on the type of tenancy. For ‘periodic’ tenancies - rolling on a week-by-week or month-by-month basis - a landlord can’t increase the rent more than once a year without getting agreement from the tenant first.
When can a landlord increase rent during fixed-term tenancies?
For a fixed-term tenancy (one that runs for a set period, i.e. six months) a landlord can, again, only increase the rent if the tenant agrees to it. If the tenant doesn’t agree, the rent can only be increased after the fixed term ends.
Adding a review clause to tenancy contracts
Also, a landlord might include a rent review clause in a tenancy contract. This clause will set out:
- When the increase will happen
- The amount of notice that will be provided to the tenant
- A formula or system by which the rent increase will be calculated. This is so it is completely clear by how much the rent will be increased by.
Under haart’s Property Management services, our dedicated lettings team are on-hand to help you manage payments, plus build tenancy contracts when you’re looking for new tenants. Find out more here: Landlord Advice
What is a Section 13 notice?
If a tenancy agreement doesn’t include a rent review clause, or it’s expired and the landlord still wishes to raise the rent, a landlord can use a a section 13 notice.
A section 13 procedure can only be used once a year. Tenants must have at least one month’s notice of the proposed increase for weekly or monthly rental agreements.
If the tenancy agreement is for more than a month, a tenant is entitled to more notice (usually 6 months).
A landlord can serve the notice during the fixed term of a tenancy, but the rent increase cannot take effect until after the fixed term has ended. If a tenancy didn't start with a fixed term, a section 13 notice cannot be used at all during the first year.
For a full breakdown of rent increases and the legislation involved, visit gov.uk.
How much can a landlord raise the rent?
A landlord must get a tenant’s permission to increase rent by more than any amount previously agreed. Plus, the increase should be in line with average rents in the local area and relevant to the property size.
For example, if rent for a one bedroom flats in the area is around £600 per month, a landlord cannot expect £900 a month for a same-sized property in the same area.
With rents rising in line with inflation, the average UK rent increased by 9.5% between June 2021 and June 2022, according to HomeLet Rental Index.
How much notice does a landlord need to give a tenant?
Before any rent increase, landlords should always provide a tenant with enough notice. If you pay rent weekly or monthly, a minimum of one month’s notice must be given. For a yearly tenancy, 6 months’ notice must be provided.
As we previously explained, a landlord can't increase the rent during a fixed-term tenancy unless there is a rent review clause set out in the tenancy agreement that says the rent can be increased. Most assured shorthold tenancies start with a fixed term, meaning that for the first year of a tenancy agreement the rent cannot be increased.
How does a landlord propose an increase in rent?
If a landlord wishes to increase the rent on a property they can:
- Renew a tenancy agreement at the end of the fixed term, stating an increased rent
- Agree a rent increase with the tenant. There must be a written record of the agreement that both parties sign
- use a form called a ‘Landlord’s notice proposing a new rent’ which increases the rent after the fixed term has ended
Can a tenant refuse a rent increase?
A tenant can refuse an increase in rent and appeal to a tribunal to challenge a section 13 rent increase. The tenant must still pay the rent at the existing rate until a decision is reached. For advice for tenants on how to tackle a rent increase dispute, try Shelter England’s guide.
If a tenant and landlord cannot reach an agreement on rent, the tenant may decide to move on. Read about Ending a tenancy here.
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