As online lettings agents, we often hear from landlords who want to increase the rent. With inflation getting higher and higher, there are plenty of reasons to increase the rent moving into 2018 and beyond. If you’re thinking of increasing the rent, keep in mind that there are some regulations that you’ll need to pay attention to, if you want to ensure everything is fair and legal.
Here’s a quick look at the most important things you need to know about increasing the rent.
While there are plenty of sensible reasons to increase the rent, it can occasionally be counterproductive to do so. In some cases, it might not actually be in your best interests at all. Remember, when you increase the rent, there’s always the risk that the tenant may decide it’s better for them to move elsewhere. This could simply be because they can’t afford the increase, or because they think they might get a better deal elsewhere.
In this situation, you risk losing more money by potentially leaving your property empty for some time while searching for a new tenant then you otherwise would gain by increasing the rent.
The first step to working out how you should go about increasing the rent is to check your tenancy agreement. There are generally two types of agreements, fixed term tenancies, usually on an annual basis, and rolling contracts.
It is hard to increase the rent on fixed term contracts than rolling contracts. Unless the contract itself stipulates a situation in which the landlord can increase rent, rent can only be increased when the contract is renewed at the end of the term. In these situations, six months’ notice must be given for annual contracts.
Whatever the terms of the agreement, rent can still be increased by mutual consent with the tenant. This may involve voiding the original contract and drawing up a new one.
Increasing the rent with rolling contracts is somewhat easier. You’ll have to give at least one month’s notice for the rent increase itself, and rents can’t normally be increased more than once annually without mutual consent.
Though one month’s notice is the minimum required, it may be in your best interests to give longer notice. If the tenant decides to vacate the property instead of paying the rent increase, it’ll give you more time to find a new tenant. This means you’re less likely to miss out on another month’s rent.
A section 13 notice is the official document you will give to your tenant to inform them of the proposed rent increase. These are not always a compulsory part of the rent increase process – particularly if the increase is being written into a new contract.
However, if the tenant is on a rolling contract, and there’s no stipulated process by which the landlord can increase rent in the contract itself, then a section 13 notice is the best official way of actioning the rent increase procedure.
If you want to find out more from our Landlord Essentials series, then check out our previous blogs about what to do if the tenant damages your appliances and what to do if the tenant takes your keys.