How Much Can a Landlord Increase Rent?

The legal considerations surrounding rent increases can impact both landlords and tenants, so it is essential to understand the rules and regulations that govern a rent rise. While landlords want to maximise their income, there are certain restrictions and limits on increased rent. In this brief guide, we explain how much landlords can increase rent by and the laws that apply.

As a landlord, it is crucial to ensure that the rent you set is both fair and realistic, balancing your own financial interests with the well-being of your tenants. At the same time, landlords are entitled to increase rent in order to boost their incomes, particularly with mortgage interest rates increasing.

Rent increases are a common concern for both landlords and tenants alike, as they can have a significant impact on housing affordability and the overall landlord-tenant relationship. Landlords want to keep tenants in their property, and there can be a fine line between increasing rent and keeping the property occupied.

In this short guide, our landlord solicitors will provide you with an in-depth overview of the guidelines surrounding rent increases in the United Kingdom. We will explain various aspects of rent increases, including when and how landlords can legally raise rent, the factors to consider when determining a fair increase, and whether tenants can dispute the new, higher rent.

If you have any questions we have not covered, our specialist landlord solicitors are able to answer your landlord query. You can contact us by completing the enquiry form below or by calling 0151 666 9090.

How much can a landlord increase rent?

Landlords are entitled to increase rent in their properties by whatever amount they see fit, as long as the increase can be deemed fair and realistic. This is a Government stipulation, which essentially means that any increase should be in line with local averages.

Landlords are expected to align any rent increases with the local market rates, as this ensures that the proposed raise reflects the value and demand for similar properties in the area. It also means that it will be easier to find a new tenant whenever their existing tenancy agreement runs out.

Several factors can determine what is deemed fair and reasonable. Firstly, landlords must assess the rental prices of comparable properties in the area. If similar homes or flats in the vicinity are being rented out at higher rates, it may justify a reasonable increase in rent.

If, for example, the landlord currently rents out a property for £800 per month and neighbouring homes are being rented out for £1,200 per month, it would be deemed reasonable to increase rent by £400 per month.

If, however, the landlord suggests a new rent of £2,000 per month, this would likely be viewed as unfair and unrealistic. In this case, the tenant would have the right to challenge the proposed raise and seek resolution.

A landlord can also look to raise rent in line with inflation. Average UK rent increased by 9.9% between April 2022 and April 2023, according to HomeLet Rental Index.

It is important to note that while landlords theoretically have the freedom to set their rental prices, it is in the best interest of both parties to propose a reasonable increase that reflects the market conditions and maintains a positive landlord-tenant relationship.

When can a landlord ask for a rent increase?

Many landlords believe they can increase rent annually. However, the timing for when a landlord can impose an increase depends on the type of tenancy in place, and whether it is periodic or fixed-term.

• Periodic Tenancy: A periodic tenancy rolls on a week-by-week or month-by-month basis. Generally in these cases, the landlord cannot increase the rent more than once a year without the tenant's agreement. This means that landlords must obtain consent from the tenant before implementing a rent increase. The agreement can be reached through negotiation and discussion between both parties.
• Fixed-Term Tenancy: A fixed-term tenancy has a specific duration, such as six months or one year. During the fixed term, the landlord can increase the rent only if the tenant agrees to it. If the tenant does not agree to the proposed increase, the rent can only be raised once the fixed term ends. At that point, the landlord can renegotiate the terms of the tenancy, including the rent amount.

It is also worth noting that the terms and conditions regarding rent increases may be outlined in the tenancy agreement signed at the outset of the tenancy. Some tenancy agreements may include a rent review clause, specifying the circumstances, frequency, and process for rent adjustments. This clause will set out how often a landlord can increase the rent for their property.

How much notice does a landlord need to give a tenant?

During a fixed-term tenancy, landlords are unable to demand a rent increase unless a rent review clause is included in the tenancy agreement. If such a clause exists, the landlord has the right to raise the rent while the tenancy is ongoing, but it must clearly outline the specifics of how and when the rental increases will occur, and how much notice needs to be given.

In the absence of a rent review clause, tenants with a 12-month fixed-term tenancy can expect to receive a notice period of six months before any rent increase takes effect.

For those in a periodic tenancy, where the tenancy rolls on a week-by-week or month-by-month basis, landlords are typically required to provide a minimum notice period of one month for any rent increase.

Can a tenant dispute a rent increase?

A tenant can dispute a proposed rent increase if they believe it is unfair and unrealistic. This means it is important for landlords to consider other similar properties and their monthly rent when proposing a new fee.

If you have a good relationship with your tenant, you may be able to resolve any dispute without the involvement of another party. It may be beneficial to negotiate and reach a compromise in terms of the new rent figure, and this can also help to find a balance and a fair amount to charge.

In some situations, however, a tenant might be able to take the dispute to a tribunal, which will then decide on a fair and realistic rent. The tribunal can set a new rent for the tenancy. As a landlord, if you aim to increase the rent you charge for a residential property, it is often best to work with an expert landlord solicitor. Contact the team at Percy Hughes & Roberts today to understand your legal rights and obligations to a tenant, and we can help you to resolve these matters amicably to give you the best chance of avoiding legal consequences.