Rent increases are a common part of renting out property, especially when market conditions change or property expenses go up. However, it is important that landlords handle any rent increase properly, with clear communication and respect for the legal process.

A rent increase notice is a formal document that landlords can use to inform tenants of upcoming changes to their rent. It is designed to give tenants enough time to prepare or explore their options, whether that means negotiating or considering alternative arrangements. This process not only keeps landlords compliant with the law but also helps maintain positive tenant relationships.

In this guide, the expert landlord solicitors at Percy Hughes & Roberts explain what a rent increase notice is, when it can be issued, and the legal steps landlords must take to increase the rent they charge legitimately.

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. 

Understanding a Rent Increase Notice

A rent increase notice is an official document that informs tenants about an upcoming change in their rent. It must give at least one month's notice of the increase, to provide tenants with enough time to plan financially or consider other options. They may consider negotiating the proposed increase with the landlord, or decide to relocate.

More than just a courtesy, the rent increase notice is a legal requirement. It maintains transparency between the landlord and tenant and sets clear expectations for both parties. The process for issuing a rent increase notice depends on the type of tenancy agreement in place, but it must always adhere to specific guidelines to guarantee the increase is fair and reasonable.

Providing clear and timely notice helps to maintain a positive landlord-tenant relationship and prevents potential disputes during a fixed-term tenancy.

When Can a Landlord Increase Rent?

The rules for when a landlord can increase rent depend largely on the type of tenancy in place, which could be a fixed-term tenancy or a periodic tenancy.

A fixed-term tenancy runs for a specific period (such as six or twelve months). Rent increases cannot occur during this fixed period unless the tenancy agreement includes a rent review clause or the tenant agrees to the increase. If there is no agreement from the tenant or no rent review clause, the rent must remain fixed for the entire term. Once the tenancy ends, landlords have the opportunity to renegotiate the rent as part of the terms of a new fixed-term tenancy agreement.

With periodic tenancies, where the tenancy automatically rolls over on a week-by-week or month-by-month basis, landlords generally have more flexibility to increase rent. However, the rent can only be increased once a year unless both parties agree otherwise.

In both types of tenancies, any rent increase must follow legal guidelines to ensure it is fair and in line with local market conditions. Rent review clauses in the tenancy agreement often outline when and how a landlord can propose to increase the rent, and should offer clear guidelines and expectations for both parties.

How Much Notice Is Required for a Rent Increase?

While landlords should give at least one month's notice before increasing a tenant's rent, there are different specific notice periods that depend on the type of tenancy agreement and the terms outlined within it.

Fixed-term tenancies

• If a rent review clause exists, it will outline the timing and notice required for an increase.

• Without this clause, landlords must wait until the end of the fixed term to propose an increase in the new tenancy agreement, and typically give at least six months' notice.

Periodic tenancies

• Landlords must usually provide at least one month’s notice before increasing the rent.

• For yearly periodic tenancies, the required notice is generally six months.

Landlords must follow these notice periods to remain compliant with the law and give tenants enough time to prepare for the change.

Section 13 Notices Explained

A Section 13 notice is a formal method for landlords to increase the rent of a tenancy in England and Wales during a periodic tenancy. This process is specifically designed for rent increases when there is no prior agreement between the landlord and tenant, or when a rent review clause is not included in the tenancy agreement.

To be legally valid, a Section 13 notice:

• Can only be issued once every 12 months.

• Cannot be used during a fixed-term tenancy.

• Must state the new proposed rent and the date the increase will take effect.

Tenants can challenge the notice by referring the matter to a tribunal before the new rent takes effect. The tribunal will assess whether the proposed rent is fair based on local market conditions.

Section 13 Notices are an important legal tool for landlords but must be used correctly to maintain compliance with the law and avoid disputes with tenants.

How Much Can a Landlord Increase Rent By?

There is no fixed limit on how much a landlord can increase rent by in England and Wales, but any increase must be considered fair and reasonable. The amount should align with current market rates for similar properties in the local area. A significant or unreasonable rent hike could be challenged by the tenant, either through negotiation or by referring the matter to a tribunal. A tribunal will assess whether the proposed increased rent is fair, and may reject it if it is not.

Key factors that landlords should consider when determining a rent increase include:

• Local market rates: The proposed rent should be in line with what is being charged for similar properties in the same area.

• Property condition: If the property has undergone improvements or refurbishments, this could justify a higher rent increase.

• Inflation and rising costs: Increases in maintenance costs, property taxes, or inflation might also support a rent rise, but the increase should still remain in line with the market.

If a landlord issues a Section 13 notice for a periodic tenancy, they cannot issue another increase for at least 12 months. This measure protects tenants from frequent rent hikes.

Ultimately, the goal is to maintain a fair balance between allowing landlords to cover costs and adjust for market conditions, and ensuring tenants are not subject to sudden, unaffordable increases.

You can read more on this topic here - How Much Can a Landlord Increase Rent?

Can Tenants Challenge a Rent Increase?

Tenants can challenge a rent increase in several different ways if they believe it is unfair or unreasonable. Depending on the type of tenancy and the circumstances of the proposed rent increase, tenants may challenge it using the following approaches:

• Negotiation: In many cases, the first step is to try to negotiate directly with the landlord. Tenants can explain their concerns, reference local market rates, or offer a compromise. Landlords may be open to negotiation, especially if there is a risk of tenants leaving.

• First-Tier Tribunal (Property Chamber): If an agreement cannot be reached, tenants in periodic tenancies have the right to challenge a rent increase by referring the matter to the First-Tier Tribunal. The tribunal will review the proposed rent and determine whether it is fair based on the market and similar properties in the area. This must be done before the proposed rent increase takes effect.

• Challenging a Section 13 Notice: If the landlord uses a Section 13 notice to increase rent in a periodic tenancy, tenants can formally challenge the notice by applying to the tribunal. The tribunal has the authority to reduce, maintain, or even increase the rent, so this option should be considered carefully.

If your tenant stops paying rent while challenging the increase, they may fall into arrears, which could give you grounds to pursue eviction. While it is best to avoid disputes, there are legal options for both landlords and tenants to resolve issues over a decision to increase rent.

How Can Percy Hughes & Roberts Help?

Navigating rent increases can be a complex and sensitive process for landlords. At Percy Hughes & Roberts, our experienced team of landlord solicitors can provide expert legal guidance to help you handle the process smoothly and in compliance with the law.

Whether you are seeking advice on how to issue a rent increase notice, understand your obligations under a Section 13 notice, or ensure a proposed rent increase is fair and reasonable, we are here to help. Our legal expertise can ensure that you remain compliant with regulations, protect your rights and help you to maintain positive tenant relationships.

Our landlord solicitors can help you with a range of issues relating to landlords and tenants and represent numerous residential landlords in the North West. For more information on our landlord services, do not hesitate to contact our expert solicitors today. Call us on 0151 666 9090, or send us your query by email by filling in our online contact form.