“How much can my landlord increase the rent?,” is a question often posed by renters around the world, let alone in the UK. And it’s a valid one, too. Rent increases are typically part and parcel of renting a property - but that doesn’t mean you need to be in for a nasty surprise when the landlord decides to act on a rental increase.
Most importantly, the landlord needs to have the renters’ agreement before any increase can take place, and it must be ‘fair and realistic’.
But how do you define ‘fair and realistic’?
In this article, we’ll look at how much a landlord can increase the rent by, as well as some of the particulars around when they can do it and how renters can react to any financial changes.
Reasons a landlord may increase the rent
UK law technically gives landlords the right to charge as much rent as they like. The reality, however, is somewhat different. The majority of landlords understand they are providing a service, and want to keep their renters happy. Therefore, it’s unlikely to envisage a situation where landlords increase rents by an outlandish amount.
If a landlord decides to increase the rent, the sum is usually in line with average other local rents. Their reason for doing so may be to keep pace with market movements or perhaps their own circumstances have changed - such as mortgage payment increasing.
This doesn’t mean they are likely to increase rents by significant amounts. After all, it costs money to re-let a flat, and most landlords prefer a good-quality renter who pays their rent on time and takes care of the property. If they have those attributes in their current renter, they’ll avoid trying to rock the boat for the sake of a hundred-or-so pounds a month.
When can a landlord increase my rent?
Now you know some of the reasons why a landlord might decide to raise the rent, you're probably asking yourself if - or when - it will happen to you. If you have an AST (Assured Tenancy Shorthold) in place, you’re safeguarded against rent increases for the duration of the agreement. The landlord can still ask to increase the rent during your AST, but you have the right to reject any increases while your agreement is in place.
When the AST finishes, it goes onto a periodic tenancy (rolling on a week-by-week or month-by-month basis). During this period, the landlord can increase the rent but can only do so once a year, unless you have agreed otherwise. If they try to increase the rent more than once in the year, you have the right to turn down the request. They also need to provide you with at least one month’s notice before any rental increase come into effect.
For more information, check out our post, when can a landlord increase your rent?
How much can a landlord increase my rent by?
There’s no set figure for how much a landlord can increase your rent by, but it does need to be fair and realistic. Essentially, this means your landlord can only raise rents if they're in line with the current market. The AST often has a section suggesting how much rents could increase by.
The percentage is typically between 0.5 and 5%, with market rents expected to be somewhere in that bracket after a 12-month AST comes to an end. If you’re paying £1,300 a month in rent, a 0.5% increase amounts to £1,306 and a 5% increase equates to £1,365 per month.
Sometimes rent increases can be as high as 10%, especially if the postcode where there has been a boom in rentals. However, the average yearly increase is 2%, which equates to £1,326 for a rental that was previously £1,300.
How can I respond to a rent increase?
Landlords need to present any rent increase in writing. They can do this by providing a new tenancy agreement with the higher fixed term, producing a written record of the agreement that you both sign, or using a ‘Landlords notice proposing a new rent’ form, which increases the rent once the fixed term has ended.
If you agree with the rent increase, you simply need to sign a new AST or written agreement. If you disagree with the new rental amount, you should communicate this to the landlord or managing agent while still paying the original amount.
Before signing an AST and moving into the property, it’s worth factoring in any future rent increase. While it can be hard to budget for something 12 months down the line, doing so can prevent any rental increases that catch you by surprise.
Landlords value good renters, so you shouldn’t worry too much about unfair increases. As long as you are aware of your rights and communicate with your landlord or managing agent, navigating a rental increase should be fairly straightforward and in line with current market rents.