How Much and How Can a Landlord Increase Rent?

mariam-abu-hussein
Mariam Abu HusseinLegal Assessment Specialist @ Lawhive
Updated on 27th February 2024
Rent Increase

Renting a property can be a great option for many people. However, it's not always all sunshine and roses. Disputes often arise when a landlord wants to increase the rent they are charging their tenant. In this article, we'll cover the following points to help inform you, the reader what to do if you are on either side of the fence.

What You Need to Know About Rent Increases

The main advantages of rent increases for landlords are that they can keep up with inflation, cover rising costs of maintenance or improvements, and maximise their return on investment.

The main disadvantages of rent increases for landlords are that they may lose good tenants, face legal challenges or disputes, and damage their reputation or relationship with their tenants.

Tenants also may benefit from better quality improvements at the property. However, they may struggle to afford higher rents, face financial hardship or stress, and have less choice or bargaining power in the rental market.

When can a landlord increase rent?

Your landlord can only increase the rent if you agree to it, it's written in the tenancy agreement, or if they follow the defined process. 

How much can landlords increase rent by?

There are no legal limits on the amount a private landlord can increase rents, except for social housing which has a cap of 7% for 2023-24.

However, the rent increase must be fair and realistic.

What is a fair rent increase percentage?

A fair rent increase percentage in the UK is generally between 3-5% annually, but this varies every year. Rents tend to rise in line with inflation but that is not always the case. To determine exactly how much a fair rent increase percentage is and ensure your property is in line with the fair market value you need to do an annual market rent review analysis.

Usually "fair" means in line with average local rents. For example, if you’re renting a two-bedroom flat for £800 but similar flats in the area are renting for £1,000, it’s fair to expect a landlord to ask for the £200 per month increase.

Can my landlord legally increase my rent?

Contract

Rent increases can be contractual or non-contractual, and this difference affects the process significantly. Therefore, if your landlord proposes a rent increase, you should check your tenancy agreement to assess what your landlord can and cannot do.

Contractual rent increase

A contractual rent increase is when the tenancy agreement says how and when the rent will be reviewed and increased.

For example, the tenancy agreement may state that the rent will increase by a certain percentage or amount on a fixed date every year. In this case, the landlord does not need to give any notice or get the tenant’s agreement to increase the rent, as long as they follow the terms of the tenancy agreement, which is a legally binding contract.

Non-contractual rent increases

non-contractual rent increase is when the tenancy agreement does not say how and when the rent will be reviewed and increased.

In this case, the landlord must follow certain rules and procedures to propose and implement a rent increase, which may vary depending on whether the tenancy is fixed-term or periodic.

Rent increases and the law

The rules and procedures for rent increases are mainly governed by the Housing Act 1988, which applies to most privately rented properties in England and Wales.

However, there are some exceptions and variations for certain properties or tenancies, such as regulated tenancies (also known as protected tenancies), social housing tenancies, or tenancies in Scotland or Northern Ireland.

Moreover, some proposed changes to the law may affect rent increases in the future, such as the Renters Reform Bill, which aims to abolish no-fault evictions (also known as Section 21 evictions) and introduce lifetime deposits for tenants.

How will the Renters Reform Bill change the process for rent increases?

The Renters Reform Bill will streamline the process for rent increases, introducing a single procedure for landlords. Under the new laws, landlords can still increase rents in line with the market rate without a cap, but tenants will also be able to challenge any rent increase they see as excessive.

When the reforms become law Landlords will complete a revised Section 13 form and serve it to the tenant with 2 months' notice.

If the tenant accepts the proposed increase, the new rent amount will take effect on the rent day after the notice expires.

If the tenant disagrees with the rent increase because it's above market rate, they can refer the case to the First-tier Tribunal before the new rent is due.

Under the new rules, rent increases will only be allowed once per year.

While the Bill is not yet law, it is expected to be implemented at some point in 2024, possibly in March 2024.

How should a landlord propose a rent increase?

At the moment, when a landlord wants to increase rent, they must use either Form 4 (for regulated tenancies) or Section 13 notice (for assured shorthold tenancies) to notify the tenant of their intention.

The document must include the property address, the landlord's name and address, the tenant's name, the current and proposed new rent amounts, the date when the new rent will take effect, the date when the notice is served, and the landlord's or their agent's signature.

Before increasing the rent, landlords must give at least one month's notice (if tenants pay rent weekly or monthly) or six months' notice (if tenants pay rent yearly).

The notice must be served correctly by delivering it in person or by post.

How can tenants challenge a proposed rent increase by their landlord?

If a tenant disagrees with the proposed rent increase, they can negotiate with their landlord and present evidence to support their case.

Evidence may include the average rent for similar properties in the area, the condition and value of the property, the length and quality of the tenancy, and the impact of the rent increase on their finances and well-being.

If both parties can't reach an agreement, the tenant can challenge the rent increase legally by applying to a First-tier Tribunal (Property Chamber) in England or a Rent Assessment Committee in Wales.

Tenants can apply if the rent increase is unreasonable or unfair, the notice is invalid or incorrect, or they have not yet paid the increased rent.

Tenants must apply to the tribunal before the new rent starts.

The tribunal considers various factors, such as the cost of renting similar properties in the area, the market value of the property, the condition and facilities of the property, and the terms and conditions of the tenancy.

The tribunal decides if the rent increase is fair.

If it is, tenants must pay the new rent.

If it is not, the tribunal sets a lower rent for tenants and landlords to follow.

This section explains what landlords and tenants can do if they face challenges or disputes related to rent increases.

Although it is not always required, it is advisable to consider getting a solicitor specialised in landlord & tenant issues if you decide to take legal action.

Party

Challenge

Enforcement

Landlord

Possession order

Bailiffs or HCEO

Tenant

Injunction

Court order

If a landlord proposes a rent increase but the tenant does not agree or pay the new rent, the landlord can try to enforce the rent increase by taking legal action. The landlord can apply for a possession order to evict the tenant if:

  • The tenant has not paid their rent for at least two months (if they pay monthly) or eight weeks (if they pay weekly)

  • The tenant has breached any other terms of their tenancy agreement

To apply for a possession order, the landlord can use Form N5B (for assured shorthold tenancies) or Form N325 (for regulated tenancies).

The landlord will need to pay a fee and provide some documents, such as a copy of the tenancy agreement, a copy of the notice proposing a new rent, a copy of the proof of service of the notice, and a copy of the rent statement showing the arrears.

If the court grants the landlord a possession order, the landlord can ask bailiffs or High Court Enforcement Officers to evict the tenant.

However, this can be a lengthy and costly process, so the landlord may want to consider other options, such as mediation or negotiation.

Person at home

If a tenant challenges a rent increase proposal by applying to a tribunal, but the landlord does not accept or follow the tribunal’s decision, the tenant can try to enforce the tribunal’s decision by taking legal action.

The tenant can apply for an injunction to stop the landlord from increasing the rent or evicting the tenant if the landlord has ignored or breached the tribunal’s decision or has harassed or threatened the tenant.

To apply for an injunction, the tenant can use Form N16A.

The tenant will need to pay a fee and provide some documents, such as a copy of the tenancy agreement, a copy of the notice proposing a new rent, a copy of the proof of service of the notice, a copy of the application to the tribunal, and a copy of the tribunal’s decision.

If the court grants the tenant an injunction, the landlord must follow it or face serious consequences, such as fines or imprisonment.

However, this can be a risky and stressful process, so the tenant may want to consider other options, such as mediation or negotiation.

Apply for a rent assessment

You can also apply for a rent assessment to check if your a rent increase is fair or not by applying to a Rent Assessment Committee in England or Wales.

You do not need a lawyer to apply to a rent assessment committee, but you may wish to consult one if you need legal advice or representation.

The rent assessment committee is an informal tribunal that does not follow strict rules of evidence or procedure.

To apply, follow these steps:

  1. Apply for a rent assessment if you have a regulated tenancy (also known as a protected tenancy), an assured shorthold tenancy that started or was renewed on or after 1 April 2003, or if you have received a notice proposing a new rent from your landlord.

  2. You must apply for a rent assessment within six months of receiving the notice proposing a new rent. Provide a copy of your tenancy agreement, a copy of your notice proposing a new rent, and a statement of why you think your rent is unfair.

  3. The Rent Assessment Committee will look at various factors, such as the cost of renting similar properties in your area, the market value of your property, the condition and facilities of your property, and the terms and conditions of your tenancy.

  4. The Rent Assessment Committee will then decide if your rent is fair or not. If the Rent Assessment Committee decides that your rent is fair, you will have to pay the new rent. If the Rent Assessment Committee decides that your rent is unfair, they will set a lower rent that you and your landlord must follow.

What if I want to appeal?

If you are not happy with the outcome of a tribunal’s decision on a rent increase challenge, you can try to appeal against it by applying to a higher court.

To appeal, follow these steps:

  1. Apply for an appeal to the Upper Tribunal (Lands Chamber) in England or Wales if you think that the tribunal made an error in law or procedure, or if you have new evidence.

  2. You cannot apply for an appeal if you just disagree with the tribunal’s decision or missed the deadline for applying to the tribunal.

  3. You must apply for an appeal within 28 days of receiving the tribunal’s decision. Provide a copy of your application to the tribunal, a copy of the tribunal’s decision, and a statement of your grounds for appeal.

  4. If the Upper Tribunal grants you an appeal, they will review the tribunal’s decision and either confirm, vary, or cancel it.

  5. If you are still not satisfied with the Upper Tribunal’s decision, you can apply for a further appeal to the Court of Appeal, but only with permission from the Upper Tribunal or the Court of Appeal.

Rent increase FAQs

Here are some frequently asked questions about rent increases and their answers:

Q: How often can a landlord increase rent?

A: For a periodic tenancy (rolling on a week-by-week or month-by-month basis) a landlord can usually only increase the rent once a year without your agreement. For a fixed-term tenancy (running for a set period) a landlord can only increase the rent if your tenancy agreement permits this. Otherwise, they can only raise the rent when the fixed term ends.

Q: How much notice does a landlord have to give for a rent increase?

A: For a periodic tenancy (rolling on a week-by-week or month-by-month basis) a landlord must give you at least one month’s notice (if you pay rent weekly or monthly) or six months’ notice (if you pay rent yearly) before they can increase the rent. For a fixed-term tenancy (running for a set period) a landlord must give you whatever notice is specified in your tenancy agreement before they can increase the rent

Q: Were landlords allowed to increase rent during the Coronavirus pandemic?

A: Yes, landlords were allowed to increase rent during the Coronavirus pandemic, as long as they followed the rules and procedures for rent increases. However, they should have considered if this was reasonable and affordable for their tenants, who may have been facing financial difficulties or uncertainty due to the pandemic.

Q: Can a landlord increase rent for periodic tenancies?

A: Yes, a landlord can increase rent for periodic tenancies (rolling on a week-by-week or month-by-month basis), but they must give you at least one month’s notice (if you pay rent weekly or monthly) or six months’ notice (if you pay rent yearly) before they can increase the rent. They must also use Form 4 or Section 13 notice to propose the rent increase.

Q: Can a landlord increase rent if there are repairs needed?

A: No, a landlord cannot increase rent if there are repairs needed that they are responsible for. A landlord has a legal duty to keep the property in a good state of repair and should fix any problems that affect your health, safety, or comfort. If your landlord tries to increase the rent because of repairs that they should have done, you can challenge the rent increase by applying to a tribunal. You can also report your landlord to your local council’s environmental health department, which can inspect the property and order your landlord to do the repairs.

Q: Can a landlord increase rent if there are improvements made?

A: Yes, a landlord can increase rent if there are improvements made that add value or quality to the property, such as installing a new kitchen or bathroom, or adding insulation or double glazing. However, the rent increase must still be fair and realistic, which means in line with average local rents. If your landlord wants to increase your rent because of improvements that they have made, they must follow the rules and procedures for rent increases. You can also negotiate or challenge the rent increase if you think it is too high or unreasonable.

Q: Can a landlord increase rent if there are more tenants?

A: Yes, a landlord can increase rent if more tenants are living in the property than what was agreed in the tenancy agreement. This is because more tenants may cause more wear and tear, use more utilities, or create more noise or disturbance. However, the rent increase must still be fair and realistic, which means in line with average local rents. If your landlord wants to increase your rent because of more tenants living in the property, they must follow the rules and procedures for rent increases. You can also negotiate or challenge the rent increase if you think it is too high or unreasonable.

How can Lawhive help with rent increases?

Whether you're a landlord or a tenant, understanding your rights and responsibilities related to rent increases is important for maintaining a fair and drama-free relationship.

Our network of excellent landlord and tenant solicitors is on hand to assist you in any rent increase situation.

For more information and a free case evaluation, contact our Legal Assessment Team today.

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