When can you raise the rent?
Earlier in the year I was asked by a landlady what she paid me for, as I hadn't raised the rent on her property every 6 months as another agent had told her I should. Rents can be raised annually, and once they have been raised they can't go up again for another year. That's the law.
Why NOT to raise the rent!
For some landlords, the rent review date is the main event on their lettings calendar. It shouldn't be - the gas test renewal date is far more important, as the primary focus of any landlord should be to ensure they are legally compliant and don't end up in a situation where someone can sue them. There are a number of things a landlord should bear in mind when considering a rental increase:
- A rental increase is not an entitlement. It doesn't follow that just because a tenant has been in a property for a year, the rent needs to go up. I've been a lettings agent for 8 years and there have been occasions where the landlords has agreed a rental reduction with a tenant in order to ensure that tenant doesn't leave. Those were the market conditions at the time, and sensible landlords needed to adjust to reflect this.
- A rental increase does not relate to the landlords own costs. If your mortgage has gone up, or you are saving for a holiday, that doesn't mean your tenant is liable for more rent. We hear this sort of thing argued more often than you might imagine. We've never heard landlords who are experiencing low interest rates (as many are currently) argue that their tenant should get a rental reduction, by the way!
- A rental increase does not relate to what you've read in the newspapers, the fact that you may have had an increase in another town, or the fact that your friend may have increased the rent at his property locally and got away with it! The amount of rent chargeable relates to the state of YOUR property and the local market.
- It's possible of course that your tenant can't afford a rental increase. The current rent may be stretching them already and the extra £20 you're proposing will mean they either fail to pay or choose to leave. This may not bother you if you can get another tenant at the higher sum, or you may decide that losing the tenant over an extra £20 is actually a false economy when a small empty period and the costs of re-let are considered. Different landlords have different views.
Why you SHOULD raise the rent.
So at a simple level, the only real factor in determining whether a rental increase is appropriate is local market conditions. You may not have had an increase for 6 years, but if your tenant can go and find a similar size and standard of property locally at a lower rate, it's going to be hard for you to justify an increase. If your property is managed by an agent, you'll have the benefit of being guided by them - remembering that they should know the local market better than you as it's their job! Agents are usually on a cut of all rent received so it's in their interest to propose rental increases where appropriate - but like you they don't benefit from an empty property, so it's unlikely they'll propose an increase where one can't be justified - the safest thing is to leave it to them. Equally, tenants aren't stupid! If they can see the rent you're proposing is fair in relation to the property and the market, they'll pay it. If they think you're seeking an excessive rent, there's every likelyhood they'll take their business elsewhere.
