Raising Rent – when you should, and when you shouldn’t…


A good landlord understands the value of a good tenant. A good tenant pays rent on time, looks after the property and generally makes life easy for the landlord. If the good tenant is happy, then they are likely to stay for a long time, minimising expensive void periods where no rental income is available, and also minimising avoidable repair costs. This means that it is a very good idea to make sure that your good tenant both wants to stay in your property, and can afford to do so.

Yet there are some major pressures on landlords today:

  • Inflation
    • Although currently low, inflation does affect the value of that rental income, and must be taken into account every year. You can see what inflation does to your income here.
  • Taxation changes
    • The taxation raid on private landlords, announced last year, began from April 2017. Over the next few years, this factor alone could easily turn a tidy profit into a loss – read more on my earlier blog, here.
  • Affordability
    • Many landlords, far from being wealthy individuals, are relying on their rental income to survive, perhaps in the form of a pension supplement or perhaps to enable them to pay their own rent or mortgage in turn. With so many people feeling the financial squeeze in the UK right now, landlords are not all exempt.

These are real issues, but they have to be set against a few reasons not to increase rents:

  • Justification
    • 96% of landlords are happy with their current tenant. That has translated into a relatively low inflation of rents across the UK, with just a 0.8% increase in February compared to the same month of 2016.
    • This means that landlords who do want to raise rents above the norm for their area will need strong justification for doing so.
  • Affordability again
    • While landlords are not always well off, tenants are even more likely to be feeling the squeeze recently. No matter how well justified your rent increase proposal, if your tenant cannot afford it they will be forced to leave, and a single month void period (or more) is likely to wipe out any rental increase you propose.

So let’s assume that you have decided, after carefully considering your own situation in the light of my advice, to raise the rents by a small amount. Under what circumstances are you actually allowed to do so?

  • For a periodic (rolling) tenancy, landlords can normally increase rents once per year. If you want to raise rent more than once per year you will need your tenant’s agreement.
  • For a fixed period tenancy, you can only increase rent if your tenant agrees, or when the tenancy fixed period ends.
  • You must comply with any rental increase clauses that were included in the tenancy agreement.
  • You must give the tenant at least one month’s notice of any increase.

Last but not least, it’s really worth considering how you go about letting the tenant know. You could get a stock letter online and fill in the details, write a simple email or even send a text message. But put yourself in the tenant’s shoes: how would you feel if you were on the receiving end? It is hardly going to be welcome news! I’d suggest that you start by explaining why you’re happy to have them as tenants, explain the justification for your decision (but remember it's not a sympathy contest), and propose a date from which the new rent will become due. Be careful not to imply that it is up for negotiation though, as it may set up an unrealistic expectation on their part, and lead to disappointment.

Making it personal and friendly should sugar the pill, but be prepared for an emotional response if things go wrong. This is one of the places where having an agent can be really welcome. We often know the tenants and their circumstances, and are quite comfortable shouldering criticism if the tenant is upset at the news. This is a type of confrontation that many landlords would rather avoid, and as such is one of the services we provide. We can confidently and calmly defuse the situation, and keep the stress away from you, the landlord. We would also be able to advise you not only on rent increases in the local area, but on the specifics above as they apply to your needs and circumstances. That way, you can make the tricky job of deciding whether to raise the rent or not as simple as possible. If you want to know more, please do give Jasmine, Matt or myself a call on 0115 945 5179 any time.

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