Market rents change all the time along with the rental market as a whole and if the rents in an area have risen since a tenant moved in then the landlord may want to consider adjusting the rent up to a level comparable with other properties.
It’s best to discuss any rent rises with the tenant rather than just imposing a rise on them and the discussion should be approached as a negotiation. The landlord can point to examples of other properties with rents that are more than the tenants current rent. This shows that the landlord is willing to discuss things and also shows that if the tenant was to leave then they would end up paying more than they do at the present time.
The tenant should be made to feel that they are getting something out of the deal and the landlord may want to offer a new carpet or something along those lines as a deal sweetener. If the tenant is still unwilling to pay an increase, then the decision has to be made if the rent should stay the same or be increased and a new tenant found.
This decision comes down to two factors. Firstly financial. If it’s going to take a long time to find a new tenant, then it will take time to recoup the lost rent (and the rise) negating any advantage of putting up the rent in the first place – and the new tenant may not stay for long anyway.
The second factor is tenant reliability. If the current tenant is a good one who pays their rent on time is it worth chancing finding a new tenant who may not be so reliable.
If the landlord does decide to increase the rent, then how it is done depends on where in the lifecycle of the tenancy you are.
- During the initial fixed term of a tenancy the rent cannot be increased unless it was written into the original tenancy agreement.
- It’s more typical for an increase in rent to come into force when a fixed term comes to an end. At this point one of the following can be actioned:
- Agree with the tenant to sign a new agreement for another fixed term with a different rent level.
- Allow the current agreement to continue on a periodic basis but agree an amendment to the level of rent stated in the contract.
- A couple of months before the fixed term is due to end discussions should begin about what to do next and the level of future rent should be part of those discussions.
- If a tenancy is continuing on a periodic basis there are three ways in which the rent can be increased.
- If there is a clause in the agreement saying the rent will increase by a certain percentage (the rate of inflation for example) then what is written can happen.
- If there is no clause then the rent may be increased with the mutual agreement of the landlord and tenant with the agreement signed in writing by both parties and kept as evidence with the tenancy agreement.
- If there is no agreement with the tenant, then the landlord can push through an increase by issuing a Section 13 notice. This need’s specific wording and the template can be downloaded the gov.uk website. A Section 13 notice needs to be issued at least one month before the rise comes into effect. If the tenant doesn’t agree with the new level of rent, they can refer it to a Rent Assessment Committee. It usually makes more sense to just end the tenancy rather than go through the legal process. If the rise is reasonable then finding a new tenant shouldn’t be difficult.
