It's fair to say as a private landlord you'll spend a lot of your time thinking about the rent. Will the tenant pay it this month? Am I charging enough? And probably the biggest question. Should I raise the rent?
You're in business. And one thing you can rely on in the property business is your outgoings will increase year on year. Whether that's repair costs, accountancy fees or any of the 101 other expenses you face as a private landlord. You may have to meet those rising costs with a fair rent increase.
But there are other reasons why you should consider an increase. If you discover you've fixed the rent below the local market value for example. If this is the case you should give serious consideration to bringing your rent into line with what other local landlords are charging in 2019.
You may also think about raising the rent if demand increases. If the property is in an area which starts to see new developments or is becoming gentrified take advantage by increasing the rent. If the market can stand it of course.
Many landlords will increase the rent between tenancies. It's easier and makes sense. But you can also raise the rent during a tenancy. And if you have long-term tenants you will probably need to do this at some point.
Assuming an assured shorthold tenancy you can raise the rent during the fixed term if you've included a review clause in the tenancy agreement. This will set out when the rent will increase and by how much.
If there's no review clause you can't increase the rent during the fixed term. Unless your tenant agrees that is. Which is probably unlikely.
You can, of course, raise the rent if you renew the tenancy agreement at the end of the fixed term. It's a brand-new contract and you can set the rent at a higher level.
For a periodic tenancy, you can raise the rent once a year. More often if the tenant agrees.
You must use a Section 13 (Form 4) notice when you raise the rent. This notice lays out what the new rent will be and from when it applies. You need to give your tenant at least one months’ notice of the increase. This rises to six months if it's a yearly tenancy.
Any increase you propose must be fair and reasonable. Though you're allowed to charge market rent. However, if your tenant doesn't agree with the increase or thinks it's unreasonable, they can appeal to a rent tribunal.
The tribunal will consider whether the increase is fair. They'll do this by deciding what the local market rent would be for a new tenant in the property. They can decide to set the rent at the level you propose or at a lower or even higher level.
Is there a time you shouldn't raise the rent? Possibly. If the rent you charge is already at the market level than increasing it may be counter-productive. You could struggle to let your property.
There's also a case for freezing the rent to encourage long-term tenants. You'll know the value of keeping the same tenant for as long as you can. Renewing the tenancy with the same rent is one way to achieve this. Of course, you have to balance this against increasing costs but the stability a long-term tenant brings is often worth foregoing an immediate increase in rent.
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