Have you received a rent increase notice from your landlord?

Tenants in the traditional Private Rented Sector often have to move because their landlord wants to increase the rent after their tenancy period comes to an end. They’ll still need your "consent" to do this, but for tenants who cannot afford a higher rent, a rent increase usually spells trouble.

To help you out, we have answered some of the most common questions tenants have regarding a possible rent increase.

1. When Can Your Landlord Increase Rent?
2. What Happens If You Say No to a Rent Increase?
3. How Much Rent Increase Can You Expect?
4. When Can You Challenge a Rent Increase Notice?
5. What Happens If You Are Unable to Pay the New Rent?
6. Can Moving to a Build To Rent Property Help You Avoid Rent Increase?
7. Wrapping It Up

When Can Your Landlord Increase Rent?

There are numerous scenarios where your landlord can legally increase your rent. These include:

If Your Fixed-Term Tenancy Ends

Once your fixed-term tenancy ends, your landlord can increase the rent if you are signing a new contract. The rent must be clearly stated in the new written agreement, and the landlord is required to inform you about the new amount before you sign the contract. They are not required to provide you with a notice in this case.

If You Have a Rent Review Clause In Your Tenancy Agreement

Many tenancy agreements have a rent review clause that stipulates a landlord is allowed to increase the rent during the tenancy period. This clause defines when the rent can increase, the minimum notice you’ll get, and how much increase you can expect.

This clause doesn’t apply once your tenancy agreement ends. However, if you choose to continue with your fixed-term tenancy by entering into a contractual periodic tenancy, then the rent review clause will apply to the new agreement.

If You Have a Periodic Tenancy

A periodic tenancy is a type of tenancy agreement that rolls on a weekly or monthly basis. It does not have an end date. If you have a periodic tenancy, your landlord can only increase your rent once during the year. They’ll need to give you a month’s notice if they plan to increase the rent and will need your permission for it.

Should you disagree with the rent increase, they can serve a Section 13 notice to enforce the rent increase. This can only be used once a year and a month’s notice is required.

What Happens If You Say No to a Rent Increase?

As mentioned earlier, your landlord needs your permission when trying to increase rent in a periodic tenancy or a fixed-term tenancy. If you decline this request, your rent will not change. However, your landlord may look for a way to end your tenancy altogether. They may also opt for other methods to increase your rent, such as using a Section 13 notice.

How Much Rent Increase Can You Expect?

Unfortunately, there is no law in the UK capping the maximum amount by which your rent can increase. For the most part, a landlord will increase the rent to match the average market rent in the area. The rent increase will be realistic and reflective of the property’s size.

For instance, if you are living in a one-bedroom apartment in Kensington and every tenant in the area is paying approximately £2,250/month as rent for similar properties, then an increase to £2,600/month is not sensible. Landlords understand they’ll only lose customers if they opt for an obscene rent increase.

The rent increase will also depend on the rate of inflation. Typically tenants can expect the rent to increase by 0.5%-5% annually. Here’s a summary of the annual growth in rental prices in the UK between 2015 and 2020¹:

When Can You Challenge a Rent Increase Notice?

Landlords typically need your permission before increasing rent. However, they are well within their rights to increase your rent once your tenancy ends. If you want to avoid looking for a new apartment, you can try negotiating with your landlord about the rent increase notice and asking them to meet you halfway by agreeing to a price that suits you both. Finding a new tenant is a hassle for landlords because it exposes them to potential void periods, so they are likely to agree to your request.

In some cases, landlords may also try to increase rent by an unfair and unrealistic margin. If you believe that this is the case, you can file an appeal with a tribunal about an unfair rent increase.

What Happens If You Are Unable to Pay the New Rent?

If you have been unable to reach an agreement with your landlord about your rent increase notice and cannot challenge it, then you will have to pay the new rent. Tenants that struggle to pay the new amount can get evicted by their landlord.

However, your landlord will have to follow the eviction process to do this. They will have to provide you with a written notice to vacate the property and get a court order. What’s more, as per the new rent guidelines under COVID-19, all evictions have been delayed till March 2021, so you can rest easy for now².

Can Moving to a Build To Rent Property Help You Avoid Rent Increase?

Not avoiding 100%, but Build To Rent developers tend to be more flexible and transparent about a rent increase. They are not likely to increase the rent as frequently, and even if they do, they must follow a specific formula.

Build To Rent developments also offer tenants an option to sign a longer lease up to 3 years, thereby avoiding the rent increase that usually comes with signing a new contract. If you are looking for more stability in terms of rental payments, then we strongly recommend you rent a Build To Rent property.

Wrapping It Up

Rent increases are part and parcel of renting a home in the Private Rented Sector. On average, you can expect your rent to increase from 0.5% to 5% annually. Most landlords will stick to a fair and realistic rent increase to avoid losing a tenant. If you believe your landlord is overcharging you, then you can negotiate the new rent amount or challenge the rent increase notice.

If you want to avoid these hassles and your landlord doesn’t agree to lower the rent, you can consider moving to a Build To Rent property. These properties have a more tenant-focused approach and are more likely to facilitate you in terms of rent increases.

Are you interested in finding a Build To Rent property? Then visit www.buildtorent.io to find the hottest Build To Rent homes in the UK at a price that suits your budget!