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Setting and Increasing a Rent

By: Sarah Clark (ILEX) - Updated: 22 Oct 2012 | comments*Discuss
Setting And Increasing A Rent

With the rising costs of living, it can sometimes be inevitable that you have to consider putting up the rent on your property, much to your tenants’ chagrin. There are official ways of doing this, if and when necessary.

At the Start of the Tenancy

When you set out the terms of your rental agreement at the start of the tenancy, you should also make sure that rent amounts, timings and arrangements are covered – plus any timescales for rent reviews. This prevents any problems with the tenant arguing that they were not notified there would be a prospect of a rent increase at any time.

The amount of the rent should take into account the prevailing market conditions, the type of property, and the amount you need to cover any mortgage payments. Ideally you should aim for at least 125 per cent of the monthly mortgage payment.

If the tenant has signed a fixed term tenancy agreement, it should state that the rent will be a fixed amount for the entire length of the tenancy – or if the tenancy is long term that you will be reviewing it regularly.

If the tenancy agreement doesn’t cover increases in the amount of rent, you can only put the rent up with the agreement of the tenant, if the tenancy is for a fixed period of time. If the tenancy is a contractual periodic tenancy, you will need to write to the tenant and notify them when the rent is to be increased. Alternatively, there is a formal procedure which is part of the Housing Act 1988 which allows a landlord to propose a rent increase, as long as it’s at least a year after the tenancy started. This legislation also allows a landlord to put the rent up at yearly periods following the first rent increase.

How Much Notice Should I Give?

You must give the tenant at least a month's notice of any proposed increase in the amount of rent, if they pay you weekly or monthly. If the tenant agrees to the increase and doesn’t oppose it, they just need to pay the extra from the date you give them in the written notice. If they dispute the increase, they have to apply to a rent committee to decide whether the increase you are suggesting is fair. They have to make this application to there rent committee before the increased rent would have become due.

Protected and Statutory Tenants

If your tenant is a protected tenant according to the Rent Act 1977, they are entitled to make an application to the Rent Officer for what’s deemed to be a 'fair rent'. If they do this, you will only legally be able to ask them for what’s assessed to be a 'fair rent' according to the Rent Officer.

If your tenant has made this type of application and the rent has been assessed, you’ll then only be able to review the amount that you charge in rent every two years, unless you can show that there have been substantial improvements to the property, or the circumstances of the actual letting have changed. Any proposed changes to the rent will also have to be agreed by the Rent Officer.

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