Legal limits for rent rise?

There is no legal maximum, figure or % for rent rises.

https://www.gov.uk/private-renting/rent-increases

https://www.gov.uk/renting-out-a-property/rent-increases

some leases state an annual limit eg 10% or £50 a year. so check this tenants leases.

my managing agent will document/ perform a market research of similar properties and will only raise rent to that level ( so not an increase just because the mortgage has gone up) thats fair and should stand up to the new tribunal recommended in the new rent reform laws.

Id act with urgency to get market rate set up before your mortgage forces you to sell or before the rent reform act tribunal.

Hi Rebecca,
I think many of us are going to be in this position over the next couple of years. Most of my properties have tenants that have been with us many years and they are also paying below the local market rent. However, at the moment whilst my mortgages are fixed, I am reluctant to increase them due to the financial struggles we are all experiencing with the cost of living crisis.
BUT once my mortgages are due for renewal then the conversion will have to be had.
My approach will be to visit the tenants and explain the situation with the increased mortgage costs and that the rent will unfortunately have to rise to the local market values. There is no choice!
I’m sure your tenant will appreciate you sitting down with them and explaining the need for the increase, especially if you give plenty of notice. It is then up to the tenant to make their decision.
Good luck!

I was in a similar situation recently, I wrote to the tenants with the rent increase notice, and included a cover letter. I had to increase by 20%. I explained that the increase was necessary for the continued viability of the rental property, and therefore necessary for their continued enjoyment. I explained that despite the increase the rent is still below market rate by several hundred per month. I advised them to contact me if they have any problems with this. It will be a shock to them, but if they follow any of the news they will understand that these are unprecedented times. If they enjoy the home, and you are a good landlord, they will make it work - if they can't afford it, they'll have to look elsewhere or downsize. All of my tenants agreed to the higher rate, and I'm sure scarcity in the market for rental property probably contributed to their decision making. They know they're still getting a good deal.

Yes, also in the same position. I use Standard STA Templated agreements from NRLA. I recall they have a term that stipulates a maximum % increase in one year. Certainly the market Year on Year increases have exceeded that max. So it’s definitely worth checking if you ever had such a term in your existing agreements.

I’ve always operated at below market rent and focus on long term tenants and value. However now being subject to a floating rate, I’m also exposed on one property and have to try to meet the market rent and protect myself as rental income is my only source of income and I’m already a negative p&l overall.

I think one lesson is to avoid lagging the market rate even if you have to pass on these big inflation / BOE increases to your Tenants.

Reply to the comment left by Bwel at 19/06/2023 - 10:31
I agree with you - we fell into the same trap, we have many excellent tenants who have been with us for years and we have let the rents fall well below market rate while interest rates were so low. We too have had to increase rates (we took the 7% allowed to the social housing sector as a minimum increase) and we have learned the lesson that it is better to creep the rent upwards year-on-year. I also use the NRLA standard AST template but I don't think it includes a % rent increase clause, but I may have got this wrong.
(We have also just written to all our tenants to say we would give them first refusal if they wanted to buy us out, and a few have expressed an interest, so fingers crossed for that.)

Some good advise here. When I went into property I was given sound advice from a professional. Inform your tenants there will be an annual increase (usually in line with inflation). Even if it's only £10 a month it never then comes as a massive shock that there will be an increase. Admittedly we in unpredictable times atm with no crystal ball as to how it's all going to end. Personally I'm selling up as can't see this improving any time soon and offered lower than market value to current tenants to purchase.

Reply to the comment left by RoseD at 19/06/2023 - 14:49
Just done a 3 year tenancy agreement with a professional couple. CPI increase each year but a minimum of 3% with a maximum of 5%. May sound a bit too generous but I have no mortgage on the property.

Reply to the comment left by Dennis Forrest at 19/06/2023 - 14:55
Way to go Dennis. If everyone happy then that seals the deal and a good example that not all of us are the money grabbing bad landlords we made out to be....as highlighted by the various comments in this reply thread.

Something clearly is not right , I am a professional portfolio landlord .
A periodic or AST tenanacy makes no difference, to raising rent increases.
What disappoints me is landlords not increasing their tenants rents regularly, and then when rates increase , like they have now they start to worry and panic .
How on earth can you not increase tenants rent for 7 years .
It looks like this landlord has been sitting around doing nothing as he /she is not running their property buisness properly , which in return is causing us professionals landlords a real problem.