What is considered a fair rent increase or are there limitations?

What is considered a fair rent increase or are there limitations?

0:06 AM, 25th March 2024, About 9 months ago 23

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Hello, I currently have two properties, both of which have AST for 12 months. The current tenants have lived in the respective properties since 2020, pay their rent on time and keep the properties in a reasonable clean status. Since 2020, we have deliberately not increased the rent on either property, as we did not wish to add any further pressure on the tenants due to cost of living crisis experienced by many.

Unfortunately, we can no longer absorb our cost as landlords and will look to increase the rent from the start of any new ATS which will be in November this year. I wish to give the tenants notification about the rent increase now, should they wish to sign a new AST at that time.

I just wanted to check if there is any limitation on what that increase can be?

I think I read somewhere of a 7.7% ceiling, but I believe that only applies to social landlords. I obviously wish to keep a balance between a fair rent increase and no what could be seen as extortionate.

Any advice greatly appreciated.

Thank you,

Ian


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NewYorkie

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14:05 PM, 25th March 2024, About 9 months ago

Reply to the comment left by Michael Johnson - Amzac Estates at 25/03/2024 - 13:45There are many reasons why rents weren't increased, but I suspect the main one was not needing to, and hence giving the tenant a bit of a break. But I take your point about running a business, and tenants never give landlords a break when times are tough.
What you are saying is if the tenant doesn't like the increase, a landlord [currently] has the option of evicting them under s21.

Martin

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14:32 PM, 25th March 2024, About 9 months ago

I always increase the rent every year, prices always rise. Saying that, my increases have varied between £15/month to £80/month.
This saves any difficult conversations after no rise in a few years and yes I negotiate but they expect a rise every year.
I have never lost a tenant due to raising the rent, only work locations changing or family issues

Mick Roberts

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14:38 PM, 25th March 2024, About 9 months ago

Reply to the comment left by Michael Johnson - Amzac Estates at 25/03/2024 - 13:45
That's me, trying to look after tenants & now biting me. Paying £600, £300 below market rent £900, & when I increase by the LHA rate of £100, I'm a bast__d.

Cider Drinker

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15:21 PM, 25th March 2024, About 9 months ago

I look at social housing rental costs, LHA rates, inflation and RightMove when deciding a range of rents that I could offer.

Then, I look at my needs and tenant affordability.

Fed Up Landlord

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16:46 PM, 25th March 2024, About 9 months ago

As others have said - smaller annual rises rather than bigger "one offs" are preferred. As for an increase level- it's a matter of looking at market rates, tenant affordability ( from previous referencing ) and what
" feels right. I have a "mental block" around a £50-£60 increase on rents of £600-£700 and don't increase it any more than that via Section 13 Notice.

Michael Johnson - Amzac Estates

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22:32 PM, 25th March 2024, About 9 months ago

Reply to the comment left by NewYorkie at 25/03/2024 - 14:05Unfortunately as landlords we have to be much tougher than we would like to be, after all it’s still a people business. After 10 years of governments and local authorities getting tough on us inevitably the supply has not kept up with demand so prices have gone up in a short period. The interest rates may be contributing but if there were lots of properties for tenants to choose from then rents would not be increasing. After all between 1997 and 2007 interest rates were similar to present day and rents were half of what they are now. In fact sometimes when a tenant vacated we had to reduce the rent to get a new tenant. Our tenants are now paying more purely because of supply and demand as so many smaller landlords have sold or reduced their portfolios because it’s not worth the risk or not financially viable. It’s just sensible to price in small increases regularly as you don’t want tenants to start thinking of the property as theirs as this just causes different problems longer term.

Reluctant Landlord

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8:40 AM, 26th March 2024, About 9 months ago

Reply to the comment left by David at 25/03/2024 - 11:46
'unfair' is not a term that the law or government use. When it comes to rent - the baseline always has to be market rent. Tenant choice to move or stay. Everyone seem to forget (most of all politicians & pro tenant groups) that renting in the PRS is a choice, not a right or a second social housing sector either.

Reluctant Landlord

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8:50 AM, 26th March 2024, About 9 months ago

Reply to the comment left by Michael Johnson - Amzac Estates at 25/03/2024 - 22:32I agree. Housing in general has become political and toxic and as a result those providing it are deemed the devil incarnate.
I know I am a good LL, BUT when this toxicity starts to impact on my ability to both rent AND make a viable living, then you have to adapt.
If that means being 'more corporate' and seeing a tenant purely in terms of a 'occupant who rents the space' over feeling I am doing as much as I can to provide a family home for someone who will never afford/want to own their own home, then that is the way it has to be if I am to continue to provide that very same accommodation.
The tide has turned. The LL is not seen as the good guy and the sector and tenants will suffer because of this.
I'm hoping this will come to a head so that the tenants themselves see the light and realise what's going on here. LL's are just as much a victim here as they are.

DPT

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14:17 PM, 26th March 2024, About 9 months ago

Reply to the comment left by Reluctant Landlord at 26/03/2024 - 08:40
I agree. My use of the the term unfair was applied to the landlord, who frankly fell down on the job and now wants to hit the tenant with what is probably and unaffordable increase due to their own failing. This, I think is unfair.

NewYorkie

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18:14 PM, 26th March 2024, About 9 months ago

When the tenant has benefited from a below market rate rent for 5 years, why is unfair to increase rents significantly if it's the only way for a landlord to keep the tenant in the property?

If the tenant has to leave, and wants to remain in the same area, they would be faced with paying the market rate.

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