What will be the market rate for forthcoming Section 13 rent increases?

If I think my proposed rent is reasonable and if the tenants disagree, they WILL be evicted one way or another. Legally, of course.

My rents are well below LHA which is well below the 30th percentile of all rents in the area (because LHA was set at the 30th percentile in September 2023 and won’t be uplifted until April 2026 at the earliest).

Tough times ahead for tenants as much as for landlords.

There ought to be a formula to determine this.

Take the current house value, add 5% (for SDLT) and add typical purchasing costs. Multiply this figure by BofE base rate + 1%. This should be considered the starting point for a fair return.

Add on typical costs for insurance(s), letting agent fees, EICR, Gas Safety, typical repair costs,
Selective Licensing fees and any Service charge(s) that may be applicable.

Take the final annual cost of providing the property and add a reasonable return for the landlord, bearing in mind the considerable risk that they have taken on.

For a basic rate tax paying landlord, somewhere around £1,400 should cover the rent for a £200,000 home.

Reply to the comment left by JaSam at 04/12/2024 - 15:15
I'm not in any debt, it's mortgage free so fortunately I don't have that to worry about , I may have other worries but I'll cross that bridge as and when. Tenants need to realise this isn't a game that we're playing even if they think it is and they need to start thinking long-term ie, the more they keep messing landlords about the more they are digging themselves a bigger and bigger hole to fall into because they will find it very dificult to get another prs home as any diligent LL will delve as deep as possible into their background before letting them into their property to rent. If tenants think they've been given carte blanche to run rings around the LL they are sadly mistaken .

I think there ought to be a limit to rent increases.

A limit of BofE Base Rate + 5% would seem reasonable to me, even though I increased mine by more than that this year (it followed a 3 year AST with rent fixed in 2021).

Tenants often financially commit to other things (such as mobile phones, broadband contracts, loans for cars etc.,) and they need some certainty of potential rent increases.

At the next increase, which will be 5% or thereabouts (at least, that’s what I’m thinking today), my tenants will be advised that rents will increase every year. I may even cap it at BofE base rate + 5%.

Reply to the comment left by Cider Drinker at 04/12/2024 - 16:09
Good luck getting an 8.4% return on a £200K house, with or without rent controls and tribunals! You are more likely to be getting 5-6% on that if you are lucky.