Rent is a divisive issue, and rent increases even more so. Landlords must take into account the expenses of mortgage repayments, market fluctuations, and inflation when determining a reasonable rent or raising a current rent. Tenants, on the other hand, are generally upset with rent increases.
The truth is that nothing is ever the same, and prices are no exception. The expense of living is rising even if inflation is low at the moment. As time goes on, landlords’ expenses rise, hence rent hikes are a necessary part of the economy. Increasing rent to offset growing expenses is one thing, but raising rents for profit is quite another.
In this post, we’ll discuss the guidelines for rent increases, as well as whether it’s permissible to raise the rent and what other options you have.
When Landlords Can Implement Rent Increases
For a periodic or fixed-term assured shorthold tenancy, current rent is determined by the lease agreement. When a tenant signs a lease, they are agreeing to pay this amount. Furthermore, the leasing agreement should explicitly explain how and when a landlord might increase the rent.
Fixed-Term Tenancy Rent Increases
The landlord cannot raise the rent during a fixed-term tenancy, such as a 12-month agreement, unless there is a provision in the tenancy agreement that allows for an interim increase. Rent increases must be adhered to in accordance with the terms of your lease.
Renewals of fixed-term leases require that the new rate be included in an agreement signed by the tenant agreeing to pay the old rent when it expires.
Tenants with fixed-term leases do have the option of transitioning into periodic ones, but this isn’t required. A rent increase agreement may be issued at this time.
Rent Increases For Periodic Tenancies
The landlord can only raise the rent once a year under a monthly (or weekly) lease. The tenant must consent to any increase in rent before it can go into effect. In order for an agreement to be legally binding, it must be signed and dated by both parties. In order to provide the tenant at least a month’s notice of a rent increase, the landlord will need to issue a new rent form. A copy of the rental agreement must be kept on file by the tenant.
All rent increases must be reasonable and in accordance with the existing market rates in your neighbourhood.
Including a provision in the rental agreement stating that the rent will rise by X percent after six months is one approach to prepare ahead of time in the event that you choose to raise the rent. In this method, the tenant is made aware of the impending increase and given the opportunity to agree to it in advance. Even though the tenant originally consented to an increase in rent, they have the right to complain if the increase is excessive.
Raising Rent On Regulated Tenancies
Different rules apply to regulated tenancies. There is a cap on rent rises in this type of tenancy, which are determined by the Valuation Office Agency (VOA). Every two years, landlords can request that the VOA evaluate their rentals. For example, if the property has been rebuilt or enlarged and the rent has been increased, a rent review might be sought. Although the VOA can both raise and lower your rent, so you should be aware of this possibility.