As a landlord, setting fair and reasonable rent increases is essential for maintaining good relationships with your tenants and keeping your property rented consistently. In this post, we will look at what is considered a reasonable rent increase within 2023 and discuss things to consider when increasing to help you navigate sometimes tricky terrain.
What is a fair rent increase in the UK in 2023?
For private landlords, a sensible approach would be to consider adjusting the rent by up to wage inflation, even if it's lower than CPI inflation. This could make it more affordable for renters and help reduce the risk of payment struggles.
In 2023, a rent increase of around 6% is reasonable, as it remains well below average wage inflation. This approach also takes into account the increased costs that landlords may have to bear.
How much rent increase is reasonable?
A rent increase can be done if there is a rent review clause in the tenancy. Typically, this will also show the amount of rent increase.
However, there are a few other things you can do and consider as a landlord when increasing rent:
● Average rents for your area and property size
When navigating a rent increase, it is important to consider not only rent standards but also to ensure that the increase is comparable to the average rent in the local area, taking into account the size of the property as well.
● The tenant's financial circumstance
Landlords should consider their tenants current financial situations when deciding on a reasonable rent increase for 2023. If you have a good tenant who pays their rent on time and looks after the property as their own home, then you want to make sure they renew the tenancy when it expires.
● Ensure the correct notice is given
Before asking for a rent increase, it’s important that landlords give tenants plenty of notice.
Fixed-term tenancy:
If a fixed-term tenancy agreement does not have a rent review clause allowing for rent increases, a landlord is not permitted to raise the rent during the term. If the tenant is renewing and the landlord wants to increase the rent for the new fixed-term agreement, this can be negotiated between the landlord and the tenant.
● Understand the local market
Before deciding on a rent increase, landlords should research the current market conditions in their area. Looking at comparable properties and talking to other landlords can help give an understanding of what the going rate is for similar dwellings. This also helps to ensure that the rent increase proposed is fair and reasonable.
● Know your legal obligations
A tenant can appeal a rent increase if they’re on a rolling/periodic contract, which is all the more reason for ensuring that the rent increase you suggest as a landlord is reasonable based on the local market rents.
Rolling periodic tenancy:
For tenants with weekly or monthly rental agreements, at least one month’s notice of the proposed increase needs to be given. However, for those agreements which are more than a month, a tenant is entitled to a notice of one period of tenancy. A yearly rental agreement requires 6 months' notice and rent can be increased every 12 months only via a Section 13 notice.
By following these guidelines, landlords can ensure their rent increases are fair and reasonable in 2023. Navigating a rent increase can be difficult which is why we recommend using an experienced letting agent to help manage your letting property and provide support and insights on market rent when it comes to tenancy renewal.
If you're thinking of selling your current rental property and would like a free valuation from one of our expert agents, please contact your local branch today.
