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Can you increase rent on an AST?

As a tenancy progresses landlords may find that the amount of rent that they are currently charging their tenants may not fall in line with market or interest rates, leaving them the option to wait until the fixed term of the tenancy comes to an end, or employ other methods to increase their tenants rent on an AST.  

What is the most a landlord can raise your rent?PropertyLoop

How Much Should I Charge for Rent? 

Those that are new to letting a rental property could be left asking how much should I charge for rent? Thankfully the amount landlords should request their future occupants to pay in rent is somewhat simple. Although assessing similar rental opportunities within the surrounding area will offer landlords a good baseline from which to start, owners should calculate their rental yield, ensuring that the rent they set will not only be enough for an income but cover the essential expenditures that come with managing a rental property.  

Do Tenants Have to Agree to a Rent Increase? 

The occupants of a rental property do not have to agree to any rent increase proposed by the landlord. Providing that the tenants find themselves in the middle of a fixed term and the tenancy agreement is absent of a rent review clause, the landlord will need to have the tenant sign a new tenancy agreement with the revised rental charge. However, if this is not agreed on the increase will not take place.  

However, f the landlord enacts a rent increase through a section 13 or a rent review clause tenants will need to challenge the rent increase through appealing to a tribunal. The tribunal will then evaluate the proposed increase against similar opportunities within the area and determine if the revised rent is fair. Regardless of the outcome, it is essential that the tenants continue to pay their rent as it’s likely that they would be found in breach of their tenancy agreement if they neglected to do so.  

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Is There a Limit to How Much a Landlord Can Raise Your Rent?

When determining how much the expected amount of rent should increase landlords will often present sound reasoning for the proposed amendment to the figure. Has extensive renovation works or improvements been conducted to the property? Perhaps the conditions within the rental market have seen drastic change or the costs of maintaining the property have escalated. Regardless of the reasoning landlords will naturally have be cautious of raising the amount their tenants are expected to pay too much. As can be expected, if they are able to find a rental opportunity that offers similar, or better amenities for a significantly lower fee, they are unlikely to renew the tenancy and seeing the landlord exposed to marketing fees when trying to find a new tenant.  

Any increased proposed by the landlord must be “fair and realistic”, meaning that it must fall within the local market rates and in accordance with similar rental opportunities within the surrounding area. With this being said it is worth noting that there is no strict limit or threshold on how much a landlord can increase a tenant’s rent.  

How Can I Increase My Tenant’s Rent? 

Mutual Agreement 

Typically, if the tenancy is still within the fixed term then the landlord will need to negotiate with the tenant in order to come to a mutual agreement to increase the rent. This will mean that both the landlord and the tenant will enter into a new tenancy, with the new level of rent being established. As a new tenancy agreement is being signed landlord can often be more flexible with the tenant in return for the increase, perhaps offering them a shorter fixed term, or a break clause. It is crucial that any new agreement is documented in writing, with both parties of the agreement obtaining a copy to evidence the rent increase and the addition of any new terms.  

Rent Review Clause 

Under normal circumstances a landlord would be prevented from increasing the amount of rent their tenants should pay each month during the fixed term of the tenancy. However, if the tenancy agreement contains a rent review clause, then the owner will be able to increase the rent providing that the tenant receives an appropriate amount of notice. Any increase in rent proposed by the clause must still be deemed fair, with the clause outlining how the increase will be calculated, how much notice the tenant will receive and when the point in the tenancy at which the established level of rent will be evaluated. With this being said, f the tenancy agreement contains a rent review clause then the landlord will be prevented from increasing the rent through serving the tenant with a section 13 notice.  

How to Serve a Section 13 Notice 

The Housing Act 1988 allows landlords to propose a rent increase through issuing their tenants with a section 13 notice. The notice can exclusively be served once the fixed term has come to an end, with landlords being further prohibited from serving their tenants such a notice more than once every twelve months. The minimum notice period for tenancies that are fortnightly or weekly is one month. For annual tenancies you will have to give six months’ notice.   

Mistakes to Avoid on Form 4 

You only get one chance to fill out a Form 4 within a 12-month period, so make sure you do it properly – otherwise it can be thrown out. Some of the more common mistakes landlords make are:  

  • Applying for a second within 12 months of the first Section 13 Notice.  
  • Mis-spelling the names of the tenants  
  • Only one landlord signing and dating the Notice when there are joint landlords   
  • Using the wrong notice period  

The Notice itself can be posted, hand delivered by the landlord or given by an Agent. 

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