Are you considering renting out a property? It can be a great source of income, but as a landlord, you may find yourself needing to increase rent at some point. Whether it’s due to rising costs, inflation, or just keeping up with the market, rent increases are a natural part of property ownership.
However, knowing how much you can legally increase rent, and how to do it without causing issues with tenants, is necessary.
If you’re a landlord considering selling a tenanted property, the topic of rent increases becomes even more important. A well-timed and reasonable rent increase can make your property more attractive to buyers, but a poorly handled increase can lead to tenant disputes and complications that could make selling more difficult.
Let’s break it all down in simple, easy-to-understand terms.
Legal Limits on Rent Increases
Rent increases aren’t just about what you want to charge, they must follow UK laws and regulations. If you don’t follow the rules, you risk tenant disputes, legal trouble, and potential void periods where your property sits empty.
UK Regulations on Rent Increases
For landlords of periodic tenancies (rolling month-to-month or week-to-week agreements), the law is clear: you must use a Section 13 notice to legally raise the rent. This law ensures that tenants are given a fair warning and a chance to dispute unfair increases. The increase must also be fair and reasonable, in line with local market rates.
For fixed-term tenancies, rent increases can only happen if there is a rent review clause in the contract. If no such clause exists, the rent stays the same until the tenancy ends, at which point a new rental price can be set for the next contract.
What’s a Fair Rent Increase?
Raising rent is a tricky subject, too much, and you risk losing good tenants; too little, and you might struggle to keep up with rising costs. So, what’s considered fair?
A reasonable rent increase should align with local market trends. If similar properties in your area are renting for significantly more than yours, then a modest adjustment may be justified. However, if your tenants have been reliable, long-term residents, a sudden, steep hike could feel like a slap in the face, pushing them to leave and leaving you with an empty property that generates zero income.
The Smart Approach: Small, Steady Increases
Rather than shocking your tenants with a massive jump in rent, consider a gradual, predictable increase, ideally between 3-5% per year.
This way:
- Your tenants feel valued.They’re less likely to feel blindsided and more likely to stay.
- You protect your rental income. A vacant property can cost you thousands in lost rent and finding new tenants.
- You avoid disputes. Sudden, unfair increases often lead to arguments, complaints, or even legal action.
If your property has undergone major upgrades, like a brand-new kitchen, a renovated bathroom, or energy-efficient improvements, you may have more room to justify a slightly higher increase. However, even in these cases, open communication is key.
Tenant Rights & Notice Periods: Avoid Costly Mistakes
Many landlords assume they can raise rent whenever they feel like it, but that’s a dangerous mistake. Tenants have rights, and failing to follow proper legal procedures can lead to serious consequences, including:
- Legal disputes – A tenant can challenge an unfair rent increase, potentially delaying or blocking it altogether.
- Loss of rental income – If you raise rent improperly, your tenant might refuse to pay, leading to financial strain.
- A tarnished reputation – Word spreads quickly, and an unhappy tenant can leave bad reviews or warn others.
How to Raise Rent the Right Way
- Check the tenancy agreement – Some contracts set limits on rent increases or specify how and when they can happen.
- Follow the law – In the UK, landlords must provide at least one month’s notice for periodic tenancies and longer for fixed-term contracts (unless otherwise agreed).
- Be transparent – Communicate the reasons behind the increase clearly. If tenants understand the reasoning, they’re more likely to accept it.
When and How Tenants Can Challenge an Increase
Tenants have the right to challenge unfair rent increases. If they believe the new rent is significantly higher than similar properties in the area, they can take their case to the First-tier Tribunal (Property Chamber), which will assess whether the increase is justified.
Negotiation Strategies Between Landlords and Tenants
Sometimes, a rent increase can come as a shock to tenants, especially if they weren’t expecting it. To keep things smooth, try:
- Explaining the reasons for the increase (e.g., higher maintenance costs, market rates)
- Giving tenants plenty of notice** (beyond the legal requirement, if possible)
- Offering something in return (e.g., minor property upgrades, longer fixed-term agreements)
- Being open to discussion and understanding your tenant’s situation
Market Factors Affecting Rent Increases
Setting the right rent price isn’t just about what you want to charge, it’s about what the market supports. If you go too high, tenants may leave. If you go too low, you miss out on potential income.
The Role of Location and Demand
Location plays a huge role in rental values. A property in London or Manchester will likely see higher rent increases than one in a rural area where demand is lower. Research what other landlords are charging for similar properties in your area before deciding on an increase.
Inflation and Cost-of-Living Adjustments
Inflation can erode profits for landlords, making rent increases necessary just to keep up with rising costs. However, raising rent too aggressively can drive tenants away, leading to vacant properties and lost income.
How to Compare Rent Increases to Similar Properties
How Much Can a Landlord Increase Rent? Know Your Limits
Raising rent is a delicate balancing act. As a landlord, you want to keep up with rising costs and market trends. But push too hard, and you risk losing reliable tenants, creating costly void periods, or even facing legal challenges.
So, how much can you actually increase the rent?
The truth is, in most cases, there’s no legal cap on rent increases, but that doesn’t mean you can charge whatever you want. The law requires that any increase must be fair, justified, and aligned with market conditions.
What Counts as a “Fair and Realistic” Rent Increase?
A fair rent increase means it should reflect what similar properties in your area are charging. If other landlords are increasing rent due to rising property costs, inflation, or improvements, then a reasonable adjustment may be expected.
However, a steep, unexpected increase , especially one that far exceeds the local average, can backfire, leading to:
- Tenant dissatisfaction – A sudden hike can cause stress and resentment.
- Higher turnover rates – Tenants may look elsewhere, leaving you with a vacant property.
- Legal disputes – A tenant can challenge an unreasonable increase, delaying or even preventing it.
How Much is Too Much?
- A good rule of thumb is to keep rent increases between 3-5% per year , unless there are exceptional circumstances.
- If you’ve made major upgrades (e.g., new kitchen, modern heating, energy-efficient improvements), you may justify a slightly higher increase.
- If property costs have risen** (e.g., higher mortgage rates, maintenance fees, or taxes), a modest increase helps cover your expenses.
- If market demand is high, you can adjust rent accordingly, but keep it within reason to retain good tenants.
For instance: If your tenant pays £1,000 per month, a 3-5% increase means they’ll pay £1,030-£1,050. A sudden jump to £1,200, however, might seem excessive, unless local rents have surged dramatically.
Legal Guidelines: Raising Rent the Right Way
Even though there’s no fixed limit, landlords can’t just raise rent whenever they like. There are rules you must follow, depending on the type of tenancy agreement:
- For periodic tenancies (rolling contracts): You must give at least one month’s notice before increasing the rent. The increase must be “fair and reasonable” compared to similar properties.
- For fixed-term tenancies: You can’t raise rent mid-contract unless there’s a clause allowing it. Otherwise, you must wait until the tenancy ends and propose a new rate when renewing the contract.
- For tenants on housing benefits: Rent increases may affect eligibility, so it’s essential to communicate changes clearly.
If a tenant believes an increase is unfair, they can challenge it through a rent tribunal, which could lead to delays or even force you to lower your rates.
The Smart Way to Raise Rent (Without Losing Tenants)
- Do Your Research – Check local rental prices and compare similar properties.
- Be Transparent – Clearly explain the reasons for the increase (e.g., rising costs, property upgrades).
- Give Proper Notice – Follow the legal requirements to avoid disputes.
- Keep It Reasonable – A fair increase ensures tenants feel respected and are more likely to stay.
- Offer Flexibility – If a tenant is struggling, consider a phased increase rather than a lump sum jump.
Selling a Tenanted Property After a Rent Increase
If you plan to sell your tenanted property, a recent rent increase can work for or against you.
How a Higher Rental Yield Can Attract Buyers
Investors love properties with strong rental yields. If your property already has a tenant paying competitive rent, it can make it more appealing to potential buyers.
Potential Risks of Increasing Rent Before Selling
- Tenant resistance (leading to disputes or vacancies)
- Difficulty finding buyers if tenants decide to leave
- Longer sales process due to instability
Tenant Cooperation and Its Impact on the Sale Process
Happy tenants are more likely to cooperate with property viewings and potential buyers. Raising rent too aggressively can cause friction, making the selling process harder.
Alternative Options for Landlords
Not every landlord wants to increase rent before selling. Here are some alternatives:
- Sell without increasing rent for a smoother, quicker process
- Offer incentives to tenants to keep them cooperative
- Sell to a cash buyer like Zapperty for a fast, hassle-free transaction
If you’re considering selling your tenanted property but don’t want the headache of managing rent increases, we can help. Zapperty offers a quick cash sale, meaning you can sell your tenanted property without delays or disputes. Get your cash offer within 60 minutes and complete your sale in as little as 7 days!
