Rent increases – What You Need To Know
The vast majority of landlords are in the buy to let business with a view to making money and probably as much as possible. That could be by way of a combination of rental income and capital appreciation in the value of the property.
However, as evidenced by previous drops in house prices, there is absolutely no guarantee that your investment property will increase in value. As far as rental income is concerned, it is a very competitive market place so, realistically, you may only expect to make increases in the rental that you charge your tenant(s) in line with the competition.
As a landlord you should be aware of everything to do with rental income so let us have a look at this in a little more detail.
It is important that your tenancy agreement covers when the rent can be reviewed and in what way it can be reviewed. For instance, if the tenancy agreement is of a fixed term nature then, unless your tenant is in agreement, the rent can only be put up at the end of the fixed term period. In the case of a periodic tenancy, unless the tenant is agreeable, it is usually only possible to increase the rent no more than on an annual basis.
Another thing worth noting is that any increase in the rent has to be of a reasonable sum. If you wished to increase the rent by more than the figure quoted in the tenancy agreement you would need the approval of the tenant.
If the tenancy agreement does not cover when and how the rent can be increased, both you and the tenant can sign a document that agrees an increase in the rent or when the fixed term comes to an end renew the agreement having raised the rent or complete a form called “Landlord’s notice proposing a new rent” allowing you to increase the rent once the fixed period has finished.
If the tenancy agreement is yearly then you are required to provide your tenant with 6 months notice. If rent is paid either monthly or weekly then you must provide at least 1 month’s notice.
Remember that your tenant has the right to submit an application to a rent assessment committee if they disagree with a proposed rent increase and that committee will make the decision as to what the rental payment should be.
We hope that the above is of benefit.