As a landlord, any properties you let out are run as a business seen as the rental income you generate will either pay the mortgage of the property or provide passive income to yourself.
Over time, most properties increase in value in line with inflation. In addition, you may have carried out improvement works to the property that also increases its rental potential. So, it’s perfectly understandable that at certain intervals you will want to reassess the rental income you are currently charging.
However, when you consider rental increases from the perspective of the tenant, the news isn’t always so welcome. Given you naturally want to achieve a fair reflection of the current value of the property, the issue cannot be avoided. Instead, careful consideration is needed along with compliance with regulations to ensure the process is handled as sensitively as possible.
Can I Increase The Rent For My Property?
The short answer is yes, you can increase the rent for your property unless you have a fixed-term rental agreement. Even with a fixed-term agreement, it may still be possible to increase the rent if a rent review clause has been added to the agreement.
For any rental agreements that are not considered fixed-term, rental increases are freely permitted.
However, you must still follow the correct legal procedures seen as the money will be more than your tenants originally agreed to.
Your tenants also have a right to negotiate the increase. While it’s up to you to accept or reject their offer if they are exemplary tenants you need to consider the implications this could have if they decide to move out. Staying on good terms with your tenants is always advisable either way.
How To Increase The Rent On Your Property
Step 1 – Check what rental agreement you have in place to see whether it is fixed-term or not. You must comply with the terms set out in the agreement, including whether rent increases are permitted and if so what the correct procedures are.
Step 2 – Find the proper notice period for rent increases. If the tenancy has been in place longer than 1 year, you must provide 6 month’s notice for a rental increase. This decreases to 1 period (i.e month, quarter etc) of the tenancy for tenancies between 1 and 11 months, and 1 month’s notice if the tenancy has been in place for less than 1 month.
Step 3 – Ascertain what would be considered a fair increase in rent based on the condition of the property itself, its size, and the average property prices in the area. As mentioned, tenants have a right to negotiate the price regardless, but if the increase is seen as unfair it may be taken to a tribunal. This is why it’s essential to get proper advice from a lettings agency.
Step 4 – Once a new rental figure has been agreed, the tenancy contract will need to be updated and the bank payments changed.
If an agreement has not been reached and you decide to end the tenancy, then proper notice must be given. Also, consider that the tenant may be able to receive government help to cover the cost of their rent payment before deciding to end their tenancy.
Tenants who do not qualify or simply do not agree with the increase may move out of their own accord. In the worst-case scenario, you may need to arrange an eviction through the courts. Though, if you follow the government guidance and keep the channels of communication open, this should be enough to come to an agreement without having to resort to further action.
Property Management Nottingham
Rental increases are a tricky topic, seen as both parties have rights that need to be respected. If your property has increased in value either due to improvement work carried out or because of inflation, then you may be considering increasing the rent. The most important factor is to ensure you proceed with the law in mind, not to mention the human factor which is your tenants who will either be understanding or find they are unable to pay the increase.
Navigating the challenges surrounding pricing your rental property is just one of the many services we offer as part of our property management services. We work with property owners from across the Nottinghamshire area, so if you are looking for help with all aspects related to renting out your property you’re in the right place.
Give us a call on 0115 958 7791 to speak to our friendly team. Be sure to check out our landlord guides for further reading.