One of the most awkward things about letting property is working out whether to increase your rent for an existing tenant.
Legally, you can only do this once the fixed term has ended, unless you have inserted a clause in the tenancy agreement stating there will be a rent review or that the rent will rise by X from a certain date.
If the tenancy is periodic (rolling on from month to month) you must give the tenant a month’s notice of any increase and you can only raise the rent once every 12 months unless the tenant agrees to more frequent increases.
Of course, if you want to increase the rent more often than once a year (which I wouldn’t advise) and the tenant doesn’t agree, you could give them two months’ notice to leave, by issuing a Section 21 notice, and look for a new tenant prepared to pay more.
Personally, if I had a rock-solid tenant, I wouldn’t even consider raising the rent if it meant I’d risk losing them, unless I was forced to because of increasing costs. Sadly, a number of landlords will be looking to increase rents this year due to the more punitive taxes they face from April 2017.
However, if raising the rent is likely to mean you’ll lose the tenant, it’s worth considering the cost and hassle of re-advertising the property, paying for check-in and check-out reports and any costs to freshen up the place to attract new tenants, plus the cost of any void before you go ahead.
Don’t forget that if you use a letting agent you’ll also have extra commission to pay if they have to replace the tenant.
Before proposing raising the rent to your tenant, it’s best to find out whether rents in your area have risen and by how much and work out how much rent you might expect to achieve if your tenant left and you had to find a new one.
When discussing raising the rent with your tenant, it will help to show them examples of other rents in the area.
Of course, existing tenants will also face additional costs if they decide to move so they might agree to a rent increase to avoid the cost and hassle of leaving, but if they feel forced into paying too much by a greedy landlord, you might find your relationship with them is less than comfortable, so it’s always best to keep the rent reasonable.
When you do decide to increase the rent, you can either issue the tenant with a new tenancy agreement or, if the tenancy is periodic,you must issue a SECTION 13 FORM notifying them of the increase.