Landlords: can you put up the rent in 2017?

New year, new rental prices? How and when you, as a landlord, can increase the rent.

If you own a property and want to get the best return from it, you may be tempted to increase your tenants’ rent, especially if you live in one of the many UK cities where rental prices are going up and up. However, there are regulations surrounding rental prices and procedures that you must follow if you wish to put up the rent next year.
Firstly, tenants usually fall into two categories — regulated tenants and assured tenants. The procedure for adjusting the rent for these two groups is different, and so it’s important to make sure you’re aware of which group your tenants are in.

shutterstock_4002532601. Regulated Tenants

A regulated tenancy is a specially protected type of tenancy for any tenants you’ve had in the same property for a long period of time. If your tenants moved in before 15th January 1989, they are likely to hold a regulated tenancy and, as such, the maximum rent that you can charge them should be set by the Valuation Office Agency.

2. Assured Tenants

An assured tenancy is a tenancy that started between 15th January 1989 and 27th February 1997. These tenants have protection from eviction at the end of their term and more rights to dispute a rise in the rent. You have to give these tenants written notice of a rise and your tenants have to be in agreement with it, unless you have written a rent review clause within the tenancy agreement.
Most contracts since 1997 are assured shorthold tenancy agreements. Under this type of agreement, you can only increase the rent if the tenants agree to it, if it’s written in the tenancy agreement or at the end of a fixed term. If the tenants do not wish to pay a higher rent to stay in the property after their fixed term, you have every right to find new tenants.

Tenancy Agreement

shutterstock_529941163To be able to adjust a tenant’s rent during a tenancy, there must be a clause in their tenancy agreement stating something along the lines of ‘the tenant’s rent will be reviewed after the first x months of the tenancy’. This clause will then allow you to consider if the market price of your property has gone up and whether to increase the rent.

You should also include information about how often rent can be changed. Normally this is a maximum of once a year for assured tenants, or at the end of each fixed tenancy period. However, for regulated tenants, the rent can usually only be changed once every two years, even though the rent officer only sets the rent for the next 12 months in some cases.

Giving Notice

You need to make sure to give your tenants adequate notice of a rent increase. This means that, for monthly tenancies, you should make them aware a month in advance. For longer tenancies, you must give at least one rent period’s notice. The new rent should also be paid on the same day as the lower rent would have been. So, if tenants usually pay on the 16th of the month, this shouldn’t change when you increase the rent.

Problems You Could Encounter

shutterstock_509114242By putting up the rent, you could encounter problems, such as out-pricing your current tenants or pushing them away. In turn, you may end up with a high turnover, depending on how quickly you are able to replace your previous tenants.
You may also end up with tenants disputing the new fees.

When problems arise with a regulated tenancy, the tenants or yourself may take the dispute to a rent officer, who will decide whether the new charges are justified. With an assured tenancy, the tenants can take the matter to a first-tier tribunal, where the tribunal will consider the market value of the property, and you will not be able to charge them any more than the market price they state.

Final Notes

So, it is, indeed, possible to raise the rent in the New Year, but only under certain circumstances. Be sure to make any rent adjustments fair and in line with inflation to avoid any issues, or so that any problems you do encounter can be resolved in your favour.

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