How much can a landlord increase rent by?

Last updated: 07/04/2024
5 min read

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One of the most frequent questions we hear is: “how much can a landlord increase rent by?” Of course, as a landlord, you want to maximise your rental yields.

However, there is a balance to be struck to ensure your rental prices are fair, in keeping with the area, and viable enough that tenants will actually pay the going rate.

As such, if you’re thinking of raising your rent, it pays to do your research. According to government guidelines, any rent increases must be “fair and realistic.” They must also adhere to the procedures outlined in the tenancy agreement.

Remember too that rents across the UK are already incredibly high and tenants are currently paying a third of their wages on rent, according to the monthly HomeLet Rental Index.

Even the smallest, most incremental increases could make a big difference to your tenants’ finances.

Therefore, as you read this guide to increasing rent sustainably and equitably, you may want to consider purchasing Tenant Default Insurance to ensure your monthly income is protected - no matter what.

What is fair rent to charge?

When you own one or more properties rented out to tenants, you'll want to ensure the rent you charge is fair for both parties.

According to the HomeLet Rental Index, the average rent in the UK is £1,262 but can vary depending on location. Most often, landlords base the rental charge on similar properties within the local area.

But with living costs continuing to increase, as a landlord, you might wonder how to increase your rent fairly and within the law without pricing out your tenant.

By how much can a landlord increase rent?

As a landlord, you are allowed to raise the rent, but you must adhere to some rules. According to the government, the rental increase you request must be fair and realistic, meaning it shouldn't significantly exceed local averages.

You can also only increase the rent on your property at certain times, depending on the tenancy agreement.

As all increases need to be fair and realistic, the amount you raise your rent by should reflect the average price in the area.

For example, if you own a property that you're currently renting out to a tenant for £1,000 per month, but nearby similar homes are rented out for £1,500 per month, you could realistically increase your charge.

But if you raise the rent to £2,000, this could be seen as unfair and unrealistic. In this circumstance, the tenant would be entitled to dispute the increase.

Whilst you can, in theory, charge whatever you like for rent, it's in the best interests of both parties to propose a reasonable increase.

Protect yourself with Tenant Default Insurance

Landlords nationwide have seen their budgets squeezed due to increased Buy-to-Let mortgage rates, high energy tariffs and an ongoing cost of living crisis. Some of those costs will inevitably be passed on to tenants.

However, with renters facing many of the same pressures, raising rents in a way that remains affordable for your tenants, and negates the risk of them defaulting and falling into arrears, is somewhat of a balancing act.

Follow our tips above and you’ll be well on your way towards treading the line between raising your rents sufficiently to cover costs and shielding your tenants from unsustainable increases.

Of course, some tenants’ finances are on a knife edge already. Therefore, it pays to discuss any increases in advance with your tenants and keep the dialogue open and transparent to ensure your rent increases don’t come as a major surprise.

All tenants can fall on hard times. Often, through no fault of their own. Although, as a good landlord you will always be sympathetic to their plight, at the same time you must protect your investment.

Rental arrears can have a detrimental effect on your livelihood, especially if you rely on your rental income to cover major outgoings, such as your mortgage. As such, Tenant Default Insurance can give you added protection should you need it.

To find out more about Tenant Default Insurance from HomeLet or to purchase a policy, please contact us on 0800 035 8258 or request a callback to discuss your needs at your convenience.