Rent increases on rolling tenancies - landlord & tenants rights

Last updated: 31/03/2024
4 min read

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With tenants now renting for longer and the Private Rented Sector (PRS) consistently growing, the rules surrounding rent increases on rolling tenancy agreements have become a much bigger consideration for all parties.

But what rights do landlords and tenants have? Read on to find out as HomeLet explains all in this handy guide to rolling tenancies.

A quick snapshot of today’s PRS

According to Statista, some 4.6 million households were living in rented accommodation in 2023. That is more than double the 2 million households that were renting in 2000.

Furthermore, figures from the latest English Housing Survey (EHS) commissioned by the Department for Levelling Up, Housing & Communities, have revealed that nearly a fifth (19%) of households in the UK are privately rented.

The EHS also found that private renters spent more of their household income (33%) on monthly rent compared to social renters (27%) and owner occupiers who spent 22% of their income on mortgage repayments.

Perhaps unsurprisingly, as a result, those private renters who were surveyed had spent an average of just 4.4 years in their current dwelling compared to 12.7 years for social renters and 17.6 years for mortgaged owner occupiers.

Nearly a third (32%) of private renters had been renting in the PRS for more than a decade while nearly two-fifths (39%) had been in the sector for three to nine years and the remaining 29% had been renting privately for two years or less.

What is a rolling tenancy agreement, and what is a fixed-term tenancy?

When letting a home, there are commonly two types of tenancy on offer: fixed-term or periodic.

Fixed-term tenancies are typically for six or 12 months and give both landlords and tenants peace of mind as the rent will remain fixed for this period (unless a clause has been included in the tenancy agreement to allow rent increases). With a fixed-term tenancy, rent can only be renewed at the end of the contract.

By contrast, a periodic tenancy – or rolling tenancy agreement – offers both landlords and tenants more flexibility (usually only one month's notice is needed from both sides to break a tenancy) but less security.

If a tenancy isn't renewed at the end of its fixed term, it immediately becomes a rolling one.

This is usually for one month but will typically match the frequency of rental payments (so, if a tenant pays weekly, the rolling contract would be on a week-by-week basis).

What are the pros and cons of a rolling tenancy agreement?

While a fixed-term tenancy agreement provides greater long-term security and the reassurance of regular rental income, a rolling tenancy agreement can have advantages, too.

It saves landlords the time, cost and hassle of having to re-let the property to other tenants while also allowing them to keep hold of good tenants in the short term (even if their long-term plans are elsewhere).

In the case of rogue tenants or a sudden need to retake possession of a property, rolling tenancies make it easier to evict or regain possession as landlords don't need to wait until the end of a fixed term to serve notice.

However, they cannot serve a notice seeking possession under S21 Housing Act 1988 as amended in the first four months of the tenancy.

On the downside, landlords could quickly lose good tenants on a rolling contract as the notice required is much shorter.

Usually, the decision on whether to operate a rolling tenancy agreement will depend on the landlord and tenant's circumstances, and how much flexibility they want.

In some cases, rolling tenancies can continue for years with both parties satisfied with this arrangement.

Rent rise rules with rolling tenancies

In the case of a periodic tenancy (the legal name for a rolling tenancy agreement that rolls on a week-by-week or month-by-month basis), a landlord typically cannot increase the rent more than once annually without a tenant's agreement.

The rolling tenancy agreement signed by both parties at the start of a tenancy should set out how and when the rent will be reviewed to ensure the chances of disputes are limited.

There are general rules regarding rent increases, which state that a landlord must get permission to increase the rent by more than previously agreed during the fixed term of a tenancy.

The rent increase must also be deemed fair and realistic. This usually means in line with average local rents.

A landlord can choose to increase rents at market value at any time on a periodic tenancy as long as they give one month's notice, or in cases where you pay rent yearly – six months' notice. It must also be restricted to only once a year without the tenant's agreement.

When can a landlord increase rent?

If a rolling tenancy agreement specifically states how rents should be increased, a landlord must abide by this. In general terms, if a landlord wants to increase rents on a rolling tenancy, they must:

Give a minimum of one month’s notice to their tenants unless they pay rent annually, and then they must give a minimum of six months’ notice.
Agree a rent increase with their tenant in advance, producing a written document of the agreement that has been signed.
Provide their tenant with a 'Landlord's notice proposing a new rent' form.

For further guidance on the rules governing rent rises, read our blog: How much can a landlord increase rent by?

Why a periodic tenancy can be good for landlords

When a fixed-term tenancy ends, it automatically becomes a rolling tenancy if the tenant remains in occupation and doesn't move out.
Once it becomes a periodic tenancy, a landlord isn't usually able to increase the rent more than once a year without the tenant's consent.
Landlords must give tenants a minimum of one month's notice if they intend to increase rents.
Rolling tenancies can work well for landlords and tenants but don't necessarily offer the same long-term security as a fixed-term arrangement.

With the increasing number of renters in the PRS – some of whom may be merely doing it temporarily or as a stopgap – the use of a rolling agreement may become more common in the future as landlords and tenants prioritise flexibility.

As such, landlords and tenants should both be aware of their rights and obligations regarding periodic tenancies.

Gain added security with Rent Guarantee Cover

Although rolling tenancy agreements provide genuine flexibility for landlords and tenants alike, the PRS and wider economic climate in the UK are volatile at present. With a cost of living crisis that is slow to abate, and tenant budgets spread thin, the threat of tenant defaults and arrears is never too far away.

Rolling tenancies give landlords swifter recourse to evict tenants at shorter notice. But sometimes you may need some extra help dealing with rent arrears, protracted legal disputes and periods of vacant possession. All of which can be draining – both on your finances and energy. This is where Rent Guarantee Cover can help.

This invaluable insurance product for landlords provides added security that your rent will be paid in full should any issues arise during your rolling tenancy agreement.

HomeLet’s Rent Guarantee Cover provides missed rental payments for up to six months, continued cover during vacant possession, up to £50,000 cover for professional services and claim costs for evictions, and dedicated expert support when you need it most.

No wonder we’re one of the nation’s most trusted providers of Rent Guarantee Cover for landlords.

To find out more about Rent Guarantee Cover 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.