Is there a limit to how much my landlord can increase rent?
Rhys Owen, Senior Property Advisor, discusses when a landlord can increase the rent and how much they can increase it by...
Estimated reading time: 4 minutes.
A rent increase isn’t fun for anyone. Landlords don’t gain any joy from informing their tenants about them - especially when they have great tenants - and the tenants themselves certainly don’t celebrate learning that a rent increase is approaching.
Nevertheless, there is likely to be a time when a rent increase is inevitable and it’s not always because of a greedy landlord.
We’re currently in the middle of an extended period of time where rent increases have been or will soon be imposed on many renters. A year or so ago this was largely happening because of supply and demand - there wasn’t enough properties available to meet the number of people looking to rent, which naturally pushed up rental prices the same way house prices increased due to there being more buyers than homes available for sale.
That is still the case, though it is improving, but now that interest rates have been consistently rising little by little another spanner has been thrown in the works as mortgages are now more expensive than they have been for a long time. This means that landlords who are either buying or re-mortgaging are having to pass their increase in mortgage payments onto the renters.
When is a landlord allowed to increase the rent?
This will depend on the type of tenancy you’re currently in. There are two types of tenancy - periodic and fixed-term.
If you’re in a periodic tenancy, your landlord can usually increase the rent once a year without your prior agreement.
If you’re in a fixed-term tenancy, your landlord will only be allowed to increase the rent at the end of the fixed term, unless you happen to agree to the rent increase in the middle of the fixed term of if a rent review clause is present in the current tenancy agreement.
Read: What tenants should know about tenancy agreements and deposits
Does my landlord need to give me notice before increasing the rent?
In most cases, a tenancy begins as a fixed-term agreement, usually for around 6 or 12 months. At the end of that fixed-term, the tenancy naturally rolls onto a periodic tenancy unless a new fixed-term is agreed and signed. It’s important to understand exactly which type of tenancy you’re currently in as this will determine how much notice your landlord needs to give you before increasing the rent.
If you’re in the middle of a fixed-term tenancy your landlord has no right to demand a rent increase without the previously mentioned rent review clause being present within your current tenancy agreement. If you’re unsure, you will have to read through your agreement and see if the clause was put in place. If there is one in place, your landlord can increase your rent during the fixed-term tenancy. This clause must explicitly state how and when the rental increase can or may occur.
If you’re on a periodic tenancy because the fixed-term came to an end and no new fixed-term was signed for,then your landlord would need to give a minimum of one months’ notice before increasing the rent.
How much can my landlord increase my rent by?
According to the government, a landlord must be fair and realistic when it comes to increasing the rent. This basically means that the rent should be somewhat in line with the local rent averages, so as long as it’s fair and realistic a landlord is free to increase the rent by as much as they see fit.
As an example, if you’re renting a flat for £700 but similar properties in the local area are renting for as much as £850, your landlord would be well within their rights to request £150 more per month, despite this being an increase of more than 20%. However, if the landlord requested a rent of £950 per month, this could be challenged by the tenant for failing to meet the “fair and realistic” test.
This sort of high increase is rare, but it certainly does happen - especially in times like this where interest rates have been rising and landlords who are coming out of a long fixed-term mortgage are facing much higher rates than they were previously paying. Coupled with a steady rise in property and rental prices due to limited supply and it’s easy to see why so many tenants are facing sudden sharp rental increases.
You can learn more about challenging a rent increase by contacting Citizens Advice.
Read: 5 questions every tenant should ask their landlord
If you’re looking to rent a property in Cardiff don’t hesitate to get in touch with our expert lettings team here at CPS Homes and find out more about how we can help. You can reach out to us by calling 02920 668585, e-mailing enquiries@cpshomes.co.uk or by popping into one of our three Cardiff based branches.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
