UK rent growth slows but tenant affordability is a ‘challenge’
2 years ago | 1 comments
What is considered a fair rent increase or are there limitations?
12:06 AM, 25th March 2024, 2 years ago
23
Hello, I currently have two properties, both of which have AST for 12 months. The current tenants have lived in the respective properties since 2020, pay their rent on time and keep the properties in a reasonable clean status. Since 2020, we have deliberately not increased the rent on either property, as we did not wish to add any further pressure on the tenants due to cost of living crisis experienced by many.
Unfortunately, we can no longer absorb our cost as landlords and will look to increase the rent from the start of any new ATS which will be in November this year. I wish to give the tenants notification about the rent increase now, should they wish to sign a new AST at that time.
I just wanted to check if there is any limitation on what that increase can be?
I think I read somewhere of a 7.7% ceiling, but I believe that only applies to social landlords. I obviously wish to keep a balance between a fair rent increase and no what could be seen as extortionate.
Any advice greatly appreciated.
Thank you,
Ian
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Member Since October 2020 - Comments: 1172
12:10 PM, 29th March 2024, About 2 years ago
Reply to the comment left by NewYorkie at 26/03/2024 – 18:14
Because when our costs don’t increase we all use our money for other things. Tenants can usually budget for regular modest increases but not large ones. Its unfair because a tenant through no fault of their own may now be left trying to unwind other financial commitments to pay what has become an unaffordable rent.
Where the landlord is in danger of not being able to cover their costs they will have no choice, but otherwise I think we should only be demanding affordable rent increases.
Member Since October 2013 - Comments: 1642 - Articles: 3
12:41 PM, 29th March 2024, About 2 years ago
Reply to the comment left by David at 29/03/2024 – 12:10
I’m afraid my many years of being a kind, considerate landlord disappeared when my tenant took advantage of me at a cost of £20,000+. Future increases will need to ensure I can cover my costs, not my tenants’… until I sell and exit the PRS.
Member Since December 2022 - Comments: 18
11:44 AM, 30th March 2024, About 2 years ago
If your contract does not specify annual rent reviews, and how any increase will be calculated, then 1.5 x RPI is a generally acceptable industry guideline. I use this as it was used by my managing agent for many years prior to me taking over the management myself.
Whilst I don’t always increase in line with this, IE if the market doesn’t support it, I always have this option because it’s clearly stated in the AST.