How to Increase Tenant’s Rent?

There may be many reasons why a property owner can decide to increase rent; the following are two of the most common ones:

  • To keep up with the rising levels of inflation
  • To take benefits from the profitable rental market

A legal way to increase rent

The most common way many landlords use to increase rent is to prepare a new tenancy agreement and get it signed by the tenants at the end of the fixed term. This is one of the best ways to increase rent.

It’s worth mentioning that it’s not always necessary to prepare a new tenancy agreement as it’s pretty understood that the existing tenancy can become a periodic tenancy with similar terms and conditions. So, you can quickly get your tenant to agree to the increased rent by just sending him a letter regarding the increase and getting it signed by him. This dated letter will prove the agreement regarding the rent increase.

Rent Review Clauses

A tenancy agreement may sometimes contain rent review clauses. It would help if you ensured that all the clauses are fair and by Unfair Terms in Consumer Contracts Regulations 1999.

An effective way to make a fair rent review clause is to specify new figures for the rent after a specified period. For instance, let’s say £700pcm is the rent right at the start of the tenancy period; the clause should specify that after six months, the rent for the property will increase by, say, £50 and become £750. This will be considered fair because the tenant will automatically approve the increased amount when signing the agreement. At the same time, if the clause states that the landowner may increase the rent by whatever amount he likes and feels, this will not be considered fair.

Don’t ever try to increase the rent by too much amount.

What is the extent to which you want to increase rent is of utmost importance. Therefore, the rent increase should be fair and justified. Even if you state the new amount in your Tenancy Agreement, which is a pretty excessive increase, the court can deem your increase rent clause invalid. It doesn’t matter if the tenant has signed it or not.

For example, in the bank way case, the tenancy agreement consists of a rent increase clause that states the rent increase from £4,680 to a whopping 25,000. However, when the rise in rent became effective, the tenant refused to keep up with the increased amount; thereby, the landlord sued him for possession.

The Court of Appeal stated that the rent increase clause was invalid as the increase in rent was quite substantial, and it was solely devised to bring the assured tenancy of the property to an end. The tenant could not pay the new increased amount. So, high rent increases are not at all recommended.


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