What is a Fair Rent Increase in Rochdale & Greater Manchester?

As the cost of living continues to bite – for tenants and landlords alike, how much is a fair rent increase is an important question for people who rent out property.

Greater Manchester landlords need to understand the law around rent increases. As your costs increase, and demand for rental properties soars, you may think it’s time to ask your tenants to pay more each month for the property.

However, any rent increase needs to be fair, reasonable and within the law. If you’re looking to rent out property in Norden, Newhey, Bamford, Milnrow or Littleborough, we look at the rules around how much is a fair rent increase?

Reasons to propose a rent increase

According to Rightmove figures, rents in the north west rose by 5.7% last year, bringing them to an average of £1,182. Landlords need to balance the needs of their tenants with the need to run a viable business. So, you might want to raise your rents if you’re struggling to make a profit or see that your property is cheaper than others in the area.

You might also consider raising the rent if you’ve invested in the home, substantially improving the facilities on offer. Think carefully, however. You don’t want to price the home so highly that you’re left with a void property.

Remember that even if your costs increase, you can only increase the rent in line with current market values in the area.

What is a fair rent increase per year?

According to the government, a fair rent in the UK is one that is both reasonable and realistic. Realistic means that any increase needs to bring the rent in line with other similar properties in the area.

Reasonable means any increase should be fair. Keeping it in line with inflation is a good measure, so UK rent rises tend to come in at between three and five percent annually.

When can you raise the rent?

There are laws about when landlords can raise the rent. Currently these depend on the type of tenancy you have.

1 Fixed-term tenancies

For fixed-term tenancies, that run for an agreed period, you can only increase the rent if the tenant agrees or when the tenancy ends.

2 Periodic tenancies

These are rolling tenancies that go from week to week or month to month. Periodic tenancies often kick in once a fixed term tenancy is over. With this type of tenancy, landlords can only raise the rent once a year.

3 Rent increase clauses

It is advisable to include a rent increase clause in your tenancy agreement from the outset. It should stipulate when a rent rise will happen and the notice period before it applies. This means that everything should be clear and understood from the time when the tenant signs up.

Raising the rent – the process

If there is no clause in the tenancy agreement about rent increases the landlord can:

• renew the tenancy at the end of the fixed term, with an increased rent
• agree the increase with the tenant – you will both sign a written agreement
• use a ‘landlord’s notice proposing a new rent’ form, which increases the rent after any fixed term
• use a Section 13 notice

What is a Section 13 notice?

If you didn’t include a rent review clause in your tenancy agreement, or it has expired, you may be able to use a Section 13 notice under the Housing Act 1988. This can only be used to increase the rent once a year. You must give your tenants at least a month’s notice (if they pay rent weekly or monthly) or six months’ notice if they pay annually. If you use a Section 13 notice during the fixed term of a tenancy, it can only apply once the fixed term has ended.

Can a tenant refuse a rent increase?

If your tenant is not happy with the increase they can appeal to a tribunal. They will need to continue to pay the rent at the current rate in the meantime.

The Renters’ Rights Bill

Landlords should be aware of the impact that the Renters Rights Bill will have on rent increases. The bill is currently going through Parliament and will mean an end to fixed-term assured tenancies with all tenancies being periodic, which tenants can end by giving two months’ notice.

If the bill becomes law, all rent increases will need to be made using the same process. Landlords will be able to increase rents once per year at the market rate by serving a Section 13 notice. Tenants will have more powers to challenge unreasonable increases.

Understand fair rent increases? We can help.

If the idea of working out what is a fair rent sounds daunting, we can help. With extensive experience of helping landlords in Greater Manchester manage their properties, we understand the law around rent increases and the current market rents achieved in the area. Contact us to find out more.

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