Raising rent etiquette

I had a change of tenant during the slump in rental prices in London last year. For the first time ever I had an empty flat and no prospects, so my current tenant hammered me on the price and with the state of the market it was better than the flat staying empty. But now rents have shot up and I could easily get what I was asking for last year (and more). She’s been a good tenant so far but I also need to pay my bills, and right now I’m losing about £400/month on the market rate. I’d love your thoughts on a reasonable amount to raise the rent by and with what kind of time frame. I use the standard Openrent AST and she moved in July. Thanks!

What does your AST say? Generally you can only increase it once a year, although if it’s a 6 month AST I believe you often have the option to increase at the end of the shorthold.

This happens all the time. I’m in a similr position with one of mine, although probably only about £150 below the new market rent. I will probably raise the rent by £50 per month at the end of the first 12 months. Theyre good tenants and a void between tenants would lose me about £1400, so better financially to have an increase which doesnt lose the tenant.

Thanks David. Will you keep putting it up each year until you get in line with the market? And what % of your rent does that represent? I’m wondering what % is reasonable to raise it by. She knows she’s on a good deal so I’m sure she’s expect it to go up, I want it to seem fair without screwing myself over. I’ve never had a void period other than before she moved in so I’m not so worried about it if she wanted to move out with an increase, I’d probably be better off in a few months even if there was some void time!

I need to check, but I think I can raise it at the end of the year. I just want to get a view on what’s a reasonable increase and how often I can realistically raise it, ie do I raise it every year until we catch up to the market rate.

I used to do 3%, which would be just over £40, but I will probably do £50 a year until its at the market rent.

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Just to share an experience for what it’s worth.
We didn’t raise rent in all the time tenants were there which was three years. When we did try and raise it to market level they didn’t like it so maybe a good idea to implement a yearly increase if it’s justified so people then expect it and do not resent it.
If your rent is much below market value I would put it up yearly until it’s where it needs to be.
Sounds as though your tenant will still be getting a good deal.

I’ve never had a landlord raise rent before, so already have that expectation. Just pointing out that it’s not as easy as that. I’m not sure if there’s a suave way to work that into your screening process.

For the first time in a decade of renting a landlord is increasing our rent via section, didn’t even discuss it, and it’s soured things considerably.

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Yes, much better to do it amicably and informally.

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I have done this once, after a tenant had been in for two years, and all went fine. We agreed verbally then I sent a letter and rent increase form. Once they start to pay at the new rate it is deemed to be accepted.

In your case I would either give them a few months warning that you were going to raise the rent £400, or do it a smaller amount this year, say £250, whilst saying they should expect you to do it again next year to catch up.

Yes, as soon as they start paying the new rent, however agreed, it becomes binding.

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Thank you! Yes, I was planning a gradual increase and only to what I had wanted for it last year (market rate now exceeds that)

I’m not planning to do it via a section. I’m sure she’s expecting it, she negotiated £300 off the rent because of the state of the market so even with a rent increase she’ll still be getting a significantly better deal than she’d find elsewhere. I’ve never raised a rent before and have always kept my rent at the low end of the market but I’m currently subsidising her rent, it’s not tenable for me


Thanks Peter. Yes I was expecting a gradual increase would be the better way to go

Well if she originally negotiated £300 off the rent just because the market was weak and you had no choice, I would be more inclined to impose a bigger increase now. At least half that amount.


Hi Mitra, In the past, I’ve always charged below market rent and never increased it for the duration of the tenancy, hence, this was unsustainable when the last tenants ended up staying for 5 years - the average currently is c. 4+ years, in view of the lack of supply.
I’ve now changed tack and, whilst still starting a tenancy at below market rent, I let my tenants know at the outset that I’ll be increasing it by the CPI [Consumer Price Index] rate each 12 mths. This has worked well with my last tenants [except with it being 5.4% in 12/21, I reduced it to a round figure which was only 2.3% this year, since my tenants have been really good and looked after the property. They really appreciated this].


Thanks David! I’ve got estate agents calling me because the market is now so strong!

As far as I’m aware I believe the maximum a landlord can increase the rent per year is 8% and has to be in writing (I’m not sure but I think it’s a section 13) and it can be disputed but I don’t think you will have that problem as they are obviously paying way below the market value and if they have any level of intelligence they should know that they will still be paying below market value and should have no reasons to reject it. I would also on next renewal put in that you will be increasing the rent inline with the retail index guide on a yearly basis.

Thanks Julie. Di you know if that’s the case even if you get to the end of the contract?

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Yes no matter when the tenancy ends (a tenancy can only by the tenant or a court) that money was paid to the tenant for the purpose of the giving it to you or if paid by the council directly to you it was still a debt of the tenants and not yours! That deposit belongs to you and if there was no issues (linked no rent arrears or property damage) then the tenant would receive the money not the council or UC so that in itself shows you that the money loaned to the tenant is their debt they will have been paying that debt during the tenancy and may still be paying it after depending on the terms they agreed but that irrelevant to you. The tenant paid the deposit knowing full well that should there be any damage or rent arrears that the deposit would not be returned. IT IS YOUR SAFETY NET (I get it will no way cover your loses) should a tenant not comply with the contract. I can assure you that UC have lied to you so don’t worry just get them out and I wish you all the best with any new tenant you get.

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