How much can landlords increase rent?

By Georgia Galloway | Monday 6th May | 8 minute read

There is no legal limit on the amount of rent that can be increased. However, any rental increase must be 'fair and realistic' and shouldn't exceed local averages. Fixed-term rental fees can only increase when the term ends, and rolling contracts can't be increased more than once a year without tenant agreement.

The average cost of renting in the UK has increased by 7.2% year-on-year. However, tenants should be aware that despite the increase in average rent and landlord costs due to rates and inflation, our latest landlord report discovered that 61% of landlords would consider reducing rents to keep reliable tenants.

How much can landlords increase rent?

When can landlords increase rent?

The government provides the following clarification for when landlords can increase their tenant's rent:

For a periodic tenancy (rolling on a week-by-week or month-by-month basis) your landlord cannot normally increase the rent more than once a year without your agreement.

For a fixed-term tenancy (running for a set period) your landlord can only increase the rent if you agree. If you do not agree, the rent can only be increased when the fixed term ends.

Is there a cap on how much a landlord can increase rent?

Landlords can only increase rent by what the government calls a "fair and reasonable" amount, which must be in keeping with local averages for similar properties.

Despite the general rules about rent increases in England, there are no legal limits on the amount a private landlord can increase rents in the private rented sector.

Where has the average rent increased?

Average rent has increased by 7.2% year-on-year. Scotland (9.9%), the North East (9.9%) and Wales (9.5%) saw the largest increases, with only Yorkshire & the Humber (7.1%), London (4.2%) and Northern Ireland (2.6%) seeing rent increases below the UK average.

The table below shows where in the UK the average rent has increased the most by percentage.

Region Average monthly rent Year-on-year change (£) Year-on-year change (%)
Scotland £793 £70 9.9%
North East £695 £60 9.9%
Wales £881 £80 9.5%
North West £848 £70 9.0%
South East £1,325 £110 8.7%
East Midlands £860 £70 8.7%
East of England £1,163 £90 8.4%
South West £1,077 £80 8.2%
West Midlands £905 £70 7.9%
Yorkshire and the Humber £799 £50 7.1%
London £2,121 £90 4.2%
Northern Ireland £735 £20 2.6%

Source: Zoopla April 2024

Would landlords consider reducing rent?

Our 2024 survey of 755 UK landlords discovered that 61% of landlords said they'd consider reducing rents if it meant keeping a reliable tenant. Of course, this also means that almost 40% wouldn't consider reducing rents, even for a good tenant.

Which landlords are more likely to consider reducing rent?

Landlords renting properties for 5 years are the most likely to reduce rents for good tenants, as 70% said they would consider this. 

The more experienced landlords with 10 or more years of renting are the least likely to reduce rents, as only 44% said they'd consider it.

How long have you been a landlord? % of landlords that would consider reducing rents in 2024 if it meant keeping the same, reliable, good tenant
1 year 59%
2 years 61%
3 years 61%
4 years 65%
5 years 70%
6 years 64%
7 years 62.5%
8 years 57%
9 years 65%
10 years 49%
More than 10 years 44%

What do landlords look for in a tenant? 

When trusting their property to a new tenant, landlords will make checks based on income and credit history to ensure the rent will be paid. They are also likely to ask for references from previous landlords to gain an understanding of personality and reliability. Good credit, strong references and honest and open communication are all part of what landlords look for in a tenant.

References: A new tenant with strong references from previous landlords is the fastest way to identify the likelihood of whether a new tenant will be a good fit. Knowing if a new tenant is likely to pay their rent on time and in full and if they will keep the property in good condition is one of the most worthwhile things a landlord can do to protect their property and investment.

Credit checks: Along with strong references, credit checks from a credit reference agency can be incredibly important when deciding on a new tenant. A landlord must get permission from a prospective tenant before running a credit check, but it could identify areas of financial difficulty, such as insolvency solutions or County Court Judgements (CCJs).

Communication: A tenant exhibiting strong communication skills from the outset will likely maintain this trait throughout the tenancy. This translates into promptly reporting any issues, informing about rent concerns, seeking permission for alterations beyond the agreement, and responding promptly to landlord inquiries.

Are landlords happy with their current tenants?

Our survey has found that an overwhelming 94% of landlords are happy with their current tenants.

This positive feeling is mutual, as, according to the latest national figures, over 80% of tenants said they were either satisfied (52%) or very satisfied with their landlords (29%). This discovery goes against the belief that landlords and tenants are usually unhappy with each other.

What makes a bad tenant?

Our 2024 Landlord report found that 18% of landlords evicted tenants in 2023; we discovered the 2 top reasons for eviction: 

1. Antisocial behaviour (48% of evictions): Antisocial behaviour by tenants can disrupt the peaceful enjoyment of the property for other tenants and neighbouring residents and cause damage to the property itself. 

This type of behaviour encompasses a range of actions that are disruptive, disrespectful, or harmful to others, including but not limited to:

  • Excessive noise: Loud parties, music, or late-night disturbances can disturb other tenants and neighbours, leading to complaints.
  • Property damage: Intentional damage to the property, vandalism, or neglectful behaviour that results in deterioration of the premises not only diminishes the property's value but also imposes financial burdens on the landlord for repairs and maintenance.
  • Illegal activities: Engaging in illegal activities and criminal behaviour on the premises jeopardises the safety and well-being of different tenants and exposes the landlord to legal liability and potential legal consequences.

2. Not paying rent (47%): Tenants who consistently fail to pay rent on time or refuse to do so despite negotiations can cause many issues for both the landlord and the tenant. 

Landlords often rely on rent payments to cover mortgage payments, property taxes, maintenance costs, and other expenses associated with property ownership.

How can tenants demonstrate their reliability to landlords?

A solid credit score tells landlords that a tenant has been responsible with their finances, consistently meeting financial obligations, indicating they're likely to pay rent on time. 

Another key indicator is having a steady income. Prospective tenants can prove this with letters from their employers or bank statements - solid proof that they're financially suitable for a lease.

References can prove tenant reliability. If past landlords or employers give a vote of confidence, it speaks volumes about a tenant's trustworthiness. 

Offering a larger security deposit or paying several months' rent upfront shows commitment. It gives landlords peace of mind, knowing that a tenant has suitable finances and is dedicated to the rental agreement.

Why would a landlord reduce rent?

Rent demand is currently at a record level. But while landlords are increasing rental costs across the UK, predictions are that demand may cool in 2024.

Reliability and peace of mind with a particular tenant may make a landlord prefer to keep a tenant who pays less instead of looking for someone who will pay more.

Tips for tenants: How can tenants negotiate rent reductions effectively? 

Research comparable rental prices: Before starting negotiations, tenants should research the current rental market in the area. Look for similar properties in the same location to see what they are renting for. This will give you evidence to support your request for a reduction if you find that similar properties rent for less.

Reliability: If you have been a responsible tenant, paying rent on time and taking good care of the property, emphasise this to your landlord. Landlords will likely be more willing to negotiate with tenants they trust to continue paying rent regularly, maintain the property, and protect their investment.

Point out any Issues: If any maintenance or repair issues with the property still need to be addressed, bring them to your landlord's attention during negotiations. Highlighting these issues may help to negotiate a lower rent or request that the landlord address the problems before agreeing to renew the lease.

Tenants must be aware that while 61% of landlords said they would consider reducing rents for reliable tenants, 39% said they wouldn't. Asking for a rent reduction could damage their landlord relationship, and therefore, any rent negotiations need to be handled with great care.

What financial considerations are there to losing a good tenant?

The Office for National Statistics revealed that 45% of tenants are struggling to pay their rent. 

Although 61% of landlords would consider reducing rent for good, reliable tenants, 39% said they wouldn't consider reducing rent.

But what financial considerations should landlords consider when deciding not to reduce rents for reliable tenants?

Cost of empty property

An empty rental property will bring in no income. With high demand for rental properties, unless the property is in a very undesirable location or has severe issues, it's unlikely the property would stay empty for long. But empty rental properties come with the added costly risks of vandalism or squatting.

Finding new tenants

There are costs and times involved with finding new tenants. The property may require refurbishments or repairs. New photography of the property will be required. The property will need to be listed with prospective tenants viewing the property - and currently, on average, there are 13 viewings per available rental property. And that's all before the time required to select the 'right' tenant.

Potential for new tenants to be unreliable

The risks associated with an unreliable tenant can be costly. From non-payment of rent to damage to property and increased repair and maintenance costs, an unreliable tenant could be a very costly mistake.

Then, replacing them would start the process of sourcing new tenants all over again.

What will landlords do with their rental properties in 2024?

As landlords' costs increase, over half of tenants should anticipate their monthly rent increasing, as 51% of UK landlords have said they'll raise rents to cover any additional expenses.

But renters must know that 32% of landlords anticipate selling their properties this year, which is one of the most pressing issues in the UK property market. During this cost-of-living crisis and with rental fees increasing, renters are finding it harder to save enough for a deposit or meet the criteria for a mortgage.

Landlords' costs are increasing. Whether it's increased mortgage rates or any number of price increases such as property maintenance or renovation, as a result of inflation, landlords have to balance these increased costs with rental price increases.

With more landlords looking to sell their BTL properties, rental availability is decreasing, leading to increased demand for rental accommodation. Indeed, our survey discovered that 71% of landlords experienced an Increase or Significant Increase in demand for their properties from would-be tenants. This, in turn, increases monthly rental costs and further exacerbates renters' inability to save enough money to get onto the property ladder.

A third of landlords (33%) believe their rental properties will remain the same this year and will not increase rent or sell their BTL properties.

Do landlords think they'll buy an investment property in 2024?

Although 32% of landlords are looking to sell property in 2024, the number of landlords looking to invest in property has increased year-on-year.

Last January, 45% of landlords said they would invest in 2023. 30% didn't think they'd invest, and 24.58% didn't know. Our latest survey has discovered that 40% of landlords did buy rental properties last year.

This year, landlords' intentions to invest in property have increased, as 51% said they think they'll buy an investment property in 2024.

Of those who think they'll invest further in property this year, 85% already own 2 or more properties. They tend to have 3 or more years of experience (88%) as landlords, and 57% already own properties in London.

Why do landlords use a bridging loan or development finance for their property investments?

23% of UK landlords utilised development finance, and 13% used a bridging loan to acquire rental property investments.

The landlords who used development finance tend to own 3 properties (24%), have been landlords for 5 years (21%), and own their properties in London (59%).

Those that used a bridging loan are similar. 28% own 3 properties, 46% own properties in London, and they have been landlords for 3 years (26%).

Final thoughts

Landlords can increase rent by a "fair and reasonable" amount as long as it's in line with similar properties in the local area. However, 61% of UK landlords are open to reducing rents for reliable tenants. While inflation and rate increases are raising landlords' costs, tenants are struggling too during a cost-of-living crisis.

An Office for National Statistics (ONS) survey has revealed that 45% of renters struggle to pay their rent.

Landlords' openness to possible rent reductions demonstrates the importance of keeping reliable tenants. The financial implications of replacing reliable tenants or having bad tenants can outweigh the financial hit of the rent reduction, which is a short-term financial sacrifice for the longer-term reliability and peace of mind that comes with good tenants.

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