The objective of the new rent increase framework
The Renters’ Rights Act introduced new rules governing how landlords increase rent. The intention is to prevent unfair or excessive rent increases while allowing rents to reflect market conditions.
Under the new system, landlords must provide a minimum of two months’ notice before a rent increase takes effect.
Most landlords consider two months’ notice reasonable as it allows tenants time either to adjust their finances or decide whether to move.
The practical problem landlords may encounter
The removal of Section 21 possession has changed the balance of negotiating power between landlord and tenant.
If a tenant refuses to pay an increased rent and continues paying the previous amount, the arrears may take a significant amount of time to reach the threshold required for a possession claim based on rent arrears.
PIMS Observation
Where rent increases are small, a tenant who simply continues paying the previous rent may accumulate arrears very slowly. This can delay the point at which possession proceedings based on rent arrears become available.
This means landlords must approach rent increases strategically and ensure the proposed rent reflects genuine market conditions.
Tribunal challenges to rent increases
Tenants have the right to challenge rent increases through the First-tier Tribunal.
The tribunal can determine what it considers to be the market rent for the property.
Importantly, the tribunal cannot increase the rent beyond the level proposed by the landlord when the rent increase notice was served.
PIMS Practical Advice
Before proposing a rent increase, landlords should review comparable properties in the area to ensure the proposed rent reflects the local market.
If the tribunal determines the rent, that figure may effectively become the fixed market rent for the property for a period of time.
Why rents are increasing
Many rent increases are being driven by rising costs rather than landlord preference.
Mortgage interest rates, insurance costs, compliance obligations and maintenance costs have increased significantly in recent years.
For many landlords, rent adjustments are necessary simply to maintain the financial viability of their property investment.
The concept of a “fair rent”
The new legislation encourages tenants to challenge rent increases they believe are unjustified.
However, the definition of a fair rent ultimately depends on market conditions.
Tribunals will typically consider comparable rents for similar properties in the same location when determining whether an increase is justified.
Tenant notice periods
Under the new system tenants normally provide two months’ notice when leaving a tenancy.
This can help landlords reduce void periods by providing more time to arrange viewings and secure new tenants.
However, tenants retain their right to quiet enjoyment of the property, which means landlords cannot automatically insist on access for viewings without agreement.
PIMS View
The rent increase framework now relies heavily on tribunal oversight and market evidence.
Landlords who regularly review local market rents and document the reasons for rent adjustments are in the strongest position should a tenant challenge the increase.
The removal of Section 21 means landlords must now manage rent negotiations more carefully, as possession options are more limited.
Key considerations for landlords
- Review local market rents before proposing an increase.
- Ensure the rent increase reflects genuine market conditions.
- Understand the tenant’s right to challenge increases through the tribunal.
- Ensure tenancy documentation is fully compliant.
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