Are there rules about how much rent can be increased by?

TisMeBill

We have a property which we have rented to the same tenants for ten years, we are aware we have not been charging market rate for rent, but they have been very good and looked after the place. They currently pay £1200 a month,  if we were to relist the property for rent we have been assured by estate agents we could expect to charge £1750 - £1800 a month.  The problem we have is that our fixed rate interest only mortgage ends soon and our broker tells us, we cannot get a new mortgage based on the rent currently paid and we will need to raise the rent to £1550 a month to allow us to re mortgage. This would mean a rent increase of 30%, I suspect our tenants cannot afford this, but even if they could are we allowed to raise the rent by such a large amount?

gazfocus

It’s depends what’s in your tenancy agreement but in general, there’s no ‘rule’ to say how much the rent can be increased by. You do have to serve the tenant the appropriate notice though and give them chance to respond. 

coypondboy

A good reason why rents are going up rising interest rates are making many btl unable to re-mortgage so if end up on lenders svr looking at 8%.  Estate agts also get a bigger commission as based on % of rent so renters are fooked. 

TisMeBill

coypondboy said:

A good reason why rents are going up rising interest rates are making many btl unable to re-mortgage so if end up on lenders svr looking at 8%.  Estate agts also get a bigger commission as based on % of rent so renters are fooked. 

Sadly this is exactly the problem we have, if we end up lenders SVR the current  rent will not even cover the mortgage repayments, so we need a 30% rent increase just to be able to re mortgage, but even then repayments go up much more than the extra rent. So  I'm beginning to think it is not worth doing, might just sell up and unfortunately tenants will have to find somewhere else to live.

Grumpelstiltskin

If you are thinking of selling read this thread.

Landlord selling property can’t afford to move — MoneySavingExpert Forum

propertyrental

Read

Post 5: Rent increases: when & how can rent be increased?

macman

Is the tenancy periodic or contractual? You cannot increase the rent during a contractual tenancy.
You are aware that 'selling up' does not end the tenancy? You will have to serve an S21 and give 2 months notice, assuming the tenancy has gone periodic. And then hope that the tenants agree to vacate at the expiry of the notice period, which they are not obliged to.
Subject to proper notice, there is no limitation on the increase you can make, but the tenant can challenge the increase via a tribunal.

propertyrental

macman said:

Is the tenancy periodic or contractual? You cannot increase the rent during a contractual tenancy.

 I regret you are confused macman.
A contractual periodic tenancy is both periodic, and contractual!
And if the contract has a rent review clause then rent can be increased according to that clause.
And if it does not, then a S13 Notice can be used.

Unless by 'contractual' you mean 'fixed term'. But even in a fixed term tenancy (eg 2 years) there may be a rent review clause that can be relied on.

diystarter7

Hi OP

From Gov site

https://www.gov.uk/private-renting/rent-increases

Thanks