Increasing Tenant Rent

PositiveOptimist

Hi All,

I am a landlord who faces a hike in BTL Mortgage repayments when my current mortgage deal ends in November. Around the same time, the AST agreement for my rental property becomes a periodic tenancy.

How do I go about increasing the rent as I don't have a rent review clause in the current AST.

MultiFuelBurner

As they both end at the same time present the current tenants with a new 12 month tenancy at the increased rates. If they don't sign or kick up a fuss then Section 21 is there to help.

So that's the harsh way. Do you have a good relationship with your tenants? Explain the situation early as in now so they can look for another property to rent.

BeerSavesMoney

I believe that being honest with them now is better than advising them of an increase at the last possible minute.

This will give them a chance to decide if they want to move elsewhere or stay. 

If they decide they want to move out then at least you know to start planning for this as well.

dimbo61

Could you check out local prices for Rentals in your area.
Maybe drop your tenants an email explaining that the government and bank of England have now increased the base rate from 0.1% to 5.25% as of today with more rises on the way.
Offer to sell the property to them.
No point running a business at a loss.

saajan_12

PositiveOptimist said:

Hi All,

I am a landlord who faces a hike in BTL Mortgage repayments when my current mortgage deal ends in November. Around the same time, the AST agreement for my rental property becomes a periodic tenancy.

How do I go about increasing the rent as I don't have a rent review clause in the current AST.

How does the current rent compare to market rents for similar properties in the area? 

Your mortgage interest isn't really anything to do with them, just like their circumstances wouldn't inherently anything to do with you. 

If already in line or higher, then you're not going to be very successful with an increase, as the tenants would likely just start looking and move away. If lower than the market, you could suggest increasing to get in line with market rents. 

theartfullodger

Assuming all paperwork OK (use this checklist) 
https://nearlylegal.co.uk/section-21-flowchart/
- then frankly no point offering 12 month tenancy with a big (?) rent increase (thus unhappy tenants afterwards)
.. just serve an s13 notice: 


- in your shoes I'd issue it now (today?).


This sounds like it will end up with an argument..

May I humbly ask a question?? If costs - eg mortgage rates - dropped would you offer a rent reduction?? I ask as in 2008 when rates fell through the floor I didn't.....

PositiveOptimist

Thank you, in order to issue an S13 notice, do I need to have a rent review clause in the tenancy agreement?

theoretica

For section 13 you don't need a rent review clause - but one of the grounds you tenant could use to challenge it is if the increase is to more than market rate.

propertyrental

PositiveOptimist said:

Thank you, in order to issue an S13 notice, do I need to have a rent review clause in the tenancy agreement?

No. The opposite!

If there were a rent review clause, you would have to rely on that to change the rent.

If there is no rent review clause, then in a periodic tenancy you use a S13 Notice.

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

[Deleted User]

Selling to the tenants at a good price (just cover what you paid for it - you already made plenty of profit) is the best option.

It's their home, and you have a responsibility to them.  You don't want to be out of pocket of course, but it expecting them to cover a bad business decision isn't right either.

theoretica

Many tenants will be either unable to buy or not wish to.  If you are thinking of selling then giving them plenty of notice and offering first refusal and a discount would be best for both of you, as you would not have a void period hunting for a buyer, nor any uncertainty about whether or when they would leave.  If you decide to continue to rent then you can't expect anyone to pay above the market rate - does that meet your expenses?