The sensitivity of reviewing rent
As a landlord, navigating the sensitivity of rent reviews can be challenging. It involves assessing whether your tenant’s rent aligns with market conditions and determining a fair and reasonable approach to address any discrepancies.
As our most recent market update indicated, rents are still increasing with a national rent increase of 6% year-on-year, according to the Office of National Statistics.
Concurrently, the turbulence in the mortgage market has prompted many landlords to reevaluate their rental income in relation to market standards and their incurred costs.
I personally have spoken with many landlords who have considered selling their property as a result of increased costs and discovering that their tenants are paying rent significantly below the achievable market rate.
Recognising the financial challenges confronting renters is essential, especially in the current environment where many are experiencing financial strain. While it’s delicate for all parties involved to avoid placing anyone in a precarious position, in order to maintain a healthy rental sector and good supply of properties for tenants, landlords need to be covering their costs.
With all this in mind, you may be contemplating addressing this issue with your tenant.
The Process
Firstly, if you are in a fixed term contract, it is important to note that rent increases are not permissible until the fixed term ends. On the other hand, for those in a month-to-month tenancy, rent adjustments can only be made once every twelve months.
Most modern tenancy agreements, if properly drafted, include a clause allowing rent increases in line with the retail price index. This effectively ties rent adjustments to inflation rates, aligning them with the percentage increases of other consumer goods.
As a landlord, it’s key to weigh the upper-end figure, the typical market rate, and the minimum increase essential to cover your expenses. Utilise these numbers as a thoughtful basis for negotiation. For many landlords, holding onto your existing tenant is often more favorable than the complexities of seeking a new one. Consequently, framing the issue in this manner should facilitate reaching an agreement that suits everyone.
Against the expected, I’d advise regularly checking the rent, adjusting as your situation allows. Rather than keeping the rent low for extended periods, this prevents the necessity for a sudden, hefty increase down the road, preventing any strain in the landlord-tenant relationship.
Should you require guidance on rent sensitivity discussions or further assistance with follow-up paperwork, our dedicated lettings department is eager to offer support. Feel free to reach out to the team at 01905 675999 or via email at [email protected].