Increasing rent can be daunting: you don’t want to unsettle your tenants, but left too low and you’ll eat into your investment. Here we explain why to increase rent and how…

What happens when you leave rent below market value

Keeping rent at the same level for too long is bad business. You’re essentially offering subsidised housing, losing a large chunk of cash, all while costs of being a landlord continue to increase with inflation. You’re also setting yourself up for greater risk later down the line.

The time will inevitably come when rent needs to rise to meet market value. Smaller, more frequent reviews avoid a huge hike for your tenants. That hike could prompt pushback, or even them looking elsewhere, leaving you with potential void periods, as well as the price of reletting.

In the event you decide to sell the property, it’ll be far less appealing to another landlord if the yield is lagging behind—after all, investor focus is often on the figures. Regular, appropriate rent increases sustain long-term viability of your investment not only during a tenancy, but whenever you’re ready to move on.

When’s the right time to increase rent

We undertake annual rent reviews on all our properties, taking into account local and national markets and the home’s specifics.

The Renters’ Reform Bill is due this Spring, and there’s talk of introducing an arbitration element to rent reviews, likely resulting in a more protracted process. Currently, most assured shorthold tenancies stipulate two months’ notice before you can up the rent (provided a rent increase notice hasn’t been issued in the last 12 months), so a window of opportunity won’t be around for long before you’ll be bound by more stringent rules.

How to increase rent effectively

First and foremost, you can’t increase rent if you’re not compliant. You need all the paperwork in place, and the property must be in order. Secondly, make sure to serve the right notices and stay on top of the necessary admin. Thirdly, bear in mind the benefits of retaining good tenants.

We can help with all this, as well as negotiating with tenants and keeping things fair. By using an agent like Orchards, you have on-hand support at every step.