Why Now is the Right Time to Increase Your Rent

Mark ShiptonLandlord news, Property market news

Every day, we hear of more and more landlords struggling financially or seriously worried about their financial situation in the near future. 

This is usually down to two scenarios which are hitting landlords at the same time: 

You’re expecting (or experiencing) higher monthly mortgage payments

If this hasn’t already hit you, thousands of landlords will see their buy-to-let mortgages getting reviewed in the coming months. Rising interest rates are leading to monthly payments shooting up, leaving many landlords with wildly inflated mortgages to cover every month while rent levels stay the same. 

You’re experiencing increased costs 

We are all experiencing increased costs, with landlords hit on several fronts. Service charges have been high for a while, with higher electricity costs, insurance, increased compliance costs, and rising contractor and material costs coming in to the frame as well.  This plus higher mortgage payments is making many investment properties far less profitable.

So, with all this happening, is your buy-to-let investment still viable? If you’re concerned about this, here are two steps to take. 

Remortgage wisely

Be very aware of when you need to remortgage. Make sure you speak to your mortgage advisor well before the product end date to find out what your new payments could be and get advice about what to do. If you don’t have a trusted independent mortgage advisor, we can put you in touch with someone we’ve worked with for many years. 

Raise your rent 

Right now, and for good reason, rents for residential properties across the UK are rising at their fastest rate in over a decade. In our professional view, now is the time to maximise rental income to cover your increasing costs.  

It’s essential that you’re pragmatic about this decision.  

Though you may be concerned or uncomfortable about putting your rents up, we’ve found tenants to be very accepting of rent rises. Tenants tend to understand that landlords’ costs have increased, and many are aware of the market conditions. 

We’ve seen considerable rises in rent whether a property is newly let or when a tenancy is being extended.  

Many landlords are choosing to sell up as costs rise and their investment becomes unviable. In most cases, tenants would rather come to an agreement to raise the rent with their landlord than be told the property is being sold and they need to find another home. 

How can you put rent up? 

We know the rents your property should be achieving within the developments we manage, so speak to us for up-to-date figures so you understand the local market.

When it’s time to make the ask, you have to follow specific rules before putting up rent – and the rules depend on the tenancy in question.  

You can propose a new rent under an assured periodic tenancy using a Section 13 notice. This is a formal rent rise notification and must be served correctly to ensure it is valid and enforceable. 

A section 13 can’t be used in the first year of a periodic tenancy or in the first year of a fixed term which converts to a periodic tenancy. In some cases, it also can’t be used if a rent review clause is in place. You can serve a Section 13 notice during a fixed-term tenancy, but the rent can’t increase until the term has ended.  

Where allowed, Section 13 notices can only be used once a year to increase rents. We are helping landlords with Section 13 notices more and more to help them achieve the rent they should be getting in the current market. 

The Renters (Reform) Bill is on the way 

When the Renters (Reform) Bill is passed into law, you’ll still only be able to increase rent once a year, and you’ll need to give tenants two months’ notice (now it’s only one). At this stage, it’s thought that you’ll need to complete a simple form and serve it to tenants to increase rent. Tenants will then have to start paying the new rent unless they want to dispute the amount through the First-tier Tribunal.  

Calm in the storm

Mortgages and rent are emotive subjects, and hiding your head in the sand is tempting. Still, with professional advice and a clear strategy, your investment can continue to be viable even in the rough seas of today’s financial ecosystem. 

Grace Miller & Co have recently let my property in record time and arranged all administrative procedures most efficiently. This was carried out in a quiet and thoughtful manner towards myself and new tenants at a competitive rate too

Elisabeth S.
Since opening Grace Miller & Co. in 2000, we’ve given all our clients proactive, professional and personable care. We’re very proud of the reputation we’ve built and the client reviews we’ve received. If you have a property in London or Surrey and would like to benefit from our outstanding service and unrivalled knowledge in residential lettings, sales and block and estate management, please contact us today