A very interesting article. It answered one question I was going to raise with regard to how much should the annual rent be raise by. However, given the fact that in a relatively short period we have had three hikes in the base rate, and in my case these total more than a RPI increase, what do you suggest is the best approach to ensure that rental income is not eroded and current tenants are not priced out?

Hi I have a tenant who has been paying a laughable level of rent for nearly 3 years now - she pays 195 per month on a one-bed flat in a good area. Other flats in the house rent at 350. Also, she is the biggest source of complaint and problems for me. 12 pounds a month of her rent is subsidised by the local council. She is currently on an ordinary tenancy (her shorthold 6 month tenancy ran out approx 2 years ago) Am I within my rights to increase her rent to a near realistic level for the area (I was thinking 295 per month) knowing that the council will more than likely pay the difference anyway, so it should not directly affect my tenant? Whilst it is a big increase, she has had no increases for many years, and it is still very reasonable after the proposed rise. Can you advise if I am being fair/legal and how I should best go about it Thanks

Hi Bob. I'm pleased you liked the article. How much to raise the rent is the landlord's eternal dilemma. Get it right and you achieve contentment for both you and the tenant; get it wrong and you potentially lose a good tenant and take a heavy blow to your annual profit through having the property stand empty. My way isn't right for everyone, but it has kept me in reasonable 'letting' shape for over 25 years. I keep in regular contact with my tenants, without getting over friendly - this helps when the time comes to consider a new rent level, because I can sound the tenants out and, if they seem to object to the rent suggested, it can be revised downward (assuming keeping the tenants is more important). Unfortunately, rent levels are subject to local comparables - i.e. market forces rather than personal expenses or desires. So, take time to do plenty of research - check the local papers, ask a few letting agents for advice, join a landlords' association, etc. Then, set the rent according to the results and, above all else, try not to be over ambitious - it's usually more profitable to have the property fully occupied at a lower rent than suffer voids of a month or two before securing a tenant at a slightly higher rent. One of the greatest problems for BTL investors is (obviously) they need to cover the mortgage, but remember that this is not always possible if the cost of borrowing exceeds the market rent achievable. I always suggest BTL investors consider putting some of the annual profit aside for that fateful 'rainy day' when interest rates start climbing, which inevitably comes around sooner or later. Hope this helps. Good luck.

Hi Tony, excellent article thanks. I have a 12mth fixed assured shorthold tenancy about to be signed, it has been drawn up by a reputable Agent but makes no mention of Rent increases. The Tenant has already been in the property for more than 9mths on what was originally a 6mth shorthold tenancy agreement. There has been a delay getting this 12mth agreement signed (although all parties are happy with it and want it signed) and we are now 3 months into the Fixed Term. Am I right in understanding that if we want the rent increased at the end of this 12 mth and the tenant wishes to stay then we have to notifiy them of our intended increase in the next 3 mths? The rent has not changed to date since the tenant moved in and he will effectively have 18mths at the same rent so we need to get an increase at the end of that period if he stays. Thanks Jo

Tony - Do you have any suggestions re my previous post?

Hi Jo. The current situation seems to be that your tenant’s fixed term Assured Shorthold (AST) has now lapsed into a Statutory Periodic Tenancy (SPT), running month to month on the rent agreed in the original AST. If you wished to increase the rent while the SPT is running, the original AST would need to contain provision for rent increases. This is the best and easiest way of dealing with all rent increases, as agreement would have been reached at the outset and all parties could then follow the procedure, regardless of how long the tenancy lasts. Moreover, when there is a procedure written down and agreed in the original AST, it continues to apply in the event of a SPT arising after the fixed term expires AND stops the tenant making an application to the Rent Assessment Committee to have the rent formally reviewed. Under the current situation, that is, while the SPT is running and there is no mechanism for rent increases in the original AST, you must follow the statutory rent increase procedure (Housing Act Section 22). This is complicated, as formal notice of a rent increase needs to be issued AND the dates must be accurate for it to be effective. You are right to believe that the rent increase MUST be applied before the SPT has run its first twelve month period. The form you need to obtain from a law stationer (also available online from various sources) is ‘Notice Proposing Different Terms For a Statutory Periodic Tenancy – Section 6(2) Housing Act 1988’. Notice of three months is required, so I am hoping this reply gets to you in time. Problem: proposing to increase the rent through this route allows the tenant to apply to the Rent Assessment Committee (RAC), in which case the rent could be forced down, remain the same or go up – the RAC’s determination is mandatory and is set as the legal limit a landlord can charge. All that said, it strikes me that if there is a new AST being drawn up and the tenant seems amiable to signing it, this may actually be a better route for you. It is vital that the new AST contains (a) the new rent you wish to impose; and (b) a simple and effective mechanism for increasing the rent at yearly intervals (this should be included even if the fixed tenancy period is less than a year). If the new AST has no provision for rent increases, I would ask your agent why this is. Perhaps he/she knows more about the tenancy than your question has described. But, on the face of it, I would consider at least consulting another letting agent or your own legal advisor, because AST’s with no rent increase provision are extremely unusual. Hope this helps.

Thank you so much Tony, that is very helpful, I have put out an urgent call for the Agent to meet me on Monday morning before she goes round to the Tenant in the afternoon with the new Tenancy. Thanks again. Jo

Hi Dave. I need to clarify a few matters with you before I can reply ... firstly, you say the 'Shorthold' tenancy expired and became an 'ordinary' tenancy. Can you confirm the original tenancy was in fact an Assured Shorthold (Housing Act 1988) and that it lapsed (neither you nor the tenant did anything at expiry of the fixed term) into a Statutory Periodic tenancy, running month to month? Secondly, did the original tenancy agreement contain a mechanism for rent increases? if so, what did the mechansim state? Finally, you mention the tenant's rent is 'subsidised by the local council'. What is the nature of the subsidising? For example, if the tenant is receiving housing benefit, has there been a formal assessment of the rent in detrmining the level of benefit being paid? Is the benefit amount paid to the tenant or to you? Has there been a Market Rent determination (via Rent Officer or Rent Assessment Committee)? Have you had to submit documents to the local authority for verification of the tenancy?

My pleasure, Jo. Just one final comment, if the tenant is very 'clued up', it would be prudent to get them to sign a surrender notice prior to the new tenancy being formalised. The agent should know what a surrender notice is (and if he doesn't, be concerned about how professional he/she actually is). A surrender notice is merely a statement from the tenant confirming they desire and comply with ending the current tenancy and this prevents the new tenancy being held in question by them or by a court in the future. Better to be safe ... blah, blah. Good luck.

Tony - it seems that I am getting no responses to my questions to you - are you seeing them?

Tony - it seems that I am getting no responses to my questions to you - are you seeing them?