Annual rent reviews are a normal part of letting property, but landlords must follow the correct process. Here's how to increase rent without losing good tenants.
Rent reviews are a normal and legitimate part of the landlord-tenant relationship, but they must be handled carefully. The wrong approach can damage your relationship with a good tenant, lead to a protracted dispute, or even be legally challenged.
When can you increase rent?
For fixed-term tenancies, you generally cannot increase rent during the fixed term unless the agreement contains a rent review clause. At the end of the fixed term, you can agree a new rent when renewing. For periodic tenancies (rolling month-by-month), you can increase rent once per year using the Section 13 procedure.
The Section 13 procedure
A Section 13 notice is the formal mechanism for increasing rent on a periodic assured or assured shorthold tenancy. The notice must be on the prescribed form (Form 4 or a document containing the same information), give the correct notice period (one month for monthly tenancies, one quarter for quarterly tenancies), and state the proposed new rent and the date it will take effect.
Tenants who don't accept the increase can refer it to the First-tier Tribunal (Property Chamber), which will assess whether the proposed rent is at or below market rate.
Practical advice for rent reviews
Give tenants early warning — discussing a potential increase months before serving formal notice allows them to plan and avoids unpleasant surprises. Justify increases with reference to market rents for comparable properties. Be reasonable — a 5-10% increase where justified is very different from a 30% increase that a long-standing good tenant cannot absorb.
Keeping a good tenant at slightly below market rent is almost always more profitable than losing them to a void period and the costs of re-letting.
Under guaranteed rent
Under our guaranteed rent arrangements, rent review provisions are agreed at the outset in the management agreement. You benefit from predictability without any of the administration or negotiation that individual rent reviews require.