PDA

View Full Version : Annual rent increases? And by how much?



danatella
27-11-2008, 13:09 PM
Does anybody know what is a normal rent increase these days? I have been living in the same flat for 3 years now and at beginning of every new year my landlord increases the rent with £45 a month - a sum which he considers to be "modest" - the rent started at £950 - so in that price bracket I personally think it is quite significant - so I would appreciate what a normal rent increase per month is. My contract is due to be renewed again - I am a perfect tenant, never been late with my rent in 3 years - looked after the flat very well, have a stable job etc - there are no risks with me whatsover and I would like to live there for a few more years but at this rate of increase I will soon reach a point when I wont afford to anymore. I looked around the property websites and I see same flats I looked at 3 years ago for rent at the same price - rentals dont seem to have gone up really. Furthermore - I am not impact the current economic climate has got on rents?! Any advice would me much appreciated. Thank you.

jeffrey
27-11-2008, 13:52 PM
Does L increase rent by:
a. serving a Notice under s.13 of Housing Act 1988; or
b. granting a new Agreement?

For an AST/SAT, those are the only options. An informal increase demand is not legally enforceable.

danatella
27-11-2008, 14:20 PM
Hi, thank you for your quick reply - the answer is none of the above - at the begining of the tenancy we had a formal short tenance agreement done through the estate agent - at the end of year he came round to see me and asked me if I was happy there and want to renew the agreement - I said yes - and the he said that he needs to increase the amount by £45 a months as the maintenance fees have gone through the roof - I didnt expect it and I am not a good negotiator, also my young son was in the room playing - so I just said ok. The estate agents sent a new contract that I had to sign and return. At the end of the second year, he just sent me a letter stating he is happy to renew the agreement for another year providing I agree with an increase of a "modest" £45 a month. Again, I was not happy - £90 extra a month from the initial rental sum is quite a lot for me - as I would imagine is for all the tenants renting in that price bracket - but I do not want to distrupt my son's life again as he is very settled here - so I asked him if I will get another contract then - and he said no - we will just attach this letter to the previous contract. It looks like he is not using the agency anymore - and it is a self managed flat - meaning that I deal with him directly for any problems. He is coming over to see me on Saturday - and I expect the usual increase by verbal agreement first followed by something in writting - so I am trying to get all my facts before then - to find out if such an increase per month every year is the norm or not and particulary if in these times of economic crissis if it is reasonable to have another increase or be happy to have a good long term tenant? People I work with say they've been in the same place for a few years and never had the rent increased, one had it every 2 years or so but with a much smaller amount. Have I got the right to negotiate it? Thanks for all your help

jeffrey
27-11-2008, 14:24 PM
Does L increase rent by:
a. serving a Notice under s.13 of Housing Act 1988; or
b. granting a new Agreement?

For an AST/SAT, those are the only options. An informal increase demand is not legally enforceable.
Danatella: my post #2 [as quoted] already answers your post #3. L cannot increase rent informally.
However, he could threaten that he might serve a s.21 Notice unless you agree to the increase.

danatella
27-11-2008, 16:21 PM
thank you very much for your time to reply to me - so a 5% increase a year is considered normal?

potatopete1
27-11-2008, 16:28 PM
thank you very much for your time to reply to me - so a 5% increase a year is considered normal?

I would say 5% increase was fair. The last increase I made was about 7%.

PaulF
27-11-2008, 19:01 PM
thank you very much for your time to reply to me - so a 5% increase a year is considered normal?You're missing the point - the agent (i.e. landlord) cannot increase rent informally, the amount is not a consideration. He either follows what is set down in the tenancy agreement or, in the absence of any such detail, use Form 4B Under s.13, for which you then have 28 days to agree or disagree.

Beeber
27-11-2008, 19:12 PM
I would say 5% increase was fair. The last increase I made was about 7%.

I disagree that there is anything normal about a particular percentage annual rent increase.

Ultimately a landlord can only command for the property the market rent, whatever that happens to be due to supply and demand in that local area.

Some landlords adopt a policy of resisting giving rent increases to tenants that they are happy with because they appreciate that a long tenancy that minimises void periods is better than aggravating tenants with rent increases.

The tenant, if she can gain the courage to negotiate, can make observations about similar properties in the local area being lower in price (hinting that she will leave if he increases the price), point out that the landlord is saving expenses by managing the property without an agent and remind him that he might lose a month or two's rent finding a replacement tenant which will cancel out any increase he may have made in yet another rent increase that is likely to trigger the tenant into giving notice.

Mrs Jones
28-11-2008, 08:27 AM
Personally I think £45 pcm rent increases are far from modest! If I was asked for an extra £45 pcm it would blow my budget out of the water and I suspect the same would apply to my tenants.

I recently increased the rent for one of my tenants by £15 pcm (with a new AST) and was quite prepared to reconsider if they objected (it represents only a 2% increase). Times are hard for many families with huge increases in utility bills etc. and I want to keep my tenants. These have been with me for 2 1/2 years.

£45 pcm is not an insignificant amount and I hope Danatella resists this yearly increase - it appears to me to be unfair and very greedy of the landlord.

danatella
28-11-2008, 08:58 AM
thank you Mrs Jones and Beeber for your advice - this is what I was after - rather then the legalities of it - I purely wanted to know if a £45 increase per month every single year is normal or not. Persoanlly I think it is a lot but this beeing the first apartment I ever rented I havent got that much experience in this matters. I know people I work with that thought it was a huge increase to be applied every single year but I wanted to hear other landlords views as well. I will just have to gain the courage to say to him that I am surprised he wants to increase it by this much every year, and especially this year with all the crissis that is going on - and if he still insists we must then at least negotiate a smaller and much realistical amount. thank you once again :o

PaulF
28-11-2008, 17:14 PM
Your tenant should be paying a "market rent" which is whatever can be attained in the locality.

mind the gap
28-11-2008, 18:28 PM
Whether an increase of £45 pcm is reasonable or not is surely all relative to the desirability of the accommodation and the rent to begin with.

If LL has people beating a path to his door to rent his luxurious penthouse apartment, then £45 may be an appropriate increase.

It's more useful to consider what percentage increase is reasonable - and my first instinct is to say that it should be in line with inflation, or the cost of living index. However, that has been complicated this year by the financial emergencies which have beset us and for what it's worth, student letting agencies (don't know if they are typical) are advising landlords to keep rents broadly the same as last year.

When I asked why, I was given the following reasons:


students' parents (who help finance their studies) are feeling the pinch and may not be able to support them to the same level as last year
landlords want to increase rents to pay for the cost of getting larger properties up to HMO standard, but prospective tenants couldn't care less about that and don't perceive it as a bonus, so are't willing to pay extra for it

elhuggy
28-11-2008, 22:40 PM
You could surf the web for similar properties in your area available to let, then knock 7.5% off the asking price for each then work out an average price. If your home is in this region or above then show the results to the LL and tell him that the rent is already at or above market value. If he is wise he will accept this rather then have you leave and risk an empty property. Or offer an inflation related increase, which is approx. 2.5% on your rent of £1040 is just £26. (950 + two years increase of £45).

mind the gap
28-11-2008, 22:49 PM
Or offer an inflation related increase, which is approx. 2.5% on your rent of £1040 is just £26. (950 + two years increase of £45).


Clear as mud, I'm afraid.

elhuggy
28-11-2008, 23:23 PM
I may have not understood when Danatella post when she says “I have been living in the same flat for 3 years now and at beginning of every new year my landlord increases the rent with £45 a month - a sum which he considers to be "modest" - the rent started at £950…”.

I took this to mean that at the end of the first year the rent rose to £995, at the end of the second year to £1040 and she is now at the end of the third year, wondering if her LL is reasonable in seeking another £45. I doubted this as I thought inflation had been in the region of 2.5% over 2008, supporting a rise of £26. But surfing the web just now I see inflation is at 4%, supporting a £41.60 rise.

Ericthelobster
29-11-2008, 10:39 AM
Your tenant should be paying a "market rent" which is whatever can be attained in the locality.And in very many areas (including mine) rents are falling at the moment... I have recently had a lot of trouble letting a property which has formerly been snapped up like the proverbial hot cake - in the end it was empty for two months and being let at a lower rent than the previous tenants paid.

So I think that these days an 'automatic' rise is certainly untenable; as a LL I would be very wary of doing this in case my current tenant left as a result, which might well leave me with problems filling the vacancy. I'm sure there will be incumbent tenants who are negotiating lower rents, let alone no increase.

As has been advised, gather evidence of what equivalent properties are going for locally and show your LL when you decline his rise. Point out you've been an excellent tenant (presumably?!) and that he'll not be able to get the rent he's asking if you leave.

However, at the end of the day you might need to follow through on your threat. But if you do, there's no need to accept the rent rise in the meantime until such time as the LL notifies you in the proper legal manner.

elhuggy
29-11-2008, 15:40 PM
7% ? How do you support this?

Wauden
01-12-2008, 12:39 PM
I agree that £45 increase a year is excessive. I think he is taking advantage of the fact that you have a young son and want to stay and are new to letting. You ought to negotiate. Hint that you could move.

danatella
01-12-2008, 13:51 PM
I just would like to thank everybody that took the time to answer my question. Unfortunately my landlord is a very tough business person and he intitially said that he has to ask me for a £50 increase in rent a month. I did look shocked and said that I certainly was not expecting an increase this, let alon this much. He then said - "ok, £40 since you have been here 3 years and you have been ideal tenants". I have starting to reason with him, i.e. rents are going down etc, there are 2 bedroom properties in the area that are advertised as low as £900 a month - as indeed others are advertised for as much as £1250 - those beeing at the high end of the market - i.e. brand new and ultra moder, stainless steel bosh appliances, open plan with breakfast bars etc - plus this is what they are adveritised at - it does not mean that anybody would actually pay that much - but I am agraid that he wasnt interested in what I had to say. He said that the estate agents made a mistake 3 years ago and that the flat should have been advertised at £1100 then so even with the £40 increase this year I will only pay £1080 which is less that what he wanted in the first place (not sure why this is relevant as he should have never accepted £950 if it wasnt enough - but I know that the flat was empty at that time and had been for a while). Anyway - he then went on to say that he hasnt got a mortgate on this flat but that the maintenace (there is a maintanance company that looks after the repairs and keeping of the comunal areas) is going on every year and he has to make some money of it (I am afraid I dont understand the relevance of it - so maybe other landlords do).

In the end I followed the advice kindly given to me and as him to put it in writing and I will have to give it a serious thought as I really did not expect such a rent increase and will have to consider all my options. I did point out that I would be happy to secure a contract for a longer period of time - 2 or 3 years if he agreed not to increase but he was not intersted as he thinks he can get more money for this flat. He said that if I decide not to accept the increase I will have to give him 2 months notice.

Nice problem to have just before Christmas - but at least I have till the end of January when the contract actually expires and some time to think carefully about it. I half hope that he gave it some thought after he left and realised that he is taking a risk if I left - especially since he knows we are happy to stay long term, but I dont hold much hope :(

Beeber
01-12-2008, 18:36 PM
Thanks for coming back and giving us an update.

Sounds like your landlord got out his violin to explain away what you regard as an excessive increase in rent and has a bit of amnesia regarding his miniscule outgoings and the previous void period.

I guess this leaves you the option of viewing vacant properties to see if you can get the same standard property for less money or better standard property for the same rent. Ring around the letting agents and private landlords and see a handful in your preferred budget - they'll be pleased to find someone looking at this time of year and you get to practice your negotiating skills to bring down the rent and fees.

You've indicated that your current tenancy agreement expires at the end of January, the fixed term, whereas the landlord is under the impression that you have to give 2 months notice. Check the terms of your contract. Generally, a tenant is not required to give written notice to leave at the end of a fixed term contract (though its obviously a good idea to notify a landlord of the intention not to renew).

If you choose not to renew it but remain in the property, it automatically becomes a periodic agreement which means that it continues with the same terms & conditions except the landlord has to give the tenant 2 months notice or the tenant give the landlord one month notice (timed with when rent is due).

So if you don't fancy being locked into another annual contract with your current landlord, let him know you'd prefer for it to lapse into a periodic tenancy. I expect he'll want to lock you into a fixed term agreement now he's determined to levy annual rent increase but that's perhaps another bargaining chip on your behalf if you can face it (because he knows you can bail out to a cheaper place quite quickly whereas he has to give you at least 2 months notice).

Ericthelobster
01-12-2008, 20:33 PM
Good advice from Beeber.

And you might find that ultimately if/when you tell the LL that regretfully you're going to have to leave for somewhere cheaper (and mean it), while keeping the relationship cordial, that he'll come to his senses and waive the increase. But don't hold your breath...

Good luck.