I get asked this question ALL THE TIME, by Landlords who want to make sure they are keeping up with both inflation and the market.
The most sure fire way to make sure your rent increases annually is to put it in your tenancy agreement that annually their rent will increase by X.
You have to be fair here and most of the time I see this being agreed between 2-5%.
You must also agree the % with the tenants before the tenancy starts and make sure that it is clearly stated within the tenancy agreement.
Usually this is a great option for both landlords and tenants alike because they can plan for an increase and it is already set out in stone – no lengthy negotiating for you and no scary rent hikes for tenants.
If your tenants will not agree to this, then each year you will have to look at what the market is doing.
For those of you who have a letting agent, they should do the renewal for you and agree at the current market rent (obviously with your say so).
If you do not have anybody instructed to do renewals then you need to phone local agents and see where the market is. Jot down the comparable evidence and use this to negotiate a new rent with your tenant.
Please note rental markets are usually really steady in rises and falls so you are going to have to expect that some years there may be little or no increase!
Tip you should start negotiations somewhere around 2 months before the end of the tenancy and make sure that you understand that the tenant may say no.
It is then for you to make the call about whether the potential void period outweighs the loss in increase of rent – if it is costlier to you to have a void period it would be better to accept £nil increase then to worry about an extra £5 a week!
So just to recap you have two options:
- Put a rent increase clause in your lease – this you have to agree at the start or the tenancy
- Go to the market and look for comparable evidence and use this to agree a new rent – this you should agree somewhere around 2 months before the end of the tenancy
I hope this has been useful for you and given you some great hints on how you can increase your rent annually!
If you need anymore property help then head over to www.ncrealestate.co.uk or email me directly Natasha@ncrealestate.co.uk
