As a landlord, your two main focuses are likely to be providing a quality, habitable home for your tenants and generating a steady stream of rental income, leading to strong yields each year.

The latter is much more likely if you’re charging the right level of market rent, something a surprising number of landlords don’t do.

In its basest form, a rent review is a mechanism for adjusting a tenant’s rent to the current market level. While this needs to be fair and proportionate, there is nothing wrong with upping rents to protect against inflation and the ever-increasing costs of being a landlord.

What are the main expenditure costs for landlords?

As a landlord, you will face a number of costs besides your mortgage repayments. This could include utilities, if you decide to let on a ‘bills included’ basis, costs for repairs and maintenance, insurance, tax costs and safety costs including an gas certificate, electrical installation condition report (EIRC) and fire and carbon monoxide alarms.

You must make sure your home and any furnishings within it are fire-safe and that everything – from boilers to fridges – are in working condition throughout.

On top of this, you will need to supply your tenant with an Energy Performance Certificate (EPC) to prove the energy efficiency of your home. If your home doesn’t meet the required minimum standards – with an EPC rating of ‘E’ or above – you would be breaking the law and could face serious penalties.

With these costs in mind, it is therefore amazing that many landlords aren’t achieving market rent.

How do you carry out a rent review?

A rent review doesn’t only have to be for a new tenant, you can create a new tenancy agreement for existing tenants. It’s important to be honest and upfront about any rent rises, giving your tenants notice about this, to ensure they know what is coming.

If the tenant doesn’t agree with the rent review, you can do this formally under what is known as a section 13 notice. Part of the Housing Act 1988, it enables a landlord to increase the rent on a periodic assured or assured shorthold tenancy by means of a notice of increase in a prescribed form.

It’s wise to get an experienced, reputable agent to do this for you, but here at Oakfield we are also happy to advise landlords looking to do it themselves.

You can find the form for a section 13 notice – known as Form 4 – on the page here.

It’s important that the tenancy agreement you sign with a tenant makes clear how and when the rent will be reviewed, so everyone knows where they stand from the start.

According to the government, for a periodic tenancy (rolling on a week-by-week or month-by-month basis), landlord cannot normally increase the rent more than once a year without your agreement.

For a fixed-term tenancy, landlords can only increase the rent if tenants agree. If they do not agree, the rent can only be increased when the fixed term ends.

For any tenancy, you must get your tenant’s permission if you want to increase the rent by more than previously agreed. What’s more, as mentioned above, the rent increase must be fair and realistic – in other words, in line with average local rents.

How do you propose a rent increase?

If your tenancy agreement with your tenants sets out a procedure for increasing rent, you must stick to this. Otherwise, the government says you can:

  • renew the tenancy agreement at the end of the fixed term, but with an increased rent.
  • agree a rent increase with tenants and produce a written record of the agreement that you both sign.
  • use a ‘Landlord’s notice proposing a new rent’ form, which increases the rent after the fixed term has ended.

You must give your tenants a minimum of one month’s notice (if they pay rent weekly or monthly). If they have a yearly tenancy, you must give them six months’ notice.

As we can see from the above, it’s not as simple as just increasing the rents as you please, and whenever you please, but there are steps and mechanisms in place – including rent reviews – to ensure you are charging fair market rents.

Most tenants will understand and appreciate the need for modest rent increases to move in line with market rents, and to account for things like inflation and higher costs. But it’s important to bear in mind that you won’t get away with increasing rents to unrealistic and unfair levels without challenges or consequences.

Like everything else in the private rented sector, the process needs to be handled in the right way – fair, realistic, honest and transparent.

It can be a bit of a minefield, which is why it’s best to call on the support and guidance of an experienced lettings agent. Even if you don’t want them to handle the rent increases, they can advise and guide on the best way of doing it in a fully compliant way.

Here at Oakfield Estate Agents, we will do all we can to help you let your home successfully, using our years of knowledge and experience to help you manage homes in East Sussex rental hotspots like Eastbourne and Hastings.

For further information on how to manage the lettings process, please get in touch with us today or read more about our letting agents service. You can also request a free instant online valuation to see how much your East Sussex property could be generating in rent each month.