Rent increases: Everything a tenant needs to know

Rents are rising through the roof and it doesn’t matter if you are on the lookout for a new property or you’ve been renting the same place, chances are you’re going to face a rent increase.

More than half the renters the Office for National Statistics quizzed in February 2023 had experienced a rent increase in the previous year.

That’s seen tenants forced to find extra cash to cover rent at a time when the price of essentials like food and energy bills are rising alongside the wider cost of living crisis.

Here’s everything you need to know about rent increases, whether you can contest one if your landlord hikes up monthly payments and how the Renters Reform Bill could tackle rising rents.

What is the average rent increase per year?

The amount a tenant might see their rent increase is likely to change from landlord to landlord in the private-rented sector.

That’s unlike renters in social housing. Rents in the social sector are regulated by central government and the majority of tenants will have seen rents rise by the maximum of 7% this year as a result.

There are no such guarantees for private rents.

The Office for National Statistics found the average rent rose 9.7% in England when comparing prices between February 2022 and February 2023. The increase was higher in London where tenants paid 12% more in rent on average in the space of a year.

Overall, a third of the renters in London that statisticians spoke to had seen a rent increase compared to 18 per cent across England. 

Debt charity StepChange also attempted to get a handle on the scale of rent increases across England, Scotland and Wales.

The charity found that around half of renters had seen their payments increase.

Rents rose by more than £100 in a quarter of cases and while 4% of tenants experiencing steep surges over £500.

StepChange’s director of external affairs Richard Lane said: “Everyone deserves to live in a house they can call home, but this is becoming increasingly out of reach for a growing number of private renters.

“Against the backdrop of a frenzied rental market, where bidding wars, sky-high deposits and rising rents are commonplace, those who are financially vulnerable are often left with no choice but to take on unaffordable, insecure, poor-quality accommodation just to keep a roof over their heads.”

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How much rent increase is legal?

There’s nothing to limit landlords from raising the rent to whatever they want. Or at least whatever the market will allow – it depends what a tenant is willing to pay.

Rents have been rising to record highs in recent months. The Office for National Statistics’ latest figures show private rental prices paid by tenants in the UK rose by 4.8% in the 12 months to April 2023.

This is largely driven by the demand for private rented homes. Around 11 million people now rent privately in England and the number of private-rented dwellings in England rose in 2022 with 11,000 more homes taking the total properties up to 4.9 million.

The sector is now home to people who cannot afford to buy a house and people on low incomes who cannot get a social home and that is causing rising demand and rising rents.

Can a tenant refuse a rent increase?

If you’re a tenant, it’s best to check your tenancy agreement to see if you have a rent review clause, which allows landlords to raise the rent at certain times during the tenancy.

Current government guidance says a landlord can only raise rent once per year without the tenant’s agreement for periodic tenancies that are rolling and have no fixed end date.

For a fixed-term tenancy that does have an end date, a landlord can only increase the rent during the duration of the tenancy if the tenant agrees. Otherwise they will have to raise the rent once the term ends.

If a tenant is renting in an assured shorthold tenancy, a landlord may issue a Section 13 notice to increase the rent.

What is a Section 13 rent increase?

A Section 13 notice warns a tenant that a landlord wants to increase the rent.

It is a notice that can only be issued once per year and cannot be issued if there is a rent review clause in the tenancy.

Landlords must give tenants notice of the planned rent increase but how much notice depends on the tenancy. If rent is paid monthly, landlords need to give a month’s notice. If rent is paid yearly then the notice period is six months.

What does the Renters Reform Bill say about rent increases?

The Renters Reform Bill is intended to give tenants more security.

That means a landlord will only be able to raise rent once in a calendar year and they will have to give at least two months’ notice before they put up monthly payments.

Speaking in a Westminster Hall debate on the bill, housing minister Rachel Maclean said: “We understand that rent is likely to be a tenant’s biggest monthly expense. It’s important that tenants have notice of any rent rises to be able to plan effectively. 

“Our reforms will simplify the system for tenants and landlords. All rent increases will take place via one mechanism. We will retain existing legislation which allows rent increases once per year in periodic tenancies and increase the notice that landlords must give to give tenants more time to plan and seek advice.”

Maclean added that tenants may refer a rent increase to a tribunal where housing professionals determine the rent based on its current market value.

As part of its reforms, the government will update guidance to help renters and landlords access and understand the tribunal process.

But Labour MP Dan Carden warned that the current tribunal system could set rents higher than the landlord had asked for, so would not be offering tenants the promised protection.

Tenants union Acorn has called for tribunals to look at local wages rather than average rents in the area to stop tenants paying more than they can afford.

Maclean added: “Our reforms will also prevent revenge or forced evictions from the small minority of landlords who may use rent hikes to force a tenant out once Section 21 can no longer be used.”

What can you do to challenge a rent increase?

Tenants may want to challenge a rent increase if it is unaffordable or if there are problems with the property that the landlord hasn’t fixed.

There are few options to challenge a rent rise, Anny Cullum, policy officer at Acorn told The Big Issue.

“Talk to your landlord to challenge a rent rise and see if you can come to an agreement; lay out why it’s unjustified, unreasonable or unaffordable for you,” said Cullum.

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If no new agreement can be reached with a landlord, the next step may be to take the rent increase to a tribunal.

Joining a tenants union, such as Acorn, London Renters Union or Greater Manchester Tenants Union, may also help in the fight against a rent hike.

“Whether the law says a rent rise is fair or not, you can still fight it,” added Cullum. “You’re in a much better position if you do this with the rest of your housemates rather than on your own, and you’re much stronger again with other people at your back.

“So join a union, join Acorn. We’ve had success at challenging unfair rent hikes, winning rent back for bad conditions and stopping revenge evictions through using our collective power and by holding landlords and letting agents to account.”

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