How to increase rent in 2024

How can landlords handle rent increases in a fair way that balances their needs with those of their renters, as well as complying with the law in England?

This is the approach of a good landlord, which recognises that private landlords are running a business, and not providing social housing.

In writing this post, I draw on both my experience as a lawyer, and as a self-managing landlord who handles my own rent increases myself.

Last updated: 20 September 2024

What are rents doing in 2024?

There were a lot of headlines about the high rent increases in 2023, particularly for new tenancies, as the private rented sector adjusted to living to higher inflation, higher interest rates and a shortage of rental properties.

The shortage has been due in part to landlords leaving the PRS, and there has also been less turnover of renters. First-time buyers have become priced out of the property market with the increase in interest rates. They’ve been staying put in their rental properties while they save. Also, hasn’t been the usual churn of renters, as the increase in asking rents is causing many to stay put.

After a long period of stable rents, low interest rates and low inflation, rents rocketed in 2022 and 2023.

At the beginning of the 2024, Rightmove and Zoopla predicted a “major slowdown” in 2024 due to affordability, and expected rent on new listings to increase by only 2-3% in London in 2024, and by 5-9% in the rest of the country.

How much is the average rent increase in 2024 across the UK?

We are now half-way through the year, the September ONS data, which combines data for new and existing tenancies, shows that the average rent increase across UK in the 12 months to August 2024 of 8.4%.

Rent increased to an average of £1,327 (8.5%) in England, £752 (8.5%) in Wales, and £969 (7.6%) in Scotland, in the 12 months to August 2024. In Northern Ireland, average rents increased by 9.9% in the 12 months to June 2024.

Rightmove’s Q2 2024 data shows that advertised rents outside of London are still rising fast – they rose 7% higher than last year (£1,231 pcm), to a new quarterly record of an average of £1,314 per calendar month. The rate of increase has slowed down in London from the peak of 16% in 2022, to 4% in the 12 months to June 2024. This is an average of £2,661, compared to £2,567 last year.

Average rent for new tenancies in Q2 2024

When referring to average rent increases for new tenancies, the amount differs between single let tenancies and HMO rooms.

What was the average rent increase for new single let tenancies in Q1 2024?

According to the Q2 2024 data from Rightmove, the average asking rent for new single let tenancies in the UK PRS excluding Greater London increased by 7% (£1,314) per calendar month in the twelve months to June 2024. This is considerably more than CPI inflation, which was 2.0% in the 12 months to June 2024.

This is an average increase in rent of almost £391 from £923, when compared to pre-pandemic mid-2019.

It’s even worse in Greater London where average rents are now £2,661 pcm, up 4% on a year ago. This has slowed down from the increase of 12.1% in the 12 months to September 2023.

According to Rightmove, the number of enquiries each property receives from would-be tenants is now 17. This is down from 26 in 2023, but is more than double the 8 in Q2 2019.

However, as you can see from the table below, the rate of increase varied considerably across England, Scotland and Wales in 2023. The highest average annual rent increase for new tenancies is an eye-watering 14.5% in Scotland. The region with the lowest percentage increase is Wales at 5.9%, followed by the South West at 7.8%.

How much are room rents increasing for HMOs in 2024?

According to the Q2 2024 data from SpareRoom, the average rent including bills for an HMO room in the UK outside of London is now £740. This is an increase of 5% on Q2 2023, and has stayed the same since Q1 2024.

In London, the average rent for a room in an HMO is back under the £1,000 pcm barrier, dropping to an average last month of £983 from £1,014 per room in Q4 2023 and £995 in Q1 2024. The increase in the 12 months to Q2 2024 in London was only 1%.

Spareroom data for Q2 2024 shows the market in London has slowed down for HMOs as rents decreased in multiple London postcodes. There isn’t one region in England that now has double digit rent inflation.

Click here for a comparison between average rents for single lets and HMOs in Q1 2024.

How much can English private landlords increase the rent by in 2024?

How much can landlords increase the rent by? In England, there are no legal limits on the amount a private landlord can increase rents in the private rented sector. (There’s a cap of an increase of 7.7% for social housing in 2024-25). This means that landlords have the freedom to set the rent to whatever level they think fit. That said, if it’s above the market rent, the tenant can challenge the rent increase in the First-tier Tribunal. Click here for more on the First-tier Tribunals.

Also, there’s always the practical cap of affordability and competition. If the increase is more than the market rent for the area, renters are likely to vote with their feet and leave. If the rent is more than they can afford, even if it’s the market rent, they’ll probably leave and find somewhere smaller, or in a cheaper location.

Part of being a good landlord is acting reasonably and hiking the rents up by a large amount in one go for existing tenants is simply not reasonable. Just because the law allows you to do something, doesn’t mean it’s the right thing to do.

What is a fair and reasonable rent increase in the UK in 2024?

A fair and reasonable approach is for private landlords to increase the rent by somewhere between CPIH and wage inflation, depending on whether the rent is behind the market for a property of that condition in the area. I personally use the lower of CPIH and wage inflation, and tend to round it down to the nearest £5.

If landlords don’t increase rent, it’s the same of reducing it in real terms, and can lead to “rent shock” when the landlord suddenly increases it in one go, which is not good for tenants.

CPIH is the most comprehensive measure of inflation. As well as including the “shopping basket” of the Consumer Price Index (CPI), CPIH includes the costs associated with owning, maintaining and living in one’s own home, known as owner occupiers’ housing costs. It is also likely to reflect changes to the landlord’s costs.

According to the ONS, CPIH inflation in the 12 months to August 2024 rose by 3.1%, the same as the 12 months to April 2024.

With respect to wage inflation, ONS data released in September 2024 showed that annual growth in regular pay (excluding bonuses) in July 2023 was 5.1%, and increase in real terms after CPIH.

This means that a rent increase of up to 5% is reasonable for existing tenancies in 2024, assuming that is not more than the market rent. However, this will depend on what rents are doing in your area, and how far you are from the market rent.

However, your rent is not far behind the market, an increase of CPIH inflation might be more appropriate.

Keeping rent increases below wage inflation means the increase is more likely to be affordable for renters, and less likely to end up causing them to fall into arrears.

7.7% is the cap for rent increases for social housing for 1 April 2024 – 31 March 2025.

It’s best to find the right balance of improving your return with smaller rent adjustments each year, rather than doing it all in one go, which can cause renters considerable hardship.

How often can landlords increase rents?

The rule of thumb for the frequency of rent increases is once a year. But this depends on the type of tenancy, whether there’s a rent review clause in the tenancy agreement and whether the tenants agree.

As the law currently stands, the frequency of rent increases for the types tenancies and contractual terms in England is as follows:

1. Rent review clause

If there’s a rent review clause in the tenancy agreement, either fixed term or contractual periodic tenancy (where the tenancy agreement states it is periodic), the landlord will need to follow that clause and they cannot use a Section 13 notice.

Usually, a rent review clause would refer to reviewing the rent once a year.

2. How often can landlords increase rent during a periodic tenancy?

Landlords don’t normally increase the rent more than once a year under a periodic tenancy. However, technically, they can increase the rent more than once a year if the tenants agree.

Sometimes landlords and tenants agree to have two increases in 12 months as a way of phasing a rent increase in two stages, if the rent has fallen behind the market.

If they use the Section 13 process, it cannot be more than once every 12 months.

3. Can landlords increase rent in a fixed-term tenancy?

Landlords cannot put up the rent in a fixed-term tenancy, unless the tenants agree to amend the tenancy agreement or the tenancy agreement contains a rent review clause (this is popular for longer fixed-term tenancies).

If the tenants don’t agree or if there’s not a rent review clause, the increase will need to wait until the end of the fixed term, and negotiate it as part of the renewal or when the tenancy becomes periodic, or issue a Section 13 notice.

4. Can landlords increase rent twice in 12 months?

It’s possible to increase rent twice in 12 months if the renewal fixed term periods are for 6 months. The first rent increase would be in the first 6 month renewal and the second increase in the second 6 month renewal. In other words, a 12 month fixed term tenancy can be ‘renewed’ by a 6 month fixed term, followed by another 6 month term. A “renewal” for a 12 month fixed term tenancy doesn’t need to be for the same length of time.

If a landlord does wish to use two-stage method, they should be open with their renters about it, and explain it’s to phase the increase.

5. How often can landlords increase rent using a Section 13 notice?

If the landlord and tenant can’t reach agreement (where there is no rent review clause), the landlord will need to use a Section 13 notice to increase the rent.

A landlord can only use a Section 13 once every 12 months, and it can’t be during a fixed term period.

The different ways landlords can increase rent in England

It’s currently relatively straightforward for landlords to increase rents in England, so long as they follow the relevant process correctly.

Here are the three different ways you can do it, although the choice between depends on whether or not the assured shorthold tenancy agreement (AST) has a rent review clause.

1. Increasing rent with a contractual clause

The first thing to do is to check the AST to see if it has a clause like the one above, which would give the landlord the contractual right to increase the rent. Some, but not all, ASTs, have these rent review clauses. They make increasing the rent straightforward, but they must be followed to the letter.

As an example, the clause above allows the landlord to increase the rent by a set 5% each year. The clause was in Leaders’ standard AST when I let a property through them in 2019. Although this clause gave me the right to increase the rent by 5%, I chose not to increase the rent. Like many other landlords during the pandemic, I kept the rent the same.

This clause is particularly restrictive and clauses can certainly be more flexible. For instance, up to 5% rather than a flat 5%, or up to the rate of CPI inflation.

The landlord cannot use a Section 13 notice if there is a rent review clause.

2. What can landlords do if the rent review clause is too low?

With CPI inflation having reached double figures in 2023, and rental inflation increasing by a similar rate, a rent review clause with a cap of 5% prevented landlords from increasing rents to the market for existing tenants.

This is because landlords can’t increase the rent by more than the amount stated in the rent review clause unless the tenants agree. One way to change the clause is to ask the tenants to enter into another agreement at the end of the fixed term. If the tenants “renew” for another fixed term, and the new AST doesn’t include the rent review clause, the landlord will be able to increase the rent when the fixed term contract expires, as the rent review clause will not apply.

Landlords should be open and transparent with renters about this, and explain why they need to increase the rent above the amount in the rent review clause.

Rent review clauses can apply to both fixed-term and contractual periodic tenancies. However, they will no longer apply if the tenancy becomes a statutory periodic tenancy. Many ASTs which do have rent review clauses will have provisions which turn the fixed term into a contractual periodic tenancy, so that doesn’t necessarily help.

Finally, if the AST has a rent review clause, the landlord cannot use a section 13 notice to increase the rent.

3. Can a landlord put up rent by agreement with their tenants?

Yes. If there isn’t a rent increase clause in the agreement, the landlord (or letting agent) can try to agree the level of the with the tenant.

The more reasonable the increase, the easier it will be able to reach an agreement. They’ll probably understand that landlords are affected by rising costs and interest rates. However, keeping the increase around wage inflation is likely to be more palatable for affordability reasons.

If your increase is below wage or CPI inflation and average local rents for new tenancies, you should point this out. Explain that you want to find the balance between what’s affordable to the renters and what’s affordable to you.

As long as your proposal is reasonable and realistic, they’ll probably be relieved it’s not as high as the figures they’ve seen in the media.

You can document this by sending them a letter to countersign, which says the parties agree the rent will increase to £x (an increase of y%) with effect from z date. The date of the rent increase should align with the usual rent payment date. Once they do pay the increased amount, they have accepted the increase. However, do be aware that if they change their mind and ignore the letter, you’ll need to follow the Section 13 Notice procedure to make it binding.

4. Increasing rent using a Section 13 Notice

If a landlord isn’t able to agree on a rent increase with their tenants, it’s not during a fixed term tenancy, and there isn’t a rent review clause, they can serve a Section 13 notice on the tenants. A Section 13 notice can only be served once every 12 months. The Section 13 notice sets the new rent, unless it’s successfully appealed by the tenant at a rent tribunal (see below).

If the rent is paid on a monthly basis, the landlord needs to give a month’s notice under Section 13, and start the new rent at the beginning of a rental period. For example, if the monthly periodic tenancy starts on 2nd of each month to the 1st of the next, the date on the notice must be the 2nd. It’s the periodic tenancy date which is key, not the date on which the rent is paid. If the correct date isn’t used, the notice will be invalid.

The landlord needs to serve a Section 13 notice using Form 4. 

5. How much notice do landlords need to give to increase the rent?

Landlords need to give at least one month’s notice of a rent increase a monthly, weekly or fortnightly tenancy one month’s notice of the intended increase is required. For a yearly tenancy, a period of six months’ notice is required before the increase can be put into effect.

The date on which the new rent is required must not be earlier than a year after the date when the rent was last increased using a Section 13 notice. If a new tenancy is in place, then the date should not be any earlier than a year after the date when the tenancy started.

The rent increase must begin on the same day of the month that the tenancy started, not another day of the month. For example, if the rent for the tenancy is due on the 28^th of every month then the new increased rent should also be due on the 28^th of the month.

How should landlords document the new rent?

There are various ways to confirm the new rent when it’s agreed with the tenant, but there isn’t a rent review clause in the tenancy agreement:

• For a periodic tenancy or where there is a tenancy which has a rent review clause, landlords can issue an addendum to be signed by the tenants to show it’s agreed. This can be very simple and state that the parties have agreed that the rent will increase to £x from y date. It can also be done in a letter.
• The safest approach is for landlords to use a Section 13 notice (Form 4) even if the rent is agreed, so long as it’s not during a fixed term. The tenancy needs to be periodic for a Section 13 notice and doesn’t need signing by the tenant. It does look quite officious, which is why I either use an addendum or issue a new tenancy agreement, depending on whether the tenancy is periodic.
• For a fixed term tenancy that is being renewed with a new rent, the simplest approach to issue a new tenancy agreement with the new rent for the new term. I use the NRLA tenancy agreement for this.

If there’s a rent review clause in the tenancy agreement, follow the process that’s in the agreement. It will probably refer to a Rent Review Notice (as per the example above).

Can tenants appeal or challenge a Section 13 rent increase notice?

If the tenant doesn’t agree to the rent proposed in the Section 13 notice, they have the right to challenge it by referring the notice to the First-tier Tribunal. They must do this before the date the rent increase is due to start.

The renters need to use Form Rent 1, which asks form detailed information on the property (rooms, facilities, type of property, furniture, repairs). Click here to download Form Rent 1 from the GOV.uk website.

In setting a rent, the tribunal will assess what rent the property would reasonably achieve if it were let on the open market under a new tenancy on the same terms. This means that the tribunal may set a rent that is higher, lower or the same as the proposed new rent. It’s therefore a risk for the tenants to challenge a rent that is below market as the tribunal might set a higher rent.

The tribunal can take into account any repairs that the landlord should have taken care of. Additionally, they can take account of the value of any improvements the tenant has made themselves.

The tenant will still need to keep paying the old rent until the tribunal makes a decision.

So long as the proposed rent increase is no more than the average for a similar property in the area, the tribunal is unlikely to decrease the rent.

Final Thoughts

As the law stands in England, landlords may increase rents so that they keep up with the market rent for that type of property in the locality.

However, the worst approach for a landlord is to put up the rent by more than inflation in one go. Even if it’s to catch up on what has become below market rent. This is likely to be difficult for the renters to manage. It’s also not a good way to treat renters.

Rent increases are never going to be popular, but they’re necessary in periods of high inflation. However, it’s fairer to renters to do them gradually over time, rather than in one big go. Good landlords come up with a figure that’s fair and reasonable for them and their tenants, and follow the process correctly.