If you are a private buy-to-let landlord, it is likely that you have considered increasing rental prices for your properties in 2023.
With rental demand increasing and supply of new properties decreasing, rental prices are being pushed up across the country. If you are a private buy-to-let landlord, it is likely that you have considered increasing rental prices for your properties in 2023.
But can your tenants cope with these rising prices? We’re here to talk you through how to introduce rental increases with minimal consequences to your tenants.
You are not alone
Research suggests that 62% of UK landlords will be forced to raise rental prices by at least 10% within 2023 based on current market conditions. You may be in a situation where you are forced to increase the monthly rental prices on your buildings in order to protect your yields.
Research by Aldermore Bank found that landlords are conflicted about increasing rental prices during a cost of living crisis; with 64% of landlords stating that they would be worried about their tenants being able to keep up with increased monthly payments.
Whilst unplanned rental increases are less than ideal for tenants and landlords alike, ensuring you implement your new rental prices following a fair and legal procedure will minimise the impact on your tenants.How to fairly increase your rental prices in 2023
- Your tenancy agreement should include how and when rent prices will be reviewed. You are responsible for following the pre-agreed process for increasing rent
- If you want to increase rental prices by more than previously agreed, you must seek permission from the affected tenants
- Rental increases must be fair and realistic in consideration of local rental prices
- Increase the monthly rent of a property when the lease is renewed
- Agree a rental increase with the tenant where the tenant must provide a signed written agreement of the rental increase
- Use a landlord notice to increase rent after a fixed term has ended
Whilst buy-to-let landlords are facing significant short-term challenges, it’s best to continue thinking about your investments from a long-term perspective.
Aldermore’s study revealed that 54% of landlords still feel optimistic about the future, despite current challenges - it continues to be widely accepted that buy-to-let investments are still a stable way to make a good income.
By making intelligent investment plans, avoiding panic-decisions on current rentals and preparing properties for the future (such as improving energy efficiency), you can still make highly successful buy-to-let investments and protect your profits.
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