A Landlord’s Guide to Rent Increase: Issuing a Section 13 Notice
UK landlords in 2023 are facing significant challenges that are affecting their profits. Factors such as higher mortgage costs, inflation in maintenance materials and tradespeople, and rising expenses are squeezing their profit margins. But for experienced landlords who understand the market and legal procedures, these challenges can become opportunities. It's important to note that the UK rental market is highly competitive right now, with high demand for rental homes, and rents increasing at record levels. Successful landlords who are proactive and well-informed can use these conditions to their advantage. By making strategic decisions like raising rents and following proper legal procedures, such as issuing a Section 13 notice, landlords can potentially boost their profits in this high-demand market.
Why Are Rents Rising?
Five key reasons behind the current surge in rental prices:
- Increased landlord costs: Rising mortgages, insurance, and maintenance costs are driving landlords to increase rents.
- Inflation: The cost of living has gone up, and rent prices are following suit.
- Supply and Demand Imbalance: The UK is currently experiencing a significant housing shortage, with demand for rental properties far outstripping supply. This imbalance is driving up competition among renters, which in turn is contributing to the surge in rental prices. Frankly, plans to ‘tackle the housing crisis’ like this pearl from Michael Gove fail to scratch the surface of the issue. After the government’s failure to reach their own homebuilding targets since they began, we’re not expecting the deficit to be fixed any time soon. No wonder
- Legislative changes: New laws and regulations have added additional expenses for landlords. One example is that mortgage costs are no longer tax deductible for UK landlords (if the property is in their own name).
What is a Section 13 Notice?
A Section 13 rent increase notice is a legal document that a landlord in the UK can use to raise the rent of their property. This notice is typically used when a tenant's fixed-term lease has ended (unless otherwise stated in the tenancy agreement), and they are now on a month-to-month or week-to-week lease, also known as a periodic tenancy.
When to Issue a Section 13 Notice
As a landlord, you may need to increase the rent for your assured shorthold or periodic assured tenancies. However, it's crucial to follow the rules to protect your tenants and ensure a legal and fair process.
Here's what you need to know:
Frequency: You can only issue a Section 13 notice to increase rent once every 12 months. This regulation prevents sudden and frequent rent increases, prioritizing tenant protection.
Minimum Notice: The notice period for rent increase depends on how often rent is paid. If it's paid monthly, you must give at least one month's notice. For weekly payments, a week's notice is sufficient.
Timing: A Section 13 notice can only be served during a periodic tenancy, meaning after the fixed term has ended. However, you can issue one during the fixed term for assured or assured shorthold tenancies, as long as the rent increase takes effect after the fixed term ends.
Remember, tenants have the right to challenge a proposed rent increase at a tribunal if they disagree.
What is the Most a Landlords Increase Rent in the UK?
There's no fixed percentage to keep to, the increase must simply be fair and realistic. Keep it in line with average local rents for similar properties and you’ll be fine.
Tenants can challenge if they disagree by referring the matter to the First-tier Tribunal (Property Chamber). They'll assess fairness based on factors like property condition and local rental rates.
How to Issue a Section 13 Notice
1. Decide on the New Rent:
Research local market rents for similar properties to ensure your proposed increase is fair and competitive. You can find this information by searching
Looking for reliable rental market data in the UK? Look no further! Here are some top sources to find the best buy to let properties for high rental yields:
Office for National Statistics (ONS): Official data on private rental prices in different regions is released here. Whilst this is perhaps the most reliable source, bear in mind that the data is always two months behind.
Zoopla: Discover average rents and yields across various areas of the UK through their comprehensive rental market data. Keep track of rental price changes with their rental index.
Rightmove: Find rental data on their website, including average rents for different property types and areas. Stay updated on rental market trends with their insightful rental report.
HomeLet: Access data on UK rental prices, including average rents and trends across regions. Keep an eye on rental price changes with their rental index.
You must give at least one rental period's notice, up to a maximum of a year.
3. Use the Correct Form
In England, use Form 4, and in Wales, use Form No.1. These forms can be downloaded from the UK government's website.
4. Send the Notice
Send the notice by recorded delivery or hand-deliver it to ensure the tenant receives it.
If the tenant agrees to the increase, they start paying the new rent from the date specified in the notice.
How to Maximise Your Rental Income
Although UK landlords have been facing many challenges affecting their profits in recent years, they can still use existing conditions to their advantage. Issuing a Section 13 notice is one option for landlords to increase the rent of their properties. Before landlords can issue a Section 13 notice, it's important that they research local market rents and provide proper notice using the correct form, sending it by recorded delivery or hand-delivering it.
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