Tenants always think their rent is too high and of course, landlords want to take every opportunity to maximise their investment returns.
There is Legislation about the timing of rental increases, but if a tenant is on a periodic lease, the rent can be increased once every six months, after giving two months' notice to the tenant.
If the tenant is on a fixed-term tenancy, such as a 12-month lease, then the rent cannot be increased within a fixed term tenancy unless a clause had been put into the current lease agreement.
If tenants find the proposed rental increase unreasonable, they can challenge it.
It is important that landlords consider whether a higher rent will be more beneficial than having tenants stay in their property for longer, yet keep in mind that rising rents are a part of a healthy rental market and tenants don't expect to pay the same amount for their home year after year.
Know what the market rent is. How does it compare to what the tenant is currently paying? The rent achievable and decision to increase it can greatly depend upon supply and demand at that time of year, as well as local market conditions.
Changing tenancies is time-consuming and has additional costs attached such as loss of rent during the vacancy, re-letting fees and marketing charges – the total of which could be more than the proposed extra rent would bring over six months or a year.
Obviously, extended periods of vacancies are not what any landlord wants for their investment property, so always keep in mind that long-term tenants who pay their rent on time and look after your property well are really the type of people that you want in your property. It is important however, to not fall behind in the current market, so rent increases are generally encouraged annually.