Life’s expensive. Inflation stubbornly above 2% tells us goods continue to become more costly. It’s not just tenants who are feeling the financial pain. Landlords are also paying more for the products and services they need to run a buy-to-let.
The issue is more pressing for landlords whose buy-to-let loans are due to expire soon, with Revolution Brokers claiming almost 2 million deals on fixed-rate mortgages will end during 2025. For many, repayments will double and extra money needs to be found.
Increasing the rent is the most logical way to cover costs in the current climate but what happens if your tenant refuses the new rate? Can they point blank reject a hike?
The answer is yes, a tenant can refuse a new, higher rent and for good reason. Monthly rent is at an all-time high and research suggests renters are struggling to keep up with payments. In a recent YouGov survey for Shelter, almost 75% of workers living in private rented housing said they struggle to pay their rent.
LandlordBuyer understands getting a tenant to accept a higher monthly rent can be the difference between turning a profit or breaking even and making a loss or even going into debt, so here are 6 steps you can take if your tenant refuses a rent increase:
- Negotiate: the art of negotiation isn’t reserved exclusively for property sales. There should be a strategy behind pitching a rent increase, with some wiggle room for compromise. A tenant may be happy to meet you in the middle of their current rent and a higher one, so plan accordingly.
- Keep the rent the same: landlords should consider whether it’s worth losing a good tenant – one that pays on time and looks after the property – over a rent rise. Evaluate whether holding the rent at the same value is a better short- to medium-term strategy.
- Improve the property: tenants are often advised to challenge a rent increase if the condition of the property is poor. Renters may be more encouraged to comply with a rent increase if repairs and updates are made.
- Apply to a tribunal: if you are convinced your rent increase is legitimate and justified, a landlord can ask the First-tier Property Tribunal to make an impartial decision. The tribunal will look at the market or rents of similar properties in the local area, with the landlord able to provide evidence of comparable rents. Any decision can be appealed to the Upper Tribunal (Lands Chamber).
- Start the eviction process: although an uncomfortable thought, sometimes a landlord is left with no option than to replace a tenant who won’t pay a higher rent with someone who will. At present, a landlord can use a Section 21 notice to start the process but it is unclear how long this ‘no fault’ eviction option will be open to landlords. The Renters’ Rights Bill may become law as soon as March 2025 and with it will be the end of Section 21 notices.
- Remarket your property: if you have successfully ended a tenancy, there is nothing stopping you from remarketing the property with a new, higher rent. It’s wise to get advice from a local agent to establish whether there is demand at an upwardly-revised price point.
Can’t raise the rent?
As LandlordBuyer has previously discussed, you may be among a group of landlords who are unable to raise the rent. If you have not served the prescribed information, have an invalid EPC or have already raised the rent once in a year during a periodic tenancy, you may find your buy-to-let in an untenable situation during 2025.
LandlordBuyer continues to support property investors, accidental landlords and portfolio owners as they navigate challenging buy-to-let conditions. If you are receiving push back from a tenant or the threat of a rent increase challenge through a tribunal, please contact our team.
Selling your property with tenants in situ can be the simplest way to outmanoeuvre a rent value issue. LandlordBuyer will make you a cash offer for your buy-to-let – no need to evict your tenants