What Is a Reasonable Yearly Rent Increase in 2026? A Guide for UK Landlords
- Amanda Woodward
- 3 hours ago
- 7 min read
Navigating Rent Increase in a Changing Market
For UK landlords, the question of what constitutes a reasonable yearly rent increase is both a legal necessity and a strategic imperative. The law sets the framework—under current legislation, the proposed new rent must not exceed the open market rent— but what does "reasonable" mean in practice?
This guide sets out what current market data shows about reasonable rent increases, how to calculate a defensible figure, and how to balance landlord and tenant interests in a way that works for both parties. As the sector prepares for the Renters' Right Bill and the abolition of Section 21, establishing a robust, fair, and compliant rent review strategy is more critical than ever.
What Current Market Data Shows
The most straightforward way to understand what is reasonable is to look at what the market is actually doing.
Zoopla's June 2026 Rental Market Report shows average rent for new lets at £1,321 per month—up 2.1% year on year. This represents an increase of approximately £30 per month on the average property.
ONS data for April 2026 shows a slightly higher figure of 3.5% annual growth across all tenancies—both new lets and existing tenancies being reviewed.
Rightmove's forecast for 2026 suggested approximately 2% annual growth, though this varies significantly by region and property type.
Regional variation is significant. London and the South East are seeing higher growth—in some areas, 4% to 6%—due to constrained supply and strong demand. Northern regions and areas with softer demand may see increases of 1% to 2%.
Property type matters. HMOs and serviced accommodation in high-demand areas may see higher increases than traditional family homes in softer markets.
Based on this data, a reasonable yearly rent increase in 2026 is broadly in the range of 2% to 5% across most of England. This range reflects current market conditions and what tenants are generally expecting to see.
The Inflation Argument
Some landlords are argue that rent increases should track inflation—the rate at which the general price level of goods and services rises. If inflation in 4%, the argument goes, a 4% rent increase is reasonable because it simply maintains the landlord's purchasing powers.
There is logic to this argument. A landlord's costs—maintenance, insurance, council tax, mortgage interest—do rise with inflation. A rent increase that tracks inflation ensures the landlord's real income does not fall.
However, inflation is not the only factor that determines a reasonable rent increase. The market rent—what tenants are willing to pay—is equally important. In periods when inflation is high but rental demand is weak, a rent increase that tracks inflation may exceed what market will bear. Conversely, in periods when demand is strong and supply is constrained, the market may support increases above inflation.
The practical approach to use inflation as a reference point, but to benchmark against actual market comparables to ensure the proposed increase is defensible.
The Tenant Affordability Factor
A reasonable rent increase is one that a tenant can afford without undue hardship. While the law does not require landlords to assess affordability—the legal standard is simply the open market rent—practical considerations suggest that affordability matters.
A tenant who cannot afford the new rent is at risk of falling into arrears. Arrears create conflict, damage the relationship, and may eventually lead to possession proceedings. A landlord who wants to avoid this outcome consider whether the proposed increase leaves the tenant with enough income for other essentials—food, utilities, transport, children.
For tenants on fixed incomes—pensioners, those on benefits—a large rent increase may be particularly difficult. A tenant on Universal Credit, for example, may have their housing element capped, meaning rent increase is not matched by an increase in benefit. The tenant must cover the increase from other income or savings.
A reasonable approach is to consider the tenant's circumstances. A tenant with stable employment and growing income may be able to absorb a 5% increase. A tenant on a fixed income may struggle with anything above 2% to 3%.
How to Calculate a Reasonable Increase
The following approach helps landlords calculate a reasonable yearly rent increase that is defensible and sustainable.
Step 1: Research the market. Search Rightmove and Zoopla for comparable properties in the same area. What are similar properties asking? What are they achieving? Record this data.
Step 2: Consider inflation. What is the current inflation rate? Is it higher or lower than the market growth rate? Use this as a reference point.
Step 3: Assess your costs. Have your costs risen? If maintenance, insurance, or council tax have increased, this supports a larger increase. If costs have been stable, a smaller increase may be reasonable.
Step 4: Consider the tenant. Is the tenant stable and reliable? Have they been a good
tenant? If so, a smaller increase that retains them may be better than a maximum increase that triggers a move.
Step 5: Consider the property condition. Is the property well-maintained? Are there
outstanding repairs? A landlord who wants to justify a larger increase should ensure the
property is in good condition.
Step 6: Set a defensible figure. Combine all these factors and arrive at a figure that is at or below the market comparable rent, reflects current conditions, and is sustainable for the tenant.
Step 7: Document your reasoning. Keep records of the comparables you reviewed, the inflation rate, your cost increases, and your reasoning. If the increase is challenged at tribunal, this documentation supports your position.
When a Larger Increase Is Reasonable
A larger yearly increase — above the 2% to 5% range — can be reasonable in specific
circumstances.
If rents have not been reviewed for several years, a catch-up increase may be justified. A property whose rent has not been reviewed for three or four years may be significantly
below the current market rate. A larger increase — perhaps 8% to 10% — may be reasonable to bring the rent closer to market level.
If local demand has grown significantly, the market may support a larger increase. In
areas where rental demand has surged — due to new employment, a university expansion, or other factors — comparable properties may be achieving rents 10% or more above the existing rent. In such circumstances, a larger increase is reasonable and defensible.
If major improvements have been made to the property, a larger increase may reflect
the improved value. A landlord who has invested in new kitchen, bathroom, or heating
system may reasonably increase rent to reflect this improvement.
If the property has been significantly undervalued, a catch-up increase is reasonable. A
landlord who has kept rents artificially low to retain a tenant, and who now needs to bring
the rent to market level, may reasonably implement a larger increase.
In all these circumstances, the key is that the proposed increase must be supportable by
reference to comparable properties or the landlord's investment in the property. It should not be simply the landlord's desire to maximise income.
When a Smaller Increase Is More Reasonable
Conversely, a smaller increase — below the 2% to 5% range — may be more reasonable in specific circumstances.
If the tenant is on a fixed or low income, a smaller increase is more reasonable. A tenant
on benefits or a fixed pension may struggle with a 5% increase. A 2% to 3% increase is more sustainable.
If the property has been difficult to let, a smaller increase that retains the current tenant is more reasonable than a maximum increase that triggers a void.
If the local market is soft, a smaller increase may be more realistic. In areas where rental
demand is weak and supply is abundant, the market may not support a 5% increase. A 2%
to 3% increase is more reasonable.
If the tenant has been excellent, a smaller increase that retains them is often better
business than a maximum increase that triggers a move. The cost of a void and re-letting
often exceeds the annual benefit of a larger increase.
The Legal Framework: UK Compliance Essentials
Whatever increase is decided, it must comply with the legal framework.
Rent can only be increased once per year. The increase must not occur more than once in any 12-month period.
The Section 13 process must be followed. The landlord must use Form 4A and give at
least two months' written notice.
The proposed rent must not exceed the open market rent. If it does, the tenant can
challenge it at the First-tier Tribunal.
No retaliation is permitted. A landlord cannot serve a rent increase notice in response to a tenant exercising their legal rights.
Key Takeaways
A reasonable yearly rent increase in 2026 is broadly in the range of 2% to 5% across most of England, based on current market data. Inflation is a useful reference point but should not be the only factor — the market rent is equally important. Tenant affordability should be considered, even though it is not a legal requirement. Larger increases — 8% to 10% — may be reasonable if rents have not been reviewed for several years, local demand has grown significantly, or major improvements have been made. Smaller increases — 1% to 3% — may be more reasonable for tenants on fixed incomes or in soft markets. Whatever increase is decided must comply with the Section 13 process, occur no more than once per year, and not exceed the open market rent.
Frequently Asked Questions (FAQs)
What is the maximum rent increase allowed by law in the UK?
There is no fixed statutory cap on rent increases in England, but the proposed rent must not exceed the open market rent for similar properties in your area. If a tenant believes the increase is unfair, they can challenge it at a First-tier Tribunal.
How often can a landlord increase the rent?
Under a periodic tenancy, a landlord can typically only increase the rent once every 12 months using a Section 13 notice.
Does the Renters’ Rights Bill affect rent increases?
The Renters’ Rights Bill aims to prevent excessive, above-market rent increases designed to force tenants out. It reinforces the principle that rent increases must align with the open market rate and can only occur once a year.
Do I need to give notice for a rent increase?
Yes. If using a Section 13 notice, you must provide at least two months’ written notice before the new rent takes effect.
Can a tenant refuse a rent increase?
A tenant can negotiate with the landlord. If an agreement cannot be reached, they can challenge a Section 13 increase at a tribunal, provided they do so before the new rent is due to start.
Need Help With Reasonable Rent Reviews?
Whether you are a landlord looking to implement a reasonable rent increase, or an investor wanting to optimise your portfolio's performance while remaining compliant, professional guidance makes a significant difference. If you’d like to explore how this applies to your portfolio, our team can guide you.
Speak with our team on WhatsApp: +44 330 341 3063
Or visit comfortandco.uk to learn how professional management supports reasonable,
sustainable rent review processes that work for both landlords and tenants.
Disclaimer: This article provides general guidance only. Always seek independent legal, tax, or financial advice before making decisions affecting your property or business.
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