What Percentage Can a Landlord Increase Rent? A Strategic for UK Landlords

Moving Beyond Arbitrary Percentages

This is one of the most frequently asked questions we received from landlords—and the answer is far more nuanced than a simple percentage. There is no government-mandated cap of 3%, 5%, or any arbitrary figure in England. What the law does establish is a standard: the proposed new rent must not exceed the open market rent for the property.

As the private rented sector evolves, particularly with the implementation of the Renters' Rights Act 2025 on 1 May 2026, relying on guesswork or outdated rent review clauses is no longer an option. Professional landlords must adopt a strategic, evidenced-based approach to rent increases that balances commercial viability with tenant retention and legal compliance.

This guide explains what the open market rent standard means in practice, what current market data shows, and how to calculate a defensible percentage increase that protects your portfolio's profitability.

The Legal Reality: No Fixed Percentage Cap, But Strict Procedures

Under the Renters' Rights Act 2025, which came into force on 1 May 2026, there is no fixed percentage cap on rent increases in England. A landlord can propose any percentage increase—whether 1%, 10%, or 20%—provided it reflects the current market reality.

However, the proposed new rent must not exceed the open market rent for the property. If it does, the tenant can challenge it at the First-tier Tribunal for a nominal fee of £47. The tribunal will independently assess the open market rent and reduce the proposed increase to what it considers to be the true market rate.

In practical terms, the open market rent is the legal ceiling. A landlord who proposes an increase above this standard is highly likely to have it reduced if challenged, wasting time and potentially damaging the landlord-tenant relationship.

The Section 13 Requirement

The Renters' Right Act fundamentally changed how rent increases are implemented. Rent review clauses in tenancy agreements are now null and void for assured tenancies. Instead, landlord must use the Section 13 process for every rent increase.

This requires serving a formal Form 4A notice, giving the tenant at least two months' written notice before the new rent takes effect. Crucially rent can only be increased once every 12 months (or 52 weeks).

"Under current legislation, the Section 13 process is the only valid mechanism for increasing rent in assured periodic tenancies. Landlords must ensure absolute precision in their paperwork to avoid invalidating the notice"

What Current Market Data Shows

While there is no fixed legal cap, understanding current market trends provides both landlords and tenants with a practical reference point.

According to recent data, average advertised rents outside Greater London have seen more modest growth in 2026 compared to previous years, increasing by approximately 1.6% year-on-year. In Greater London, average advertised rents have increased by around 1.4%.

Based on this data, a reasonable percentage increase in 2026 is broadly in the range of 2% to 5% across most of England. This range reflects current market conditions, inflation (CPIH), and what tenants are generally expecting.

Regional and Sector Variations

Regional variation remains significant. London and the South East may see different growth patterns compared to Northern regions. More importantly, the type of property dictates the acceptable increase:

• Private Rented Sector (PRS): Standard single-let properties generally track closely with regional averages.

• HMOs (Houses in Multiple Occupation): Room rents have largely stabilized, with average UK room rents increasing by just 0.1% year-on-year in early 2026. However, high-demand urban centres may still command higher increases.

• Serviced Accommodation: Short-stay and mid-stay models operate under different commercial pressures, often requiring more dynamic pricing strategies rather than annual percentage increases.

• Social Housing & Supported Living: Social housing rent increases are capped (e.g.,CPI+1%, equating to 4.8% for 2026-27). Supported accommodation often involves complex housing benefits and exempt accommodation considerations, requiring specialist strategic advice.

How to Calculate a Defensible Percentage Increase

Amateur landlords often pick a percentage out of thin air. Professional landlords use a structured, defensible approach. The following methodology helps landlords calculate an increase that is supportable by market evidence.

Step 1: Research Comparable Properties

Search property portals for properties similar in size, type, condition, and location. What rent are these comparable properties achieving today compared to similar properties a year ago? This establishes your open market ceiling.

Step 2: Consider Inflation and Wage Growth

What is the current inflation rate (CPIH)? How does it compare to wage inflation? A fair and reasonable approach is to increase the rent by somewhere between CPIH and wage inflation. Keeping increases below wage inflation ensures the rent remains affordable, reducing the risk of arrears.

Step 3: Assess Your Operational Costs

Have your costs risen? Increased maintenance, insurance, or council tax liabilities support a larger percentage increase. If costs have been stable, a smaller percentage increase may be more appropriate.

Step 4: Evaluate Tenant Reliability

Is the tenant stable and reliable? Have they maintained the property well? A smaller percentage increase that retains a good tenant is often better business than a maximum increase that triggers a void period. The cost of a void period and re-letting fees frequently exceeds the annual benefit of a larger percentage increase.

Step 5: Consider Property Condition and Compliance

Is the property well-maintained? Are there outstanding repairs? Under the Housing Health and Safety Rating System (HHSRS) and minimum housing standards, landlords must ensure properties are safe and compliant. A landlord seeking a larger percentage increase must ensure the property condition justifies it.

Step 6: Set a Defensible Percentage

Combine all these factors to arrive at a percentage that is at or below the market comparable rate, reflects your operational costs, and is sustainable for the tenant.

Step 7: Document Your Reasoning

Keep meticulous records of the comparables you reviewed, the inflation rate, your cost increases, and your strategic reasoning. If the increase is challenged at tribunal, this documentation is your primary defence.

When a Larger Percentage Increase Is Defensible

A larger percentage increase—above the standard 2% to 5% range—can be defensible in

specific circumstances:

• Catch-Up Increases: If rents have not been reviewed for several years, the property

may be significantly below the current market rate. A larger percentage increase—

perhaps 8% to 10%—may be defensible to bring the rent closer to market level,

provided it does not exceed comparable properties.

• Surging Local Demand: In areas where rental demand has grown significantly,

comparable properties may be achieving rents 10% or more above the existing rent.

• Major Improvements: If major improvements have been made to the property (e.g., a

new kitchen, bathroom, or heating system), a larger percentage increase reflects the

enhanced value and improved living standards.

When a Smaller Percentage Increase Is More Strategic

Conversely, a smaller percentage increase—below the 2% to 5% range—may be more

defensible and commercially astute in specific scenarios:

• Fixed or Low Incomes: If the tenant is on a fixed income or benefits, a smaller

percentage increase is more sustainable and less likely to trigger arrears.

• Soft Local Markets: In areas where rental demand is weak and supply is abundant, the

market may not support a significant increase.

• Excellent Tenants: Retaining an excellent tenant with a modest increase is almost

always more profitable than pushing for a maximum increase that results in a costly

void period.

The Legal Requirements Checklist

Based on existing guidance and the Renters' Rights Act 2025, whatever percentage increase is decided, it must comply with the strict legal framework:

1. Frequency: Rent can only be increased once every 12 months (52 weeks).

2. Process: The Section 13 process must be followed. The landlord must use Form 4A and give at least two months' written notice. Rent review clauses are no longer valid.

3. Ceiling: The proposed rent must not exceed the open market rent.

4. No Retaliation: A landlord cannot serve a rent increase notice in response to a tenant

exercising their legal rights (e.g., requesting repairs).

5. Compliance: Ensure all deposit protection rules (TDP schemes), Right-to-Rent checks,

and HMO licensing requirements are fully up to date.

Strategic Rent Management vs. Amateur Guesswork

The difference between an amateur landlord and a professional property operator lies in

strategy. Amateur landlords react to rising costs with arbitrary rent hikes, risking tribunal

challenges, tenant resentment, and costly void periods. Professional operators, like those guided by Essential Management Ltd, use market data, operational cost analysis, and strict legal compliance to implement defensible, sustainable rent increases that protect long-term portfolio yields.

This article provides general guidance only. Always seek independent legal, tax, or financial advice before making decisions affecting your property or business.

Frequently Asked Questions (FAQs)

Can a landlord increase rent without notice?

No. Under the Renters' Rights Act 2025, landlords of assured periodic tenancies must give at least two months' written notice using a Section 13 notice (Form 4A).

What happens if a tenant refuses a rent increase?

If a tenant disagrees with a proposed increase, they can refer it to the First-tier Tribunal

before the Section 13 notice expires, at a cost of £47. The Tribunal will determine a rent based on comparable local market rents.

Is a Section 13 notice needed for every rent increase?

Yes. For assured periodic tenancies in England, you must start the process by serving a Section 13 notice, even if you plan to negotiate a different amount with your tenant.

Can rent be increased during a fixed-term tenancy?

Under the Renters' Rights Act 2025, it is no longer possible to create a fixed-term assured tenancy in England. All assured tenancies are now rolling periodic tenancies, meaning rent increases must follow the Section 13 process.

What is a fair rent increase percentage?

There is no fixed percentage. A fair increase is one that reflects the open market rent for a comparable property in similar condition, taking into account inflation, wage growth, and tenant affordability.

Need Strategic Guidance for Your Portfolio?

Whether you are navigating the complexities of the Renters' Rights Act, managing HMO compliance, or seeking to optimise the yield of your private rented sector portfolio, professional guidance makes a significant difference. Our team provides the strategic insight required to operate successfully in today's highly regulated property market.

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 landlords in

calculating and implementing defensible, compliant percentage increases.