Landlord putting up rent by 25%

[Tenancystress]

I’m in a flat spin. We have rented a place for the standard rate for the area less than a year ago and the landlord has now said they want to make a 25% increase in rent due to rising costs. No date attached so I assume they mean that they will want me to start paying it by the end of this month. We’ll have to be paying it out of savings. I’m unable to work due to ill health.
I know that we will need to move out and find another cheaper place as the solution but it’s really not easy to do and we’ve only just moved. I don’t know how moving will affect school and the kids. We have been good tenants.
Is it really possible that anyone’s mortgage could have gone up by 25%? And is there any standard notice period for bringing in rent rises that I can ask for? Can I negotiate and offer to pay the exact difference of their mortgage rising? Citizens’ advice bureau? They’re not professional landlord just a single place they rent out so they may not know the rules. Please be gentle I am in a total panic.

My understanding is that they have to give you three months notice and that any increase can only take place annually from when you signed a contract. You are not obliged to agree to any increase, you are legally allowed to start a negotiation.

Exactly. Then need to issue you with a section 13 rent increase notice. And that is only if there is a break clause.

This is a fair point, Im guessing the poster was maybe on interest only and siphoning all the profit instead of using it to pay down the mortgage. Zero sympathy for the debt monkey. All my sympathy goes to his Tennants.

Please join Tenancy Matters UK and make a post (you can do this anon). Many of the admins on there are housing professionals or work in allied sectors so will give specific and accurate advice, although many of the replies here also say what I think they would (can only be I created during the fix term if you agree or there is a rent review clause, also needs to be given on a section 13 notice stating increase etc). They also advise not to use CAB for housing issues but to keep trying Shelter.

My mortgage has gone up more than 25% this month so it’s certainly possible

Im the same. My btl mortgage has gone up so much I was going to have to raise rents by 70%. My HMO rent charge is much lower than local pricing as I have had great long term tenants so havent raised rents in 4 years so potentially some of the 70% could have been mitigated with annual increases but long story short, I am in Scotland so couldn't raise the rent to cover my costs even if i wanted so sadly had to service notice and property will be on the market next month. Very sad for me and also for my excellent tenants.

They shouldn't be able to increase in the first year so I would say that you will accept the increase after the end of the contract but look for somewhere else in the mean time. You are right though, they may give notice if they are in a difficult financial position. If they are being forced to sell if there is no increase in rent, maybe you could reach an agreement that you could stay on as tenant until the sale goes through. That might take longer than the 2 month notice period and could be a good option for both sides.

To answer your other question about whether a mortgage could go up over 25% - we rent out our previous house and our mortgage went from £1k a month to £2.5k a month. Basically most lenders don't want to do new buy to let mortgages so refuse to make an offer and our current lender says this is their best deal for us now that our mortgage term has run out and it is this or their standard rate which would be £3.5k a month. We were making enough to turn a small profit after tax (which we pay on the full amount of rent not on how much profit post mortgage costs). We are now getting less rent than the cost of the mortgage. We will have to sell but are trying to wait it out until the market changes a bit. Unfortunately for private landlords and tenants the rules that have been introduced and the way lenders are treating buy to lets means that the rental market will be left to large scale landlords and prices will continue to rise. Individual private landlords will be getting out of the market. I don't think the government has thought through who is going to be offering properties to tenants in the future if all the private landlords are forced to sell.

I didn't ask for sympathy, I answered the question.

I think you should save your hate for successive governments who have ensured there is not enough social housing, who have sold it off ensuring that people on low incomes have nowhere to live.

Do you really think.landlords should be running their properties as some kind of charity? With all the risk that is involved, the insurance, paying for improvements, new boilers?

In fact I haven't made a profit for years. I've spent over £25k in the last 3 years on a new kitchen and bathroom and a new boiler. Don't lump all landlords together, some of us have pride in our work.

"I don't think the government has thought through who is going to be offering properties to tenants in the future if all the private landlords are forced to sell."

I think they have thought it through very well, but much too late !. Only those who cannot really afford to be Landlords will have to sell. Allowing "investors" to borrow on cheap rates and then only pay back interest was really damaging for both the market (it forced up prices and rents) and the economy.

I am actually a Landlord myself. The point I was making was valid, no offence intended if your one of the good ones with a healthy personal investment and not doing it by leveraging cheap debt and interest only.

Yes there is a break clause. The contract says the Landlord can terminate the tenancy after the first six months, which has passed now, by giving no less than 2 months' notice in writing.
So if I argue about this increase, I’m frightened that they will say we have to leave in two months time.
Plus if it then turns out my deposit isn’t protected, then presumably he could keep some or all of it saying there’s been damage or something (there hasn’t been any!) to try to recoup their mortgage costs.

For the people asking how much profit was siphoned off when mortgages were low and rents were high, I can tell you that in my case I never made any profit - it all went out in tax. I kept the rents low and didn't put them up. My accountant can back this up - I sold a property I owned for 10 years and my net loss was £60k over that period.

I didn't choose to be a landlord - my partner owned them when I acquired him and I can't sell them as they all have cladding/fire safety issues.

How do you work out mortgages have not gone up by 25%?

The BoE Official Bank Rate was 0.1% two years ago, it is 5.25% now. Note that Buy to let mortgages are more expensive than normal residential mortgages.

Can you explain your maths at arriving at your statement?

This rent cap will backfire on tenants, all such caps always have. The economically illiterate SNP (even more economically illiterate than Westminster) capped rents at 3% without capping landlord costs at 3%.
The net effect is that as landlords costs grow at 10%+ and income at only 3% more landlords will sell up = more tenants in B&B.

That is what governments want to see: tenants moved into B&B to free up the housing for first time buyers.

I disagree that these large scale landlords are better news than private landlords. There are good and bad in both but as a private landlord I feel I place a lot more priority on fixing any issues quickly and developing a good relationship with my tenants. I also care a lot about maintaining my property to keep it to a certain standard.

I think there is going to be an even bigger housing crisis coming this country's way as a result of these policies. There will be a lot more stories like this lady's. We had intended to keep our property into our retirement. We will now be selling it off and there will be one less rental property in a market that is crying out for it. People are already struggling to find rental properties in the area. I have a friend from our previous area that is having to do the same thing. The people that are looking to rent won't suddenly be able to buy so what is going to be done for them? There isn't enough social housing to help and I don't see the government doing much to change that, though they really should.

Anyway, I guess we agree to disagree.

Tenant needs advice and professional to check the wording of the contract. Totally clauses are enforceable

Nope. They can't touch it.
Honestly you could be in such a strong position and come out of this with more money.

Also, a landlord can not end a tenancy. Only the Tennant or courts can do that.

If the landlord has not placed your deposit in an approved scheme, they will have a difficult job keeping any of it as you will take them to the tenancy deposit scheme for arbitration and this will highlight that it is not in a scheme.

Since the fines will be higher than the deposit, I would think it unlikely that your landlord will hold out.

I can't check now but I do believe you could be entitled to 3 x your deposit in compensation.

If he didn't protect your deposit and provide the necessary paperwork to you with the details of the relevant scheme etc, he can't issue any notice. Just say no to the rent increase and wait to see what he does.

I don't disagree with your point about some private landlords making more effort and providing a better service than faceless large scale landlords. Absolutely your right - there are many good landlords who may only have one or two properties.
My point really was about how some of those were financed, and how damaging that has been. Now that rates are more normal - those landlords with poor levels of self investment or low alternative incomes are finding that their business model doesn't work without artificially cheap lending. The net result of which are stories like the OPs where ridiculous increases are required to cover the debt. If you add to that effect the extra house inflation caused by the same business model - it has just been a loose loose situation for so many.
I do disagree though with your point about small landlords leaving causing a crisis. The properties don't dissapear, they are either bought by other investors or bought by renters who become owners. The net housing stock numbers don't change at all. Just the models that are viable.

How does the new rent compare to other properties locally? Will it be difficult to find another property? That would be my first considerations before marking my days so to speak with my current landlord. On Mumsnet you find many think that all landlords are evil and should not exist. Or that being a landlord should be non profit exercise. They believe that everyone would pass affordability checks for mortgages if house prices were lower or the council will pick up the pieces. But in the real world that wouldn't happen, we'd have more homelessness.

This is the downside of the Scottish rent cap.

The tenant will never win, whatever happens.

I really feel for the OP. I worry every year about the rent going up. This must be a nightmare.

The first two sentences are crucial. If other properties nearby that are similar charge the new cost, then you've been undercharged and if it ends up in the tribunal you'll get little sympathy. So I'd think carefully before your challenge, OP!

My friend tried to challenge an increase in her rent (£400)- it ended up at the tribunal and it was ruled that, actually, the landlord was well within his rights given the relative low rent of the property before compared to others in the area + other increases. They went as far as to say that, actually, the landlord could have charged up to £600 a month more because of various factors.

But you do have my sympathy given £500 is a big whack.

Edit: To clarify, more details on other examples like my friends are below in the link.
https://inews.co.uk/inews-lifestyle/money/renters-challenge-increases-tribunals-landlords-charge-more-2480227