How Landlords Calculate Rent Increases (and Why Many Get It Wrong)

<h1>How Landlords Calculate Rent Increases (and Why Many Get It Wrong)</h1><p>When your landlord proposes a rent increase, it’s natural to wonder: where did that number come from? Is it based on evidence, or did they just pick a figure?</p><p>The truth is, many landlords don’t follow a rigorous process when setting a new rent. Some use rough guesses. Others copy what a letting agent suggests without checking comparable properties. And a surprising number get the basics wrong -- which could mean the increase isn’t enforceable at all.</p><p>Here’s how the process is <em>supposed</em> to work, and how to spot when it hasn’t been done properly.</p><h2>The legal standard: market rent</h2><p>Under Section 13 of the Housing Act 1988, a rent increase must reflect the open market rent for a property like yours. This is the rent a willing landlord could reasonably expect from a willing tenant on the open market.</p><p>The key word is "comparable". The proposed rent should be based on what similar properties in your area are actually letting for, not on your landlord’s mortgage costs, not on inflation, and not on an arbitrary percentage increase.</p><h2>How landlords should calculate a rent increase</h2><p>A proper rent increase calculation involves several steps:</p><h3>1. Research comparable properties</h3><p>Your landlord should look at current rental listings and recent lets for properties similar to yours. "Similar" means:</p><ul><li>Same number of bedrooms</li><li>Similar size and layout</li><li>Same general area (ideally the same postcode district)</li><li>Similar condition and standard of furnishings</li><li>Same type of property (flat vs house, terraced vs detached)</li></ul><p>Online portals like Rightmove and Zoopla are the usual starting points, but advertised rents aren’t always the same as achieved rents. Letting agents can provide data on actual agreed rents.</p><h3>2. Adjust for differences</h3><p>No two properties are identical. A fair comparison accounts for differences between your property and the comparables:</p><ul><li><strong>Condition:</strong> A well-maintained property with modern fittings can command more than one with dated kitchens or bathrooms</li><li><strong>Location:</strong> Even within the same postcode, proximity to transport links, schools, or amenities matters</li><li><strong>Furnishings:</strong> Furnished properties typically let for more than unfurnished ones</li><li><strong>Parking and outdoor space:</strong> A garage, driveway, or garden adds value</li><li><strong>Energy efficiency:</strong> A higher EPC rating can justify a slightly higher rent</li></ul><h3>3. Consider the current market</h3><p>Rental markets shift over time. Your landlord should look at <em>current</em> data, not figures from six months ago. In some areas, rents have risen sharply. In others, they’ve plateaued or even dropped.</p><h3>4. Set a fair figure</h3><p>After researching comparables and adjusting for differences, your landlord should arrive at a figure that’s in line with the market. This figure goes on the Section 13 notice.</p><h2>Where landlords go wrong</h2><p>Here are the most common mistakes:</p><h3>Using inflation as a benchmark</h3><p>"Inflation is 4%, so your rent goes up 4%." This is one of the most common approaches -- and it’s wrong. The legal standard is market rent, not inflation. If comparable properties in your area haven’t increased by 4%, then a 4% increase may be above market rate.</p><p>Some tenancy agreements have inflation-linked rent review clauses, but these are being abolished under the Renters’ Rights Act from 1 May 2026. After that date, all increases must be based on market rent via Section 13.</p><h3>Relying on mortgage costs</h3><p>Your landlord’s mortgage payments, insurance, or maintenance costs are not relevant to what constitutes a fair market rent. A landlord who bought at the peak with a high mortgage can’t charge above-market rent to cover their costs.</p><h3>Picking a round number</h3><p>"Let’s make it GBP1,200" sounds tidy, but if the market rate for comparable properties is GBP1,100-GBP1,150, a jump to GBP1,200 may not be justified. Round numbers often signal a lack of research.</p><h3>Using outdated comparables</h3><p>Rental data from six or twelve months ago may not reflect today’s market. If your landlord is relying on old listings, the proposed rent could be out of step with current conditions -- in either direction.</p><h3>Not adjusting for property condition</h3><p>If your property has issues -- damp, outdated wiring, a broken boiler that took weeks to fix -- the market rent should reflect that. A landlord who proposes the same rent as a newly refurbished flat next door hasn’t done a fair comparison.</p><h3>Copying the letting agent’s suggestion without checking</h3><p>Letting agents have an incentive to set rents high (their commission is typically a percentage of rent). A good agent will research comparables properly, but not all do. Your landlord should verify any suggestion with their own research.</p><h2>How to check whether your increase is fair</h2><p>You can do the same research your landlord should have done:</p><ol><li><strong>Search Rightmove and Zoopla</strong> for properties similar to yours in the same area. Filter by bedrooms, property type, and price range.</li><li><strong>Note the asking rents</strong> for at least 5-10 comparable properties. Remember that asking rents are often higher than achieved rents.</li><li><strong>Check the Valuation Office Agency</strong> (VOA) for local reference rents if your area has them.</li><li><strong>Consider your property’s condition</strong> honestly. If it’s in worse condition than the comparables, the fair rent is lower.</li><li><strong>Use the RentSOS checker</strong> to get a quick assessment of whether your increase looks reasonable.</li></ol><p>If your research suggests the proposed rent is above market rate, you have grounds to challenge. Start by negotiating with your landlord, and if that doesn’t work, you can refer the Section 13 notice to the First-tier Tribunal for free.</p><h2>What the tribunal looks at</h2><p>If you challenge a rent increase, the First-tier Tribunal will determine the market rent using the same approach outlined above -- but with professional rigour. They’ll consider:</p><ul><li>Comparable rents in your area</li><li>The condition, character, and locality of your property</li><li>The age and state of repair of the property</li><li>Any furniture provided by the landlord</li><li>The terms of your tenancy</li></ul><p>The tribunal cannot set a rent higher than what your landlord proposed. So there’s no risk of ending up worse off by challenging.</p>