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Question

Changing the Rent (England) | During the Tenancy (England) | England

Significant Housing benefit increase in my area

12 Feb 2021 | 2 comments

Each year around Feb/March I investigate what the HB rates are for my area and then obtain confirmation from the local council.  Did this in 2020 in mid February and the rates were due to increase by 1.4% for the first time in 4 years.  Seemed a reasonable increase.

I am now doing the same, to learn that at some point during 2020 the LHA rates for  my area increased between 9 & 14% making my rents significantly below the LHA, this would also explain why local market rents have rocketed in the last 6 months.  I thought I had a good relationship with my local council but clearly they didn’t want to share this info!

This now leaves me in a sticky position regarding my annual rent increase at 1st May.  For example a 2-bed monthly LHA last year was £622 and is now £678.  Market rents for a 2-beds are currently anything up to £750 and I am currently charging £640.

I use the Guild’s ASTs, what am I reasonably allowed to do?

For new tenancies I realise I can set the rent according to LHA and market factors.

Answer

2 Comments

  1. guildy

    The first thing is that there’s no rent control (other than the tenant can ask a rent officer if the rent is “significantly” above market rent).

    You can therefore increase to anything within market value.

    However, the increase you’ve noticed might just be the effect of the temporary Coronavirus rules where a blanket increase was given to all on benefits to help them through the pandemic.

    This temporary increase is set to expire on 31 March but there appears to be significant pressure from all sides to keep this going a little longer.

    If it were removed, you could find the rate drops back down to what you’d normally expect. It’s impossible to say at this stage until government announces what they’re going to do beyond March.

    You wouldn’t want to increase too much and then find suddenly, the tenants are unable to afford the rent.

    If it helps, from a personal prospective and our own lettings, we don’t usually increase the rent for at least 4-5 years from when they move in. This is because if they’ve been a good tenant without payment problems, we’d rather keep them (at a slightly lower rent) and not have the risk as to who may move in next if they were to leave.

    Also, it helps the tenant stay longer if they aren’t able to find anything local cheaper.

    Over the five year period we find generally we’re better off because we’ve not had any voids nor people not paying. Although a higher rent may initially feel like more income, it doesn’t always work that way over five years.

    Just a thought and as we say, there’s no rent control so you should continue as you think best.

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