How do I haggle rent down? Our landlord wants to hike monthly amount by 30%

My partner and I have been living in our current rented flat for nearly two years.

The agent recently contacted us to say the landlord wants to put our rent up by more than 30 per cent – equating to hundreds of pounds per month.

This is going to happen at the break clause in two months’ time. If we don’t agree, they said they would serve us notice so we would have to move out then.

We understand rents are going up and don’t mind paying a bit more, but we feel 30 per cent is unreasonable.

Pay up or leave: Our reader’s landlord has served them with a 30% rent hike and said if they don’t agree, they’ll serve them their notice to move out

We’ve looked online and there are other homes in our area that do cost that much, but they are bigger and in better condition.

We have a good relationship with the landlord and she has previously said we look after the home well, so we would like to try and negotiate a smaller rise.

Where should we start with the negotiations, and what is the best way to convince her – and the agent – to agree?

Ed Magnus, of This is Money, replies: This is a widespread issue facing many tenants at the moment – and 30 per cent is a big increase to swallow.

But, over the past two years, the average rent on a newly agreed tenancy has risen by more than 20 per cent from £1,061 to £1,276, according to the HomeLet rental index.

In some parts of the country, the changes have been even more extreme. For example, in Greater London, the typical rent has risen by almost 25 per cent from £1,752 to £2,179 during that time.

The harsh reality is that there are too many tenants and too few homes available to let.

The number of enquiries each property is receiving from would-be tenants has more than tripled, from eight in October 2019 to 25 today, according to Rightmove.

It is also true that many mortgaged landlords are facing financial pressures as a result of higher interest rates. 

The average five-year buy-to-let fixed rate mortgage is currently at 6.18 per cent, according to Moneyfacts.

This means the average landlord requiring a £200,000 interest-only mortgage will be paying £1,030 a month in mortgage costs if buying or remortgaging at the moment using a five-year fix.

Add that alongside tax, void periods, repairs, maintenance, letting agent fees, compliance checks, insurance and service charges and it shows how reliant many landlords will be on rents rising in order to make a profit.

According to analysis by the estate agent, Hamptons, an interest rate of 6 per cent would cause the average mortgaged landlord to lose two thirds of their total rental income towards paying mortgage interest costs each month.

In the case of our reader, it’s hard to know if the landlord is increasing the rent because they are under financial strain or whether they see an opportunity to make more income.

Regardless of their motive, it is important to remember that one thing a landlord doesn’t like, is void periods – a period of time in which the property is empty.

By serving you notice, they will need to find someone to replace. By doing this, they risk the house being empty for weeks or even months between your tenancy ending and the new tenancy starting.

Aside from the extra hassle, there are also typically costs involved in finding a new tenant, particuarly if they are using a letting agent.

These include a finders fee, referencing fees, inventory costs, and sometimes a check in and check out fee the landlord is required to pay the letting agent. 

There are also potentially cleaning and repair costs as well ahead of the new tenancy starting.

The extra work and cost required in setting up a new tenancy should give you some confidence when negotiating over the rent rise – although, it is against a backdrop of a hot rental market.

Dan Wilson Craw, deputy chief executive of the campaign group Generation Rent and Jan Hÿtch at Propertymark, the leading membership body for letting agents, give their views below.

Back on the market: It’s important to remember that one thing a landlord doesn’t like, is void periods – a period of time in which the property is empty

Dan Wilson Craw replies: You’ve already taken the correct first step which is to check if the proposed rent is in line with similar properties nearby. 

Because the agent is asking for the same rent as bigger and better quality homes in the area, the risk for the landlord is that you move out and they struggle to find someone new at that rent and have to reduce it, potentially losing money.

As you have a good relationship with the landlord, it is worth contacting her directly – letting agents collect a larger commission if the rent goes up, or marketing fees if the tenant moves out, so they are generally less interested in retaining tenants than landlords.

Dan Wilson Craw of Generation Home says letting agents are generally less interested in retaining tenants than landlords

When you speak to the landlord, tell her what the letting agent said and the reasons you think the proposed rent is unreasonable, and remind her of your record as tenants and the risks she faces if you move out. 

Offer to reach a reasonable compromise, and before agreeing anything, think about what you can afford, and what you can ask for in return, such as any improvements you believe are needed.

It could be worth finding out if your landlord has a mortgage as some landlords are currently trying to raise the rent because their mortgage repayments have gone up. 

However, not all landlords have a mortgage on their property – two in five properties owned by landlords don’t have a mortgage and so their costs are not going up as quickly. 

If your landlord doesn’t have a mortgage then she is under less pressure to raise the rent.

Jan Hÿtch replies: Rent rises could not come at a worse time at the moment, what with the cost of living crisis biting into many people’s budgets. 

But for those who feel that the rent their landlord is proposing is a bit steep, there are a few avenues they can explore to challenge their landlord’s decision.

The first and most obvious place to start is by checking your contract. Are you on a fixed-term contract, for instance a two-year contract which may have a clause that allows for the rent to be reviewed after 12 months?

If you’re not in a fixed term, and you are now in a periodic or rolling contract, this means your landlord can only increase your rent once in any 12 month period. With a rolling contract, your landlord can serve you with a Section 13 notice to inform you about a rent increase.

Higher costs: Mortgaged landlords are feeling the strain from higher interest rates with many needing to pass some of the burden onto their tenants

If you pay your rent to a letting agency who act on behalf of the landlord, in the first instance, always contact them to see if there is anything they can do to help, if you feel you can’t afford a proposed rent increase.

If you are renting direct from your landlord, and you feel the rent increase being proposed is much higher than for equivalent properties nearby, you could contact Citizens Advice for advice on how you could negotiate with your landlord. 

They can help you state your concerns to your landlord, and explain why you think their proposal for a rent increase is unfair. If you wish to, explain your own personal financial situation too, because there may be room to negotiate.

Are there any other options? 

Jan Hÿtch adds: If you have spoken to the letting agent or landlord, and understand the reasons your landlord is giving for increasing your rent, but you just can’t afford it, and your landlord can’t afford to leave the rent at a level you can afford, then you have other options.

Apply to a Tier 1 tribunal for an independent assessment of the rent. You can do this if your rent has been increased as by a section 13 notice and you feel the new proposed rent is unreasonable.

Jan Hÿtch of Propertymark says if you’re not in a fixed term, and you are now in a rolling contract, this means your landlord can only increase your rent once in any 12 month period

If you decide to go the tribunal route, make sure you apply as soon as possible, but make sure that you pay the existing rent in full rate in the meantime to avoid falling into arrears. You can do so here, and it’s free to apply.

Above all, take some action – don’t do nothing. Ignoring a rent increase notice could put you in a tricky financial position, and will make negotiating more difficult. 

Whilst landlords have increasing overheads to cover, most don’t want to lose a good tenant, and will try to help where they can.

Ed Magnus adds: Trying to negotiate with your landlord is worthwhile, if you want to stay in the property. 

To give you the best chance of success, I would suggest you meet in the middle and agree to pay 15 per cent more rent – provided that is within your budget. 

It is still a sizeable amount which would presumably go some way towards any extra costs the landlord has, but should also be more manageable for you. 

Try to stress, in a non-confrontational way, that you have always paid rent on time and kept the property clean – and that there is no guarantee any future tenant would extend them the same courtesy. 

Mention any times you have been particularly helpful to the landlord. Have you been co-operative when it comes to things like inspections and routine maintenance, for example? 

You could also point to official figures for how much rents have been rising across the country recently, to strengthen your case that the 30 per cent rise is excessive. 

According to the Office for National Statistics, average private rents went up by 5.7 per cent in the year to September – and that was the largest annual increase on record. A year previous, they increased by 3.6 per cent.

Even with an offer of 15 per cent more rent, you are still offering to pay well above the average increase across the two years you have been in the property.