A contractual rent increase is a rent rise that has already been agreed within the tenancy agreement before the tenancy begins. Rather than being decided later by the landlord, this type of increase is written into the contract and sets out how much the rent will increase and when. Tenants renting through CJ Hole Cirencester Estate Agents and other reputable agents will often see this clause clearly explained before signing, ensuring transparency from the outset.
Understanding contractual rent increases is essential for both landlords and tenants, as it affects budgeting, long-term affordability, and legal compliance throughout the tenancy.
How a Contractual Rent Increase Works
A contractual rent increase usually appears as a clause in the tenancy agreement stating that the rent will rise after a certain period. This might be a fixed amount (for example, £50 per month) or a percentage increase (such as 3% annually). In some cases, the increase may be linked to an external measure like the Consumer Prices Index (CPI).
Because this increase is pre-agreed, the landlord does not need to issue a separate rent review notice when the increase takes effect. As long as the clause is clear and lawful, the new rent becomes payable automatically on the specified date.
Is a Contractual Rent Increase Legal?
Yes, contractual rent increases are legal in England and Wales, provided they meet certain conditions. The clause must be clear, fair, and specific. Vague wording such as “the rent may be increased from time to time” is unlikely to be enforceable.
The increase must also comply with consumer protection laws. If a clause is considered unfair, excessive, or unclear, a tenant may be able to challenge it. This is why professionally drafted tenancy agreements are so important, as they help protect both parties from future disputes.
Contractual Rent Increase vs Section 13 Notice
A contractual rent increase is different from a rent increase issued under a Section 13 notice. Section 13 is used when there is no rent review clause in the tenancy agreement, or when the tenancy has become periodic.
With a contractual rent increase:
- The increase is agreed in advance
- No formal notice is required
- The timing and amount are already known
With a Section 13 increase:
- The landlord proposes a new rent
- Formal notice must be served
- The tenant may challenge the increase at a tribunal
This distinction is important, as tenants often assume all rent increases require notice, which is not always the case.
How Often Can Contractual Rent Increases Happen?
Contractual rent increases are usually set to occur annually, but the frequency depends entirely on what is written in the tenancy agreement. Some contracts allow for increases after the initial fixed term, while others build in regular annual reviews.
However, multiple increases within a short period are uncommon and may be viewed as unfair. Good practice is to limit increases to once per year and keep them in line with local market conditions.
What Tenants Should Look Out For
Tenants should always read the rent review clause carefully before signing a tenancy agreement. Key things to check include:
- The exact amount or percentage of the increase
- The date the increase will take effect
- Whether the increase is fixed or linked to inflation
- Whether there is a cap on how much the rent can rise
If anything is unclear, it is best to ask for clarification before signing. Once agreed, a contractual rent increase is legally binding.
What Landlords Should Consider
For landlords, contractual rent increases provide certainty and reduce the need for future negotiations. They can help protect rental income against inflation and rising costs, such as maintenance and insurance.
That said, landlords should be realistic. Setting increases too high may lead to tenant dissatisfaction or higher turnover, which can ultimately cost more than a modest, well-planned increase. Aligning rent increases with market trends helps maintain long-term tenancies and steady income.
Can a Tenant Refuse a Contractual Rent Increase?
If the rent increase is clearly written into the tenancy agreement and complies with the law, a tenant cannot usually refuse to pay it. However, if the clause is unclear, unfair, or incorrectly applied, the tenant may have grounds to challenge it.
Tenants who believe an increase is unreasonable should seek advice before withholding rent, as failing to pay the agreed amount could put them in breach of the tenancy.
Why Clear Agreements Matter
Contractual rent increases work best when both parties fully understand them. Clear wording, professional advice, and open communication help prevent disputes and ensure a smoother tenancy experience.
Whether you are renting a property or letting one, knowing how contractual rent increases operate allows you to plan ahead with confidence and avoid unexpected surprises during the tenancy.
