As of 19 June 2019, any new lease that is signed (including a re-signing of an existing lease as an extension) will only be able to be subjected to a rent increase every 12 months.
Although rents on all on-going leases and month-to-month tenancies can still be reviewed every six months, if you have a tenant on a lease that will be up for renewal soon, or is already in a “periodic tenancy” (ie month to month), you have 3 options to consider:
Option 1: Move onto / Stay on month-to-month:
If you would prefer to consider rent reviews every 6 months and keep those rental upgrades more manageable for your tenants compared to a double-sized increase every 12 months, you can let the tenancy roll-over into a month-to-month tenancy.
Option 2: Sign a new lease / extension with a full rent review now:
If your tenants are good tenants, and you are confident they can manage a full rent review, it’s best to re-sign a new lease now, but with a full rent increase involved. The tenant then gets the security of tenure in exchange for an increase in rent, but also with a guarantee it can’t increase again for another 12 months. Conversely, if you don’t think you have the ideal tenant, it’s best to finish the current tenancy at the end of the lease, do the full rent review, and then sign a new tenant/lease at the full new rent.
Option 3: Move onto LongView Guaranteed Rent:
If you’d like the full rent review but are worried whether the current tenant will accept it or not, and if not, how long it will take to get a new tenant on the higher rent, you can make it our problem by taking our Guaranteed Rent option. LongView will then take the risk on the best way to maximise rental income, and you can rest easy that you have full rent coming in every month no matter what happens with your tenants. You will also have the comfort of knowing that LongView has a considerable incentive to find the best possible tenant, as guaranteeing rents to you is the best way of ensuring we get paid.
To be clear, a rent review doesn’t always lead to a rent increase – we always look at tenants’ next-best-alternative in the marketplace and if new stock or higher vacancy is occurring in properties like yours, the review may not recommend an increase, but where the market is tightening (and see Antony Cohen’s article on our view the majority of the market will tighten over the next 12 months), then material rent increases may be achievable.