Tenants face billion pound hike in housing costs

With almost half of landlords planning to increase rents by at least 4%, almost two million households are each set to be a further £550 worse off this year.  In total, the cost of living in private rented accommodation could rise by as much as £1.1bn over the course of 2011.

The news will come as a bitter blow to tenants already counting the cost of rising inflation and the VAT hike - especially as those living in rented accommodation are more likely to be ‘economically inactive' than owner occupiers.

It will also make getting on the property ladder that much more difficult for first time buyers who are renting whilst saving deposits and waiting for mortgage lending to come within reach.

Hannah Maundrell, head of content at money.co.uk, said: "The mortgage market has still not really opened up so many people who want to buy have no option but to keep renting.  Unfortunately for them, simple supply and demand economics means that this pushes up the cost.  I would advise anyone concerned about the increasing cost of rent  to look at their contract and their rights as tenants.  Rent rises are not necessarily a foregone conclusion."

Rent increases: Q&A

1.  Can my landlord put up the rent?

If you have signed a fixed term tenancy agreement - this will usually be for six or 12 months - then your landlord cannot increase the rent during that time without your consent.  The only exception to this is if rental reviews were written into your original tenancy agreement. If this is the case, it will detail how often the rent can be changed and how the new level will be set.  You should refer to your original rental agreement if you are unsure if you agreed to rental reviews when you signed the contract.

Once you come to the end of a fixed term lease your landlord can issue a formal ‘notice of increase' giving you at least two months' notice that they're putting up your rent.

2. What can you do?

You don't have to automatically accept the increase and you can negotiate with your landlord.  First, arm yourself with information by looking at how much a similar property would cost to rent in the same area.  Websites such as Rightmove and Find a Property both list properties from a wide range of local estate agents and are a good place to begin assessing what else is on the market.

If you find that there are similar properties available for less than what your landlord is asking for you can use this as a negotiating tool to lower your rent.

3. What if my landlord refuses to budge?

If your landlord is insistent that your rent be set at a higher level then you can try and soften the blow by negotiating some extra benefits such as the inclusion of some household bills. Alternatively a proposed rental increase may also be an opportunity to get any maintenance or improvement work done to your home.  There is nothing to stop you asking for jobs to be completed before you start paying the higher rent your landlord wants.

4.  Should I move out?

Unfortunately, if you are faced with a rent hike and can't agree a compromise with your landlord then you may need to look elsewhere. Finding somewhere nearby that is a similar quality, size, and price would be ideal, however you may have to look further afield or at different types of properties to keep your rent down.  Again property sites including Rightmove and Find a Property are good places to start.

For more information, visit money.co.uk.