Originally Posted by 1982
I am an accidental landlord who first rented out my apartment 8 years ago. I have only increased rent once in that time. The rent is significantly below market rates.
I am now planning on buying a house but intend on moving back to the apartment to save for the new house and any refurbishments. I will be completely refurbishing the apartment. New kitchen and bathrooms and will put new floors etc down.
The plan is to stay there for about a year, if I rent it out then when I move into my new house, will I still only be able to increase the rent 4% from what it is now?
If you undertake substantial renovations, which it appears you intend to do, you are entitled to charge market rates when you return it to rental, which can then by increased by 4% per annum.
If you do not undertake substantial renovations you can increase by 4% per annum
(for a new tenancy) from the date the last rent came into effect. So if you haven't raised rent for a number of years the permitted increase would be a multiple of 4% in any case.
Because of compounding if you find yourself below market rent the sensible thing to do is to increase by 4% per annum (so 5% on the first occasion) every year as soon you are eligible to do a rent review. Remember that you must give 90 days notice before the new rent comes into effect in the case of a rent review during a tenancy.