How to Set Rent Under the Renters' Rights Act: A Landlord's Guide to Getting It Right First Time
By the Husmus Team · Published May 2026 · 10 min read
Why getting the number right on day one matters more than ever
Setting rent has always been one of the most important decisions a landlord makes. Under the Renters' Rights Act 2025, it is even more consequential.
The bidding ban means you cannot test the market upwards. The one-increase-per-year rule means underpricing costs you 12 months of income. And tenants can now challenge the initial rent at the First-tier Tribunal within the first six months of a new tenancy. If the tribunal decides you have overpriced, it will reduce the rent. It cannot increase it.
Your asking rent needs to be right from day one. Not just competitive, but defensible and sustainable. This guide walks you through how to get there.
Related: New Tenant Checklist for Landlords
1. What the Renters' Rights Act changes about rent
Before you set a number, you need to understand the new rules that constrain how you advertise, collect, and increase rent.
You must publish a single, fixed asking rent. Every advert, every platform, the same number. No ranges, no "offers around." Once published, you cannot invite, encourage, or accept a higher offer. The penalty for accepting an above-asking offer is up to £7,000 for a first breach, rising to £40,000 for repeat offences within five years.
You can only increase rent once per year. All rent increases must go through the statutory Section 13 process using Form 4A, with at least two months' notice. Contractual rent review clauses, including RPI and CPI-linked increases, are void from 1 May 2026.
Tenants can challenge the initial rent. Within the first six months of a new tenancy, a tenant can apply to the First-tier Tribunal for an initial rent determination. The tribunal assesses whether the rent reflects the open market rate for a similar property in similar condition. It can reduce the rent. It cannot increase it.
You cannot collect more than one month's rent in advance. No six months upfront, no matter what the tenant offers. And you cannot collect any rent before the tenancy agreement is signed.
These rules apply to all new tenancies from 1 May 2026. Existing tenancies that convert to Assured Periodic Tenancies on that date keep their current rent, but future increases must follow the Section 13 process.
The practical effect is straightforward. You get one shot at setting the right rent, and one chance per year to adjust it. Everything in this guide flows from that reality.
2. How to research the right asking rent
Start with what similar properties are actually letting for in your area. Not asking prices from six months ago. Not what you hope to get. What is letting now, for properties genuinely comparable to yours.
Check the portals. Look at current listings on Rightmove, Zoopla, and OpenRent for properties of similar size, type, and condition within a mile or two of yours. Note the asking rents but remember that listed prices are not always achieved prices.
Adjust for differences. A furnished property commands more than an unfurnished one. Off-street parking, a garden, a recently refurbished kitchen, proximity to transport, all affect what tenants will pay. Be honest about how your property compares. If the comparable down the road has a new bathroom and yours does not, your rent should reflect that.
Ask local agents. Even if you self-manage, a quick conversation with two or three local letting agents will give you a sense of the market. Most will give you a free valuation in the hope of winning your business. Use it.
Check the data. The ONS Private Rent and House Prices bulletin publishes average rents by local authority area. HomeLet's Rental Index tracks new tenancy rents monthly. These will not tell you what your specific property should charge, but they give you a regional baseline and show which direction the market is moving.
Keep your evidence. Under the new rules, if a tenant challenges your rent at the tribunal, you will need to show that the figure reflects the open market. Save screenshots of comparable listings, agent appraisals, and any data you relied on. This takes five minutes and could save you thousands.
If you plan to work with local councils, keep your rent at or below the Local Housing Allowance (LHA) rate for your area. You can look up LHA rates by postcode on the Valuation Office Agency website. Setting rent within LHA limits opens your property to council-referred tenants and housing benefit claimants, which can mean faster lets, longer tenancies, and in some cases, direct rent payments from the local authority. It also keeps you on the right side of the anti-discrimination provisions, which require you to assess tenants on individual affordability rather than income source.
3. Build your costs into the rent from day one
Under the old system, many landlords set a low asking rent and then offset their risk and costs through large upfront payments: six months' rent in advance, a substantial deposit, a guarantor requirement. The Renters' Rights Act removes or limits most of those mechanisms. You can only collect one month's rent upfront. The deposit is capped at five weeks' rent. And you cannot require pet insurance.
That means your monthly asking rent now has to carry the full weight of your running costs. If you set it too low, you are locked in for 12 months before you can adjust.
Here is the cost stack to work through before you set your number:
Mortgage payments. Your biggest fixed cost. The tribunal does not consider your mortgage when assessing market rent, but you still need to cover it.
Landlord insurance. Buildings, contents, and liability cover at a minimum. If you are adding rent guarantee insurance or landlord-specific policies, include those too.
Maintenance reserve. A general rule of thumb is to set aside 10-15% of annual rent for repairs and maintenance. Boilers break. Roofs leak. Budget for it.
Void periods. Even the best-managed property will have gaps between tenancies. A month's lost rent per year is not unusual. Factor that into your annual numbers.
Compliance costs. Gas safety certificates, EICRs, EPC renewals, smoke and CO alarm checks. These recur on set cycles and are non-negotiable.
Management fees. If you use a letting agent or property manager, their fees (typically 6-15% of monthly rent) need to be covered.
4. Factor in protection products — and save your tenant money in the process
Under the old system, landlords managed risk in ways that pushed costs onto the tenant: large upfront deposits, guarantor requirements, months of rent in advance. Tenants bore the burden, and landlords felt protected.
The Renters' Rights Act changes the equation. You can only take five weeks' deposit and one month's rent upfront. You cannot require pet insurance. And while you can still ask for a guarantor, many tenants, particularly international workers, self-employed professionals, and people without family in the UK, simply do not have one to offer.
Corporate guarantor services exist to fill that gap. But they are expensive for the tenant. Providers like Housing Hand and RentGuarantor typically charge three to five weeks' rent as an upfront fee, which often needs renewing annually. That is a significant cost on top of the deposit and first month's rent the tenant is already paying.
There is a better approach. As a landlord, you can buy rent guarantee insurance and offer your tenant a deposit-free move-in, then build the cost of both into the monthly rent. The economics work in everyone's favour.
Consider the comparison. A corporate guarantor might charge a tenant £1,200-£1,500 upfront on a £1,200/month property. That is money the tenant never sees again, and it only covers one year. Rent guarantee insurance bought by the landlord costs a fraction of that per month, and it provides continuous protection for as long as the tenant stays.
Worked example: Your property would normally let at £1,200/month. You add rent guarantee insurance at £15/month and a deposit replacement product at £25/month. Your asking rent becomes £1,240/month. The tenant saves over £1,000 in upfront costs because they do not need a cash deposit or a guarantor. You have continuous cover for missed rent and property damage. And the £40 difference is well within the market range for a property like yours.
The tenant gets a lower barrier to entry. You get stronger, ongoing protection rather than a one-off cash buffer. And because the tenant has not been financially stretched just to move in, they are more likely to pay rent comfortably from month one.
Do not forget pet damage
The Renters' Rights Act gives tenants the right to request a pet, and you can only refuse on reasonable grounds. The pet insurance provision was removed from the Act during its passage through the Lords, which means you cannot require your tenant to take out pet damage insurance. If they do not take it out voluntarily, and their pet damages the property beyond what the deposit covers, you are exposed.
The answer is the same principle as above: cover it yourself and build the cost into the rent. Pet damage cover is available as part of a Husmus landlord insurance policy. A few pounds a month is a much smaller cost than a scratched hardwood floor or a chewed door frame. If you are accepting pets, and under the new rules most landlords will be, factor this in from the start rather than hoping the deposit will stretch.
This is not about inflating rent. It is about pricing it accurately to reflect the true cost of letting a property responsibly. The protection is a running cost, just like insurance and maintenance. Building it into the rent is the most transparent and sustainable way to manage it.
Husmus tip:Husmus Rent Shield Premium gives landlords rent guarantee insurance and deposit replacement in a single product, underwritten by A-rated carriers, with pet damage cover available as an add-on or included as part of our landlord insurance. You can offer your tenant a deposit-free, guarantor-free, pet-friendly move-in while keeping yourself fully protected. Pair it with our open-banking referencing to verify affordability before you commit.
Related: Rent Guarantee Insurance: Is It Right for You?
Related: Understanding Tenant Guarantors and the Available Alternatives
5. Common mistakes to avoid
Setting rent too low to fill quickly. It is tempting to undercut the market to avoid a void. But under the new rules, you are locked into that figure for 12 months. Only do this if you can afford it. Price accurately from the start and let the property's condition and your referencing do the work.
Setting rent too high and triggering a challenge. The six-month initial rent determination window is new, and tenants are becoming aware of it. If the tribunal finds your rent is above market, it will reduce it, and you will be stuck at the lower figure until the next Section 13 window. Keep your asking rent grounded in comparable evidence.
Not keeping comparable evidence. If a tenant challenges your rent, you will need to show that it reflects the local market. Screenshots of similar listings, agent appraisals, and regional data take minutes to collect and could save you thousands at tribunal. Make this part of your letting process.
Forgetting to account for protection costs. Rent guarantee insurance, deposit replacement products, and landlord insurance are all running costs. If you do not build them into the rent, you are absorbing them out of your margin. Under the old system, you could offset this with larger upfront payments. You no longer can. Bonus is insurance is a tax free expense!
Relying on informal rent agreements. From 1 May 2026, the only way to increase rent is through a Section 13 notice. Informal agreements, verbal arrangements, and contractual rent review clauses are all void. If you have been adjusting rent by email or at renewal, that process is over. Plan your rent-setting accordingly.
Ignoring the tribunal's assessment criteria. The First-tier Tribunal assesses market rent based on the property's condition. Outstanding repairs, unresolved damp, poor maintenance: all count against you. If you want to defend your rent level, keep the property in good shape. It is that simple.
Set the right rent, for the right tenant, with the right cover
The Renters' Rights Act does not cap your rent. It does not stop you from earning a fair return. But it does mean that the number you set on day one carries more weight than it ever has before. Research it properly, account for every cost, build in the protection you need, and keep your evidence.
Need help? Husmus open-banking assessments give you bias-free, audit-ready referencing and insurance products that you can build into your asking rent from day one. Find out how it works →
This guide reflects the Renters' Rights Act 2025 and associated regulations as at April 2026. It does not constitute legal advice. Seek independent legal guidance for your specific situation.