In short: No legal obligation exists either way, rent is set by market value, not by your personal costs, so there’s no formal mechanism requiring you to lower it when your mortgage gets cheaper, just as tenants have no automatic right to demand a cut. Under the Renters’ Rights Act 2025, rent increases now go through a formal Section 13 process where a tribunal can only set rent at the open market rate or your proposed figure, whichever is lower, it never has the power to raise rent above what you asked. Whether you should lower rent when costs ease is a commercial and reputational judgement, not a legal one, and often the smartest move is keeping a good tenant happy rather than chasing the last available pound.
Rent isn’t contractually tied to your costs
It’s a common misconception, sometimes encouraged by landlords themselves at the time, that a rent increase justified by “my mortgage went up” creates some kind of ongoing link between your finance costs and the rent charged. It doesn’t. Legally, rent is simply whatever a landlord and tenant agree (or, on an assured periodic tenancy, whatever is set via the Section 13 process, capped at market rate). Your mortgage rate, insurance costs, or maintenance bills are your business overheads; they’re relevant to your profitability, but they have no formal bearing on what rent a tenant is required to pay, in either direction. This cuts both ways: just as rising rates alone don’t automatically justify an increase beyond market rate, falling rates don’t create any right for a tenant to expect, let alone demand, a reduction.
What actually governs rent increases now: Section 13 and the Renters’ Rights Act 2025
Since the Renters’ Rights Act 2025 came into force (rent increase provisions took effect from 1 May 2026), Section 13 of the Housing Act 1988 is now the only lawful mechanism for increasing rent on an assured periodic tenancy, landlords can no longer use rent review clauses written into a tenancy agreement to increase rent outside this process. The key mechanics:
- You can propose one rent increase per 12-month period, using the prescribed Form 4A, giving at least two months’ notice.
- The proposed new rent has to reflect what you believe is the fair open market rent for the property.
- If the tenant thinks the proposed rent is above market value, they can refer it to the First-tier Tribunal (FTT) and continue paying the existing rent while the referral is being decided.
- Crucially, the tribunal can only set the rent at the market rate or your original proposed figure, whichever is lower, it has no power to increase the rent beyond what you asked for. This removes one old fear landlords had about tribunal referrals making things worse.
- The tribunal can also delay when the new rent takes effect by up to two further months in cases of genuine tenant hardship.
There’s no equivalent statutory process for a tenant to force a rent decrease mid-tenancy. If you don’t propose an increase, or market conditions mean asking for one wouldn’t be realistic or fair, rent simply stays the same, there’s no requirement to actively reduce it, and no legal channel for a tenant to initiate that themselves outside ending the tenancy and negotiating fresh terms with a new landlord.
Should you lower it anyway? The commercial argument
Just because you’re not required to doesn’t mean it’s always the right call to hold rent at its peak. A few things worth weighing:
- Void and re-letting costs are real and often underestimated. A vacant property typically costs a landlord several weeks of lost rent, letting agent finder’s fees (commonly around one month’s rent plus VAT), cleaning, minor refurbishment, and referencing time. If a good, reliable, low-maintenance tenant might leave over what amounts to a relatively small monthly saving elsewhere, the maths frequently favours retention over squeezing the last few pounds of rent.
- Reputation compounds. Tenants talk, on Reddit, on review platforms, to friends looking for their next rental, and increasingly through the tenancy database and Ombudsman scheme provisions the Renters’ Rights Act is building out. A landlord seen as fair when costs eased, having been upfront when costs rose, builds a reputation that helps with tenant retention, referrals, and reduces the emotional friction of disputes.
- Market rate is still the honest anchor. If genuine local market rents have fallen since you last raised the rent, not just your mortgage cost, then keeping rent above what a new tenant would realistically pay for the same property is a bet that your existing tenant won’t check comparable listings or won’t bother moving. That bet doesn’t always pay off, particularly with informed tenants in competitive rental markets.
- A partial gesture can do a lot of relationship work. Landlords sometimes choose a middle path: not passing on the full saving, but signalling goodwill with a smaller reduction or simply not applying the next scheduled increase, which costs relatively little compared to a full market-rate cut but is noticed and appreciated.
The practical takeaway
There is no rule forcing your hand either way, rent moves with the market and with what you choose to propose under Section 13, not mechanically with your loan costs. If you raised rent honestly to reflect real market conditions at the time (rather than purely because your own costs rose), you’re not obliged to reverse that when your costs ease, provided the current rent still reflects a fair market rate. But if the increase was really a pass-through of your mortgage cost rather than a market-rate adjustment, and rates have now fallen back, seriously weigh the cost of a potential void and the reputational value of fairness against whatever marginal extra income you’re holding onto, especially with a tenant you’d genuinely be sorry to lose.
Related reading
Sources
- Guide to the Renters’ Rights Act, GOV.UK
- Price Index of Private Rents, UK: monthly price statistics, Office for National Statistics
This is general information, not legal, tax, or financial advice. Figures and rules referenced are accurate to the best of available information as of July 2026 unless stated otherwise. Tax rules depend on personal circumstances, always check current HMRC guidance (gov.uk) or consult a qualified accountant/tax adviser before making decisions.
Last Updated on September 21, 2026