Tenants and landlords could agree how future rent increases will be decided when they first sign a tenancy agreement. For example, a tenancy agreement could state that landlords will not raise rents by more than five percent a year, or it could state that landlords will not raise rents more than inflation or average wage increases.
This would allow renters and landlords to plan ahead, knowing what future rents could be. However, there’s an unequal power balance when renters are signing a tenancy agreement because the landlord often knows they could just get a different tenant, so many people who need a home might not be able to negotiate a fair deal. Also, if market average rents reduce, tenants might find themselves locked into previously agreed rent increases that are now out of step with similar properties.