How to set an amount:
For many landlords, escalations should reflect a fair return on their investment and
should be market-related. An industry standard seems to be 10% per annum, but
the landlord may decide to forego the increase or to increase this more than 10% to
ensure the rental is market-related. The increase in rentals is influenced by supply and
demand more than any other factor – but this does not mean that tenants have no
choice but to expect whatever percentage the landlord decides.
Your tenant may choose to negotiate less of an increase if they want to and it is up to
you to decide whether to agree to the request or select a new tenant who is willing to
pay the higher amount. Sometimes it is better to keep a good, reliable tenant happy
than to risk getting a new tenant who ends up defaulting on payments.