Hi All,
BTL rates hiked for those unlucky few renewed their mortgage recently and have to increase your rent. How did you approach your tenant and what did you do to convince them to stay with an increase rent. Or what did you do to make your own finance better with other options?
e.g. kick them out and readvertise higher, do short-let, refurbish rent out higher or making into 2 bed etc.
Your answers will be very helpful!
?? no one is experiencing this? um…
I generally stagger rent increases, I tend to have tenants who stay a long time, which is what I prefer.
I will sometimes show them comparables in the area if I am increasing by a significant amount.
Kicking them out is harsh in my opinion, how much empty period would you have? Can you increase gradually instead?
I speak to them either on phone or face to face to explain mortgage increase and other reasons for increasing.
I agree, better to have gradual increases if tenant has been good than risking making situation worse, ie tenant stops paying, trashes the place etc.
I would refer to market rates and say you are keeping slightly below because you appreciate they have been good tenants (assuming they have been) but try to keep increases ideally at 5% pa or at least below inflation given current rates. You have to decide what you feel is appropriate based on the tenants and your finances but substantial increases certainly arent risk free.
It is interesting that some tenants like to hustle. not even a haggle
I expressed my problem interest is now more than the rent they are paying. Then I get a face from them looks like they think I am acting to play poor. I have to teach them about interest rate from 1%-5% and house price falling as well, So if making a loss from rent there is no point. I got no obligation to discuss all this but only to offer them trust and sincerity and doesn’t look like they are buying it.
Their response were, yeah… house price fall now it will go up in the future not to worry and also saying they are not going to pay more as they don’t have the willingness to afford (their salary suggests they can pay way more). not even accepting any increase above zero. The market standard increase is 3% or inflation rate, it would be a fool for a mortgaged landlord to not increase in the current environment when it is time to review a tenancy.
Also, throughout the term they asked me to do several improvement, I offered help but it seems they take it as an advantage asking for more. I mean those cost need to take in as well. I tried to save from my end to do the improvement myself taken a huge chunk of time and effort, if rent doesn’t increase it looks like landlord got “enslaved”.
Well, it is quite central and prime area, usually people do short-let.
My interest rate is now over the rental price and even the market price is barely any income and that is not to count the fact of any maintenance cost.
So, I am thinking of refurb from 1 bed to 2 bed as it is a relative big 1 bed or just to short let which usually can double the amount which just about to cover.
It’s unlikely you would be able to do short term lets with a standard btl mortgage. Most btl mortgages insist on minimum of 6 months ast. Air bnb lets require specialist mortgage or owned with no mortgage.
A tenant isn’t responsible for your mortgage, some just arent that bothered with staying in current property and may be planning on leaving anyway as may have other plans. Given high interest rates btl isn’t really viable at moment with higher LTV mortgages.
Airbnb doesn’t require anything. One of my tenant rented the flat and secretly subletting it on Airbnb so how did they manage to do that?
Nothing stop people doing short-let, at least not physically. It can be a relocation company long term contract at a higher rent and they do the short-let themselves etc. or simply a 6month short let.
A tenant isn’t responsible for my service charge either, my point was telling them there are little room to haggle down from the market rate. It is not a haggle between me getting a little less, it is about me having less or more negative income.
I didn’t say airbnb needed anything. If you do airbnb you will be in breach of your mortgage terms so if mortgage company finds out they can demand immediate repayment of the mortgage along with associated charges.
The mortgage company may of course never find out, however airbnb is generally very unpopular with neighbours who may complain and could potentially notify your mortgage company (details can be accessed via land registry charge at minimal cost). Some mortgage companies also do random checks.
Lenders use the Hunter system to track down mortgage breaches and these days they are pretty unforgiving, so would be likely to call in the mortgage and you then wouldn’t get another one.
We have built up 10 properties over 15 years slowly but gradually, paying off mortgages as we can. We treat our tenants with respect and do not screw every last penny out of them, for the first time we have increased marginally, will still be well below market rents.
The result is we have tenants who never give us any grief, hardly ever leave ( void periods cost loose a lot of money ) and we can retire with a healthy income.
Treat people well and your will reap the rewards
I never said I am going to do airbnb, I am saying so many people doing it and no one has done anything about them and flooded the market. and yet people still talking about if this if that and I can tell you nothing is done for those rogue landlords. that is the problem.
Never met anyone who break the rules meeting those. they better put more force into it. I never said and certainly not gona do it but never seen any cases.
well, depends where is and what group of people you are dealing with. different areas different vibes. You will know when tenants take advantage of you.
Hi there,
I always keep mine a bit below market rates to be able to be selective with tenants. It pays in the long run… I raised by email recently on two renewals and no complaints, both happy.
Teresa
Fortunately I have an occupancy agreement which automatically increases rent annually by RPI inflation plus 2%•. This year’s increase is 15.4% and no arguments because they’ve had minimal increases for several years.
I’m in a similar position to you @Danny19, I need to do some work to increase my EPC from a D to a C (i’d rather do it now knowing that it most certainly is coming, and also to open up to more mortgage providers), and then apply to renew my mortgage in October. The interest rates are extremely high and at the current rent, i wouldn’t be making any money at all. I have to increase the rent by £200+ and even then it would still be under market rates. My tenants have been with me for 5 years, as long as i’ve had the initial mortgage and i’ve never increased the rent. In fact i allowed them 8 months of paying at a reduced rental when the tenant, a builder, broke his leg and was out of work. Talking to them about ending the agreement of the reduced rental was difficult enough on its own! They are good tenants and i don’t want to lose them but i am going to have to talk to them about the situation, when i stop procrastinating. I just hope they watch the news and understand the issue with interest rates.
Sorry i couldn’t help @Danny19 but i hope you let us know what you decided in the end.
Thanks for sharing, my situation is different to yours, you see when tenants get paid more sometimes they are more frugal as they can see the opportunity of more money and what it can do. when it comes to paying more they will try every way to push it down. So there should be a way to settle this which is the market rate, but how do you decide market rate as all properties are different and not as frequent pops up.
Also, I think it should be a leave or accept rent increase. It is never a good conversation. Also when the tenant acting nice or approach you, it is all for the moment of rent increase for you to hesitate and get influence on the rent.
I don’t think anyone should be afraid of kicking out the tenant if they can’t accept as the closer you are to the tenant you feel like losing a friend, you weren’t friend with them to start with and those “friends” are expensive and are for your money.
Dannyboy, do you reduce your rent when rates go down? Sit down with tenants and say hey Im £300 a month better off I’m lowering your rent?
Being a landlord we taken highs and lows, property prices only come into the picture on buy and sell, nothing to do or discuss with the tenant. If property prices crash and it was significantly cheaper to buy.rather than rent and they leave. This affects our rent prices on renewals unless there are high rental demands.
When times are good we reinvest back into the property to keep the properties up together, this helps when times are tighter to keep an up to-date portfolio.
If tenants want improvements which are wear and tear then its down to us. If it’s enhancements then there’s flexibility to negotiate when they, you or both of you work together to achieve this.
I’ve just upgraded bedroom fixed furniture to give the tenant more storage. A two person job we did it together, even another family member helped.
It cost me a bit but no labour costs and one very happy tenant. It means they are less likely to look for a bigger place with more storage. If it adds just one month to they stay , its a good investment but more than that it keeps relations at a high. When it comes to rent increases its an easier conversation and normally not a issue. These are in my opinion how professional local landlords should be and when you see past tenants in the area they stop and chat in a friendly manner, give you a good name. . Buying non local properties doesn’t mean you have to be any different with your principles, just distant operating methods.
Across our landlord blog we have a mixture of landlords with different skills, abilities and principles showing that they are the standards others should aspire too and to give being a professional landlord a good name which sadly those who do not follow good working practices give landlord’s a bad name.
If you have tenants who are, and lets face there are many in the market, who are shall we say difficult, it doesn’t mean our standards should drop or attitudes change, we just manage them different.
Not sure who you are dressing to but i take it you had a typo.
How about asking yourself the question would you align to the market rate which is way higher than your current one when your rates go up? which get to the point when you are asking yourself this way? It is not about whether my rates are up or down, it is simply telling them the message no room to haggle. Period. I couldn’t care less to tell them what my situation is, just giving them the expectation not to haggle.
You are right there are many tenants in the market if they are playing difficult then it’s time for them to leave, my attitude is as usual fair. AST ending renew with at least inflationary if not complying off they go. Thanks for agreeing.