I’ve tenant whose been with me nearly 10
years … Never increased rent but has a very small one latsy year . It’s stil welll under market level and want ti bring it closer but still under . What’s my options I don’t want to lose them they’ve been good
You could stagger the increase over a few years.
Explain situation to them and see what their thoughts are.
It’s hard for them to contest it if it’s bringing it to market value.
Show them multiple examples of comparible properties and their rent levels.
What’s the difference? Is it like they pay 600 versus market 800 or they pay 1,000 versus market 1,400?
Yes they pay around 600 instead of about 850 plus
You have another post about this issue below which has already been answered.
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Big rises scare tenants. I would increase over several years, not more than £50 pcm per year. I review rents annually - & usually put them up if only a little - to avoid this scenario.
You could speak to your tenant, and tell them that the rent is under a market rent and will have to, over time, increase. If you combine that with a £50pcm rise as per Tricia’s advice, then that should give the tenant both a below market rent (still), and they’ll know it is. But, also manage the tenant’s expectations for the future. And, allow them to plan.
I had to move from a property significantly under market rents to full market rents. It was a bit of a shock which motivated me to buy. However, my market rent of two years ago would now already be under market rent.
If rent is £250 below market value, market value is £850, then a £50 increase would equate to about 6%. He would fall even more behind the inflation/rent increases!
He would never catch up.
Op: give them comparables and raise rent to £800. If they don’t want to pay, they need to move and you put in on for market value. Why give money away?!
I’ve decided I will write them all a letter at the end of this year explain the rents are welll under market price and put it up over two increments in 2025 to a higher rent but still fair and under market rate as they’re all good long term tenants . How’s that sound.
You can only increase rent once a year so you’d need to do first part in 2024 and balance 12 months later.
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Knowing their financial circumstances, if £250 is too much for them to accept you may as well bite bullet, do it in one go now and accept they probably leave.
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Thanks I will probably write to them all at the end of year explaining increase in Jan 25
If you work out the compound effect of not increasing rent each year to keep up to or just below market rate its quite a big amount that the tenant benefits from and the LL loses. When repairs and maintenance need to be carried out the lost revenue would be very useful.
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