…which means if Tribunal decides that rent increase was below market value and puts rent higher than initial increase, T will have higher payments backdated by several months. As well.
My suggestions for your eventual response:
Dear Tenant,
I suggest you find “Social Housing” or get your own mortgage. That way, you’ll get the answers you’re looking for.
Best Wishes
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Dear Tenant
As a business, we are not obliged to share sensitive financial information. However I can confirm that your increase is X percent which is well below CPI inflation (which is currently at X percent). The bank of England base rate has increased from 0.25% in January 2022 to 5% today - resulting in the interest on a typical mortgage to increase in excess of 200%.
Buildings insurance has increased over 50% over the last few years. Trades, repairs and all other business related expenses have increased exponentially. Taxes have also increased for businesses.
At this stage, an increase would be considerably more than £50, however we value you as a tenant and have kept it to a minimum this year. Your rent remains between £100 and £145 below the average price in the area (feel free to refer to Right Move to view comparable properties). Therefore, next year, rent will be increased further to get us closer to the market rate.
Yours sincerely
The Landlord
P.S. Be grateful it’s only £50 and don’t question me again unless the raise is above market rate.
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My above message further makes me question… Why hasn’t the economy crashed yet?!
Anyway, I digress…
Keep fighting fellow landlords.
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Very nicely written. However, the effort may be lost on tenant. They often go on what suits them and get angry when confronted with facts.
I wouldn’t make the mistake of engaging with T again over the raised rent. They will be informed of yearly unilateral increase through S13, and if they’re not happy, we’ll reiterate their two options again (tribunal and moving out). Depending on their response to that, we may serve S21.
I would reply to the tenants like this
"Your rent after increase is approximately £100-£145 under market rent for this area. I have kept your rent increase below this as I understand this can be a difficult time for you.
If you wish to challenge the £50 increase and want me to review this I will do so but please be aware this is more likely to result in an increase to match market rents adding possibly £100 to your rent level.
Of course your rights to challenge this rent increase through the courts remain and as always I will comply with the any court directions. But do be aware courts base their directions on market rents and may direct you to pay more rent as well as paying their costs if they do not rule in your favour.
So far we have a had a good relationship, and I have been able to keep rents below market value because I have been able to rely on that.
You are I’m sure aware that precise details of my mortgage and/or other expenses are commercially sensitive information " and cannot not be revealed unless requested by a court of law
If you feel the rent is to high and you can find better priced accommodation locally I will of course give you good references and release you from your contract as per the tenancy agreement , assuming you continue to pay rent on time.
Best wishes - and hoping you can agree to the modest proposed increase.
If you have not already enclose a section 13 notice of rent increase with your reply.
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In this instance, the tenant wanted a breakdown of the costs involved. So the post is answering said query - whilst not disclosing confidential information - hence I wouldn’t really see it as confrontational (but I do realise it’s easy for someone to take offence in this delightful snowflake culture we live in). The tenant questioning a reasonable increase could be considered confrontation. I personally wouldn’t over think it and would state the facts (ensuring to stay professional and polite, ensuring not disclose business information as it has nothing to do with them).
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Just to note, confronting sb with facts does not automatically mean being confrontational, which is an attitude. I certainly didn’t mean it in this context.
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I have just put up my rental by £50. Like yourself, the market value is at least £100 more than this but the tenants do pay on time and don’t cause me any problems. I justified my increase to them with quotes from 3 estate agencies suggesting suitable rental prices that we should be charging for the property. I also said that if I was not able to increase the rental I would be forced to sell the property.
I was expecting a backlash but they have been fine with it and signed on the dotted line immediately!
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Hi Jason,
Factors affecting rent increases depending on your accounting structure;
- Terms in the AST
- Depreciation - wear and tear, replacements
- Age of property,
- legislation changes,
- Inflation,
- Market trends,
- Finance costs
- Your financial targets for ROI,
- Insurances,
- Scheduled works,
- Management costs,
Maybe you’re not charging enough?
I would do nothing to aggravate the situation and you do not have to reply to the letter.
Arrange a visit and do a full inspection, with photos of any damages or repairs needed. If things go bad later you also have a stake in the ground.
A stated above, your business is your business, the option for the tenant to leave is there and you should discuss if they wish to leave or stay at the new rent which is below market rates (3 examples is a good idea).
If they get stroppy, you then have the option of a section 21, have it prepared and serve after the stroppy conversation (if you wish), but still do the inspection too.
Better to sort out now than 6 months without rent only to have to sort it then, make sure though your tenant admin is up to date too, as things may have changed since they took occupancy . Give them any missing items which are now required and get a signed receipt for them itemising what was given.
If they fail to pay the new rent, send them a letter of rental default and the amount for every occasion, and keep a copy, use 1st class post. each occasion accumulate the costs and any admin charges, interest charges (as per AST) and your course of action from after month 2 unless you decide just serve a s21 as they are buggering you about.
Hopefully though things will work out for you
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Completely concur here Jason. I had issues with my latest rental with people asking for 25% discounts on the advertised price when others didn’t even question it.
Thankfully any increases I’ve had to make have been accepted without fuss because I have carefully selected very amenable tenants, but in some cases, with a bit of tacit dissatisfaction for sure.
I also believe a lot of tenants don’t have basic manners, decency and respect when interacting with landlords. They don’t apologise when late, cancel appointments last minute, or don’t show up at all. They make unrealistic demands about fixtures and fittings like they are kitting out the Ritz. But ultimately a lot comes down to (imo) the illusion of homes they see on Airbnb, Instagram that breed entitlement.
It also filters through to agents, who often try and patronise you about what modern tenants or buyers want. I’ve had that many times since covid that tenants / buyers now want balconies, gardens, high end finishes etc - don’t we all?
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Brian7 I love your response which is very well put maintaining a level of professionalism. I will plagiarise it for whenever a tenant gets stroppy with me😂
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Yes I like Chris solution and the only information I would give them is factual comparisons of the £150 elsewhere . Luckily when my tenant left , all good as he was reliable, just left it dirty so I suggested he pay for a professional clean or give me £100. The new tenants happily paid the £300 a month increase as it was in the middle of comparable properties near Heathrow… good luck . Doesn’t our landlord legal option cover us over rental disputes? Hope so.
Most tenants are not aware rents have increased so much. The issue is, they are paying more for the exact same product with no added benefit.
If you don’t increase the rent, with inflation at 8%, you are actually reducing the rent. So by increasing by only £50 it’s like a rent reduction for you. I bet if you increased by 8% it would be substantially higher.
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Prior to the hike in interest rates I was happy to not impose rent rises on sitting tenants, only increasing rates when let to new tenants at the current market rate. The issue with charging below market rate rent is that when you do need to raise rates or indeed end a tenancy to sell a property then tenants will often have problems finding comparable accommodation at the same rent making it difficult to move them out without a long drawn out procedure.(how many tenants move out on the stated date of a S21). I have informed all my tenants that rents will be reviewed changed annually. Social housing increases normally CPI+1% are caped at 7% this year and while private letting is not bound by this figure its a good base for comparison.
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agree but then we know these scum will dig their heels in, not leave, not pay rent and trash the property… its a no win all round.
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Almost every possible reply had been offered here.
Your tenant has made a gift to you of showing their hand as being difficult going forward when we will become powerless after the Renters Reform bill becomes law.
If you have a difficult property to let them negotiate. If you have a lettable property in a city for example where there are foreign prospects like in London I would evict in this case.ake sure you are fully compliant before you do.
(1). I don’t agree tenants are not aware of rent rises. If anything they look at this more often and more closely than LLs particularly portfolio LLs who have a range of properties to consider. Tenants have just the one.
(2) this tenant has signalled that they will be difficult and after the renter’s reform bill becomes law you will be stuck.
(3) if you can get a more trouble free tenant now is the time.
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@Susan25 I object to your characterisation of tenants as scum. I have been involved with the PRS for over 60 years and have never described any tenants as scum. I am on good terms with all my present tenants who are all honest people and none of them would even think of trashing their homes.
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Susan was not talking about good honest people. She was talking about scum, regardless of being tenants or not.
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Tim_Ira and by using that word she was playing straight into the hands of the forces arraigned against the PRS. Very bad tactics at this dangerous time. I can see the headlines now - ‘Private Landlord describes tenants as scum’. Think of the damage that would do to the efforts being made to amend the Renters (Reform) Bill.
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