Looking for a landlord’s perspective here, as I’m a tenant and feel this is somewhat unfair.
We had an offer accepted for a tenancy at a £50 discount from asking, for a 24-month term. I felt it was fair for the area, as their asking was on the high side, but not far off and it was a nice property.
Anyway all seemed great, and the reference checks passed for us both.
At the contract signing stage, we receive an email from Openrent saying a custom clause had been added:
The landlord and tenant agree to a Rent Review on the first anniversary of the lease. The Rent review is to be in line with inflation using the Retail Price Index (RPI) and is upward only.
We challenged this, asking for it to be removed. They refused, so we offered to accept a rental review clause based on the ONS’s London property index, with the floor removed (so it could go down as well as up). We figured this would keep them in line with the market, and would be difficult to argue with.
We were wrong. They held firm, and asked us again to accept the clause. We also held firm, so our deposit was refunded.
As this our first experience with Openrent and Rentnow, I want to gauge the sentiment here in case it’s common and we encounter it again. Would you feel this is a fair clause as a landlord?
We considered that, but wanted a longer lease - staring a family and all that! Both us and them wanted a 24-month term, so it didn’t feel like the right thing to change.
I am a landlord, but this does seem rather unfair, due to the upward only clause. Smacks of greediness to me. I haven’t increased either of my tenants rents since June 2017. I feel increasing rents without needing to just adds to the inflationary cycle.
Whereas increasing rents annually is not universal many appear to do so especially where the market is volatile and rents are rising
Personally I only raise my rent in line with inflation and keep them generally under the current market value
A 24 mth fixed period seems unusual to me, 6 months being the norm so a rent review after 12 moths doesn’t seem that unreasonable to me
However the fact that it was not discussed until contract signing I consider to be very bad form
I’m a landlord too and agree with the above comments. I think it is unreasonable to insert such a material clause in contact without discussing it first. If I was on the receiving end I would consider it an act of bad faith and walk away.
In terms of rent increases, my policy is to not seek any increases for the duration of a tenancy, and only seek to reset at market rates once tenants have moved out. My objective is to get long standing tenants with whom I have good working relationships rather than to maximise short term gain. In a situation of falling rents tenants always have the option of moving elsewhere, although I have never had this situation and several tenants have told me they have been put off moving because they like the way I do business. I try to make sure my objective is aligned with the tenants and everyone is happy.
I think some landlords may have difficulty putting rents up, me included. I have looked at properties with tenants in situ for sale and the rents have been much lower than the market rate. I have avoided buying them because I always think I am going to end up with a battle when I put the rents up by over 50%. To try and get around this problem I am thinking of putting a rent review clause in my contracts in future, reviewed every 2 years maybe, using the ONS data also but I hadn’t considered the possibility that rents might go down. Haha. Fair enough though that’s the risk you take.
I am a landlord too and disagree that the landlord has been unreasonable. Rents here have been depressed for some time and are expected to increase in the coming months. Ordinarily a landlord would review rents after the first year and either increase or leave as is. You have got a two year tenancy, (which I would never give) and you’ve also negotiated a discount to start with. I dont think it’s unreasonable for a landlord not to want to be locked into tenancy that is below his rental expectations for that long.
This was a long time ago now, but I objected to the clause because it’s so one-sided. The fair options are to either accept the market rate (and allow for adjustments up as well as down), or fix for the term of the contract and accept that any future increases are by negotiation.
In reality the odds are overwhelmingly in favour of rents going up, due to the treasury targeting 2% inflation, so the issue was more the principle than what we would actually have ended up paying. I thought using ONS data and removing the floor was a fair compromise. But they didn’t think so, so we walked.
Fine, but given the shortage of decent properties to rent and the difficulty of getting one for many tenants, I would not urge others to adopt this principle.
Incidently, upward only rent reviews are the norm in the industry. If any landlord gets too greedy, the market punishes him and there is usually a course correction.