Hello. I’d welcome your views/experiences on rent increases. When and how do you go about this?
I value good tenants and my last tenant stayed for 10 years. I didn’t increase the rent until she’d been there 7 years and then only by a bit. By the time she moved out she was paying way below the market rate.
I’ve got tenants who are coming up for 2 years in situ. We generally get on ok but they are quite demanding and my maintenance costs have shot up. Several tradespeople have commented on their attitude and they fell out with the neighbours. They do pay the rent on time and have secure jobs. In turn I always fulfil my duties as a landlord and I treat them with respect.
The rent they pay is now £150 below the market rate. I would like to increase this a bit because of my costs. What sort of increase would be fair or should I leave it another year?
There are lots of different views on this issue. My own is that rents should always be at or around the current market level. However, this goes up and down. I’m not saying that you should reduce rents, but each year or two you should probably do a desktop review of local rents for similar properties and either increase a little or leave it where it is. Small increases are usually more palatable for tenants and leaving them too low encourages people to stay for the wrong reasons. They can become trapped by their inability to afford anywhere else that’s desirable. In the period 2013 to 2016, rents increased dramatically in London and I raised them by 3% each year. After that they plateaued and have actually fallen a little more recently, so I haven’t increased in the last 4 years.
Thank you for your reply David. I think a slight increase would be fair in the circumstances when I look at other similar properties for rent in the area. On the other hand they’ve paid in full over the covid period (for which I’m obviously grateful) so I don’t want to seem heartless.
Yes, my point above was a general one. Given the covid situation, I would not personally increase the rent for a tenant unless it was drastically below the market price.
i would not raise rents in the current climate … seems inappropriate for the times.
I wouldn’t raise at the moment either, they’re paying which in the current climate is great, even if they are hard work. Also if you put their nose out of joint with an increase currently a lot of the power is with them if they decided to stop paying and just stay put. Let sleeping dogs lie
I have suspended my rent increases during the CV19 period, which I think is a sensible approach if your tenants are still making regular / full payments.
Manage it yourself then you have less expenses
Sticky wicket then . Balance between a good tenant, an increase, losing them , expense in getting another tenant.
Hi
My management fees have also increased a lot. I haven’t passed these on. It’s a difficult one and will depend on how competitive your rents are. Personally I prefer to keep the tenants happy and financially this works with lower voids, maintenance costs and tenant finding work than trying to maximise the rent.
Ultimately the income from renting is variable and maintenance costs will fluctuate. I would only use maintenance costs as a reason to increase rents if the current rent is below markets rate as a tenant doesn’t need to make our investment viable but is fair to charge up to market rates.