I have had sitting tenants since April 2023. They barely scraped through referencing at that point when the rent was advertised as £1700. As they had a young baby, I allowed them to rent for £1600 for a year, but have been raising it since then, and I want to raise it again to £1850 (from £1750) on 1st October, which is 1 year since the last rent increase. I have checked this is fair market value for the property size, number of bedrooms and location.
They have an agreement with Reposit, which I never checked out, and so, as it stands, I am only covered for 8 weeks of £1600 rent. I now want to increase this to £1850. To do so, Reposit have told me I have to get a new contract, new reference checks on the tenants and a new inventory - all of which is no problem. I use Open Rent.
But what if they fail their referencing as sitting tenants at £1850? What if they can’t afford the Reposit? Or worse, a deposit of £2,134.62?
Are they good tenants who pay on time and take good care of the place?
You are conflating 2 different things
A-whether they can afford a 5.7% rent increase to 1850
B. Whether they can afford the increased amount for a higher Reposit based security deposit which is there to cover potential damage etc if they leave
Unless the risk of damage or the value you need covered has increased why not leave it at the cover for 1600pcm and they keep paying £30 pa. It’s up to you and the tenant how much Reposit cover you/they require not Reposit. Dont think Reposit cant force you /tenants to get a new deal instead of them continuing existing deal at £30 pa, you have already increased rent without tenants having to have a new Reposit deal -but check their T&C and ask them.
Not being able to afford the extra 100pcm or 1200pa is more of a concern but it’s a matter of negotiation between you and tenant. If you increase it more than they can afford you risk either they get into rent arrears or they leave. Equally you have no idea if they have had pay increases (or promotions) over last year or if they feel they can afford. You could propose 1850 to bring up to market rent on basis theyve had it below that so far and see what they say. Then be willing to negotiate and agree something lower like 1825 or 1800.
Remember the cost of a void period and risks of getting a bad tenant far outweigh pushing to get that extra £25 pcm or £50pcm.
If they are good tenants who take good care of your property it’s worth accepting a slightly below market rent to keep them.
If I were your tenant I would refuse the rent increase, fair or not. I would reason that you won’t be able to do anything about it till the arrears = 3 months rent at least, £5,550. At £100 a month that means you can’t serve notice for 55 months, i.e. 4+ years. And then who knows what the judge will say, and how long it’ll be before a hearing. I’d tell you to do one.
Well it depends on @Jo144 's relationship with tenants and their attitude. They will know they paid below the original advertised price but have accepted increases since. They may also know if they refuse any increase at all even tho @Jo144 will like them have increase costs, then they risk her serving notice by saying she wants to move in, or that she wants to sell. They have a small child and wont want to be evicted. So they may choose to negotiate or if they can afford, accept the increase.
@david240 - Thank you - yes, I know there are 2 separate issues at play, but they were both playing into my affordability thinking, whether they were different or not. I asked Claude after putting this here, and it put it into perspective - the difference is actually only £330 or so between 8 weeks’ rent at £ 1600 pcm and 8 weeks at £1850, so I will keep the Reposit at £1600 - thank you for your advice.
I reduced the rent from £1700 to £1600 for year 1, and then when I wanted to put it back up to £1700, they asked to delay, so we agreed £1650 for 6 months, then £1700 for the next 6 months, and it has been £1750 for the past year. When they changed jobs and their payday changed, I also allowed them to pay 8 days later, so they pay 8 days in arrears and the rest in advance. I think I have been quite amenable.
Current rents for a 2-bed in my location are about £2000. They have a kid with an EHCP in the local school, so I don’t think they want to move. My costs have gone up, including now paying for rent guarantee because of the Renters Rights Act, and I also need to save to pay for works to bring it to EPC C by 2030. It is currently at a D.
There are some exemptions from the latest govt proposals/consultation you may wish to use
a) if only works left to do are wall insulation (lasts 10y)
b) if freeholder doesnt give permission (needed eg for a hole through wall for a heat pump)
c) if tenants dont want the inconvenience of builders/works being done (lasts till tenants move)
If either are claiming benefits eg child benefit, then eg boiler upgrades may be eligible for govt grants too
I was not aware of those, no so thank you. They will be claiming child benefit, I am sure. They may also be claiming Universal Credit - they both work, but that doesn’t necessarily mean they earn a lot. There’s only electric…I need storage heaters
Ps there will be a difference between asking rents and what people actually pay. Because RRA bans rental bidding or offers above the advertised price, LLs will now be more inclined to advertise at the max they hope to get and then accept less.
In any case one 2bed will get a very different amount from another based on condition, current demand and supply
The new contract and inventory that Reposit are asking for are unnecessary and unreasonable and against your interest to do. Other landlords should take note when considering whether to accept Reposit.
Legally Reposit cannot ask you to write a new contract .
RRA overrules all insurance policy’s on such matters .
Eg mortgage brokers who exclude benefits is now an invalid reason under RRA ( unless it’s in the fixed term of an existing AST) beyond that point RRA usurps all these external factors
The n r l a webinar last week addressed the fact that RRA nullified all policies that conflict with RRA.
I would take legal advice or at least speak to the n r l a
Rent increase is via a section 13 only . The tenant has to accept it . If they challenge it and you lose you can’t enforce the rent increase.
You certainly can’t make them sign a new contract . Reposit doesn’t have a say in the matter . What happens if they refuse ?
Reposit is a deposit alternative scheme. I don’t understand how they have anything to do with rent increases. When you increase rent, you cannot ask for more deposit. Similarly, when you increase rent, the amount Reposit covers does not go up.
I think you are conflating two things.
Reposit probably think they are being asked to cover more potential cost. Correctly they’re saying that would only be the case if there was a whole new tenancy and inventory.
You want to increase the rent, and maybe you think you can increase the deposit coverage at the same time? You can’t, so Reposit are nothing to do with this. You don’t need to inform or speak with them.
Just follow the appropriate rules for increasing the rent.