I would be grateful for some advice. What would you do in this situation?
I’m currently charging considerably below market rate (around 80%). I was happy with this arrangement but due to some of the regulation changes coming in, I’ve now proposed a rent increase to 90% (at renewal). At 90% the property is still good value compared to similar properties in the area.
My current tenants (2 friends on a joint tenancy) have made it clear they can’t afford my rent proposal (90% market rate). We exchanged a few friendly emails on the subject, and they specifically told me what their maximum budget is.
Since then they’ve come back to me and agreed the rent increase I originally proposed. I suspect they’re struggling to find a new property! They’ve also proposed the following: A) a 12 month tenancy contract, B) a ‘tenant-only rolling break option, subject to 2 months notice’. They’ve also been honest and warned me that one of the two tenants is now looking to move out of the area!
Is it a good idea to renew the tenancy, knowing that the new rent level is unaffordable?
If I do renew, should I give them another fixed term, or make it periodic?
Is there anything I should be concerned about? One thing I want to avoid is the tenancy ended at Christmas, for example, when it will be impossible to find new tenants.
I guess they’re trying to give themselves time to a bit of time and flexibility to make new plans, which I totally understand. I’m trying to be flexible but at the same time I don’t want to agree to anything I’ll later regret! One option I have considered is a 6 month contract (so I’m not tied in for a full year), but also making the break-clause longer, so they can’t give notice and leave over the Christmas period.
Thoughts please!