Should I increase the rent?

Raise the rent to one that covers costs and gives a buffer to you to build a pot for major repairs like the boiler.

I've just plugged minimum wage into a benefits calculator and the couple with kids would qualify for £394 per month of Universal Credit.

That would bring the household NET income up to £5,023.

The real joke is that if someone posted that they had a household net income of £4.5k+ and posted to say they were struggling, they’d get lots of ‘oh my heart bleeds’ and ‘tiny violin’ type comments.

It just shows the hatred for landlords is strong in any circumstances. 🙄

Yes increase the rent just not straight to current market value

You say they all work full time so for context let's assume it's basic minimum wage

11.44ph for 37.5hr per week x 52= 22,308 if min wage I'm assuming no student loan (obviously just an assumption)

So that's approx 1,600 pcm take home per adult take off 100 for pension that's 4.5k monthly income for household

4.5k! Whilst yes I assume their will be some childcare fees you said they were primary age so not like nursery costs.

Even if you took the GP wage out (even though surely he would be contributing something) that's 3k per month

So yes I would put it up. If you want to keep them I would go with under 1k

As you know we have not increased the rent for 6 years and we value you as tenants we have been informed the current market rate is 1.1k pcm however we understand this would be a large increase to your family and as such we have decided to make a rental increase to 900-950 pcm

Obviously assuming you are a landlord that is keeping property up to date and safe.

100% this. ^

Some very valid points made too about "trapping" tenants if they ever want to move and find other rents are much higher

We see that scenario on here all the time, and rarely with any appreciation for how the current LLs have protected folk from increases - just complaints about what they'll have to pay in future

Happily nobody's suggesting OP makes huge increases, just a small yearly one to bring the rent more in line with others in the area

Increase it to market rate. If HMRC audit you for any reason you'll have a job to do to prove this isn't some sort of money laundering / tax evasion scheme. This happened to someone I know.

Indeed. Why is anyone presuming they’re on minimum wage?

Even if they are, 3 full time minimum wages is more than £60k per year going into the household. £4.5k + per month yet, so should be able to afford £1.1k quite comfortably.

People haven’t stopped to work that out in their hate for landlords. Quite pathetic really.

You are not a charity. It is only fair to you to increase the rent at a fair rate. I would increase it to £850 which is just over 5%. Any more would be too much.

Just to add, they probably qualify for Universal Credit if they're on minimum wage, working full-time and have kids.

@sheroku

There are three adults working full time in the property.

£1100 p/m rent is easily affordable on minimum wage - £367 per adult.

The tenants might be earning much more than minimum wage, anyway.

@Concannon88 · Today 12:10

What jobs are they in? I realise you aren't a charity, and its already under market rate, however 800 is a lot of money already. Id be interested in knowing are you breaking even or taking it as a loss?

I don't know where you live, but in 2024, £800 a month is fairly average (even LOW) in many areas, for a family home with 3 bedrooms. The tenants can always leave if they don't like the rent rise, and see if they can find another family home for 3 adults and 1 child, for less money!

A pp commented on this too and said it was around £4.5k which seems about right after tax and NI. It would probably be a bit more now since minimum wage has increased. That’s if they’re on minimum wage, they could be on a lot more!

3 x £20k ish salaries would pick up a lot more than one £60k ish one.

This is why most people are saying 'raise in gradually. '🙄

@taxguru

Being a 'taxguru', I'd expect you to know that the minimum wage incurs very little tax and it's also below the student loan repayment threshold.

Each person on minimum wage would pay £188 p/m in tax and National Insurance. So, the take home pay would be £4,629 - which is plenty to pay the OP's estimated market rent of £1,100.

They might, of course, be earning much more than the minimum wage...

Anyone arguing that a family on minimum wage with a small child should pay an extra £300 a month to a lady who clearly doesn't need it because "the market" needs to take a hard look at themselves. I was on the phone to a friend on Friday night who has just had her rent put up by £400 and she was in tears. She can't afford to stay so she'll have to move her and her kids out of the area.

I'm a business owner and being a landlord is not the same. If I put my prices up then people will either go elsewhere or buy less. No one is getting evicted from their home. No one is pulling their kids out of school.

You need to raise the rent. £950 is still under market rent. Give them 2 months notice of the rise.

Is that pre tax or post tax? What about NIC and student loan deductions, workplace pension deductions, etc.

It's net (take home) pay that would matter.

£800 really isn't a "lot of money" these days in the rental market.

My son has to pay £850 for an out of town, small, one bedroom unfurnished flat, and that's in a small Northern city, so not in the expensive London/SE areas.

I live in a run down Northern seaside town which is a very deprived area, and bog standard 2/3 bed terraced houses or semis are £800 per month in average condition.

Rental prices have rocketed virtually everywhere in the last few years.

I should have raised it but I have a soft spot for them!

The two don't haven't to be mutually exclusive OP; you can appreciate people and still have a proper business relationship, so a modest raise for each of the next few years is probably the way to go

I wouldn't bank on any appreciation for the lack of raises so far though; that way disappointment often lies

Three adults working full-time for minimum wage is £5200 p/m based upon a 35 hour week.

They should easily be able to cover market rent.

🤣 I like you!

Er OK.

What? You do a job for money presumably so stop being so sanctimonious! And unless you’re flipping superwoman/man, you didn’t care for all our relatives 🙄 I’d put your rent up just for that comment alone.

I would increase it slightly (with notice), and then review and increase (slightly) again every 2 years… Really good tenants who are reliable, pay in full and on time, look after the house and are easy to communicate with are a joy in long term renting. It is mutually beneficial for both of you to have them in the house. If you raise too much and they leave, you will have to spend quite a lot getting the house ready for new tenants - yes you could raise the rent at that point but there is no guarantee that they will be as easy to deal with or will stay long term. All good landlords know it is best to look after good long term tenants and don’t rock the boat!