Rent increase

[B1anche]

I lived alone for many years before moving in with my partner. I kept my house and rented it out. At the time, the going rate for the same type of properties in that area was around £1,000 to £1,100 per month. I wanted to find a tenant quickly and, as I wouldn't be incurring letting agent fees, advertised it with a rent of £915. I had a lot of interest and chose the applicant who seemed the most trustworthy. He then asked if I would consider a rent of £900 instead and, as I couldn't face the thought of dealing with references again for some else, agreed but said, in writing, that it would go up in 6 months and then reviewed annually thereafter.

As he was a decent tenant, I didn't increase the rent after 6 months. Covid came and went and the cost of living crisis but I still didn't increase the rent. Mainly because of procrastination on my part but also, I'm not greedy and didn't want to burden the tenant with more costs at a time when everything else was going up.

As you can see, I'm probably not cut out for being a landlord and hate confrontation.

Fast-forward to this week. I decide to increase the rent to bring it more in line with market rent. Houses on this particular estate rarely come up for rental and get immediately snapped up. My research shows that rents for identical properties are around £1,200 - £1,300. If I were to put my property up for rent now, I could probably ask for more. However, as I didn't want to hit my tenant with a massive increase, I decided on an increase to £1,100 and wrote to him.

He came back to me, very nicely saying that he understands the need for the increase and what a great landlord I've been but that he can't afford the increase and could only manage a maximum of £1,000. He reminded me that he has kept the house in great condition. Please would I reconsider.

If I agree, he would be getting a property for at least £200 per month below the going rate (probably more). I feel that I have been very reasonable and fair with the increase and he wouldn't even get a 1 bed maisonette on the same estate for £1,000 (this one is a 2 bed terrace with garden). My partner thinks he's taking the piss and could probably pay more.

I'm not sure what to do for the best and would really appreciate some other opinions:

YABU - He's a great tenant, it will be a hassle finding someone else. Give the guy a break and let him stay there for £1,000 per month.

YANBU - You have been subsidising this guy for years now. Increase the rent to £1,100 per month and if he cannot pay it, then he will need to find somewhere more suited to his budget.

Op, are you in the UK? Are you allowed to increase the rent right now? Where i am there is a post Covid cap in place until March stating that rents can only increase by max 3%.

Not sure your work status, but increased hours/second job would be another way of increasing your income perhaps?

I would ask him to go halfway and pay the £1050 and even point out comparable properties at the higher rate.

Yes he is a good tenant but you have been a good tenant and he will be aware he has been on to a good thing.

With careful consideration you would be able to find a tenant who is just as good and risk free.

In the circumstances I would say you would be prepared to accept £1050 and the next review will be I one year and tk make sure you do review it even if only say a £30-50 increase.

Ignore those saying you don't need to charge market rent. That's like me telling them they don't need to work for their full salary and should work for less.

1100 would be a 22% increase which wouldn’t really be fair all at once. I think 1000 is much fairer, as that’s still an 11% rise and steep increase.

It’s easy to say you would get 1200/1300 but you might find that’s not the reality if you actually try. I think it does sound a bit greedy.

I would also remove the ‘subsidising him’ chat as that’s not what you’ve been doing. You set a rent and he’s been paying it.

Are you only considering putting the rent up because you've seen other landlords are charging more? Not because you need to?

OP you owe nothing to your tenant beyond the contractually terms. I'd be going for the max rent and if he can't afford it he gives notice.

If you put prospective tenants through a thorough vetting process your chances of getting a bad egg are greatly diminished.

OP similar situation to you. Almost verbatim. With the difference it’s two people with one original tenant and his friends moving in. I do let through an EA. I have decided to keep the rent the same for this year but have asked the EA to write in to the contract an annual increase of 3-5% going forward. They look after the place really well. For the sake of an extra £300 a month I am sticking with my tenants. If this guy looks after the place and is reliable with the rent I would agree £1000 but have a formal contract stating an increase pa. Good tenants are worth their weight in gold. Good luck

It's not.

you need to check the laws as im pretty sure you can only increase by 7.7% this year ..

which would be 969 a month

Also there are new laws put in place at the moment regarding price increases but not sure what those change but it makes it harder for landlords due to Cost of living/.covid stuff

I'd tell him you will raise it to £1000 but from now on their will be an annual increase in line with inflation.

That is not the case in England.

Gosh, id keep him x you may get amazing tenants but my friend let out the house attached to ours x we've had a lovely single mother next for years.... it's worked lovely no problems x

However, her partner of two years got really funny about the rental price; which eventually led to the mother being evicted. She actually benefitted in the end-allocated a brand new house from the local authority- however, there new tenant who's paying an extra £300 per month is an absolute slob.

Loads of broken cars on the drive, fridge freezer, sofa in front garden. Back garden full of dog poop..... grass all dug up and ruined. He's rude and aggressive and as neighbours we all complain to her.

It's a risk.... I'm just sharing what the last 2 years have been like for us. I wish I covered her rent increase.... because this guy is something else 😦

I’m the same as you OP - mortgage free flat rented out. I actually never raise the rent for a tenant for the duration of the tenancy as it is SUCH a ballache to sort it out for a new one. My current tenant has been there 5 years and I like her and I know she’s paying £700 pcm less than the man in the flat below and I don’t care. I’m not affected by interest rates and the tenant before that told me that because I kept the rent the same she was able to save for a house deposit. I’m lucky and I want to pay it forward a little bit.

This is a great response. Thank you.

Landlord here too and I don't raise the rent during the rental term. One set of tenants stayed over 8 years, current ones over 6.

I'd meet him halfway at 1050 too. If he started living there before the pandemic that's four years - it's about time, but you are asking for a considerable jump.
I have a similar issue. When Covid hit my tenant lost her main job, so for six months agreed she'd only pay half rent. She did get another job but not at the same level so only started paying a little more. I figured I could afford to take the hit for a bit longer. Then I finally realised she'd been there almost three years paying only two thirds of her rent and it was definitely costing me - the service charges on the flat kept increasing and I pay that. So she now pays what she started on, but it's four years plus since she moved in and frankly she should be paying a lot more. I have another flat in central London and the rent has gone up 25% in that time (last increase was when it was re marketed for new tenants). Got them within a week of advertising. Rent is my income - I can't subsidise my other tenant much longer.

'Rent is my income'

Statements like this make me so sad, especially when folk don't realise it's really the tenant subsidising them, and not them subsidising the tenant.

A member of my family rents out a property and once had the place wrecked by a hideous tenant. They passed their first inspection fine but then we think must have sublet it and among other acts of vandalism, the person living there actually wrecked the bed/mattress by using it as a toilet. 🤢

I have a friend who went abroad for a year and let out her house. Similar story and it cost her over £5000 to fix holes in walls and replace carpet etc.

If you have a good tenant, hang on to them! Personally I'd accept his counter offer as a fair compromise.

Completely agree with this. OP, your quality of life and that of your family are more important than this tenant and his circumstances. It’s time to either give him notice or for him to cough up the market rate. You’re not a charity.

The extra £100 would give you £1200 gross extra per annum. 1 month's rent. It will probably take a month to get new tenants, do credit checks, references etc. You then have the uncertainty of what kind of tenant you will get. Good tenants are a rarity and very very good to have.

My advice is:

• keep your good tenant
• raise the rent to £1000
• do a proper inspection before renewing as you haven't checked on the property in a long time. There may be maintenance required.
• Do more regular (annually/bi annually) modest rent increases going forward so you don't fall too far out of market norms.
• Consider getting an agent in the future. I find mine very useful for keeping up with legal requirements. I'm assuming you have an energy rating on the property, carbon monoxide detectors, gas and electricity safety checks etc. The requirements are always changing and my agent keeps my knowledge upto date.

£200 a month is a big increase for him to look for. On top of everything else going up!

I lived in a property for 4 years and my landlord didn’t increase the rent the entire time. In return she got a good tenant who treated the place like home and left it in a spotless state. I only moved due to having a baby. I was paying £500 a month if she had increased to £6-700 in that time I would have had to leave.

How has she been operating as a charity exactly? He's paying rent. She only wants more because she thinks she can potentially get more, not because it's actually costing her any more.