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.

To rent it out at below market value and then to try and bring it up towards market value is on the cheeky side.

But as others said, a good tenant who stays long term is invaluable. Your next tenant may only stay a year and then you have to find another. And then the one after that fail to pay rent and trash the place. Yes you could get more money, but you also have stability and a good relationship. Don’t ruin it by being greedy if you don’t need that increase.

Another thing… market rate is basically extortion nowadays.

If you need to increase your income you can get a job like everyone else.

Do people realise she doesn't get the whole £1k?
Tax
Insurance
Maintenance
Reserve for things like boilers, or the roof or the wiring or decor...

She doesn't get £1k for "doing nothing". Her costs have gone up as well.

However any increases should be fair. 20% isn't fair. 5-10% after 4-5 years would probably be classed as fair.

I have a job, thank you.

If he refuses to pay £1200 then you will have to evict him. There will be no other properties available at £900 so he will stay until he is court ordered to leave. Could you be bothered with this?

Take the £1000 and be clear that the grant will increase next year.

I feel you. I'm a landlord and currently rent my flat out for 750 a month when typical rental prices are 1100 for the same property.

I don't want to fleece people and I have a nice couple as tenants. However they are paying so so much below market value....

My monthly management fee on the flat keeps increasing and with that, the mortgage and the lower rent...the maths isn't really mathing.

I'm probably not cut out to be a landlord either (accidental not by design.)

I would hang on to a good tenant, less stress and regular rent payment = less stress.

@B1anche you are doing nothing wrong by increasing the rent. I was a private tenant for years until I managed to get a council property.
Maybe meet in the middle with him. £1050? It's not unreasonable and times are difficult for everyone.
I really dislike the landlord hate on here.

You lost me at I don't have a mortgage

That's a huge increase to find. I think you need to go up incrementally rather than whack on a huge sum

We could increase the rent on our flat, but we don't because we don't need the extra money and we want to keep the tenants as they have been brilliant.

Where is the landlord hate?

I agree about good tenants being hard to find. I have had similar, where the tenants were paying well below market price, but were amazing and kept the flat impeccable. I increased the rent slowly. So in your scenario, I would increase it to £1,000, but warn him from now that in 1 year there will be another 10% increase and it would take it to £1,100.

I think it does sound like you're taking the piss and a bit of greed involved, OP. You don't need to raise the rent you're just doing it because you can.

I've posted about my parents renting out a house (they didn't buy it to let I would add, and there's also no mortgage ) and they've had a good tenant in for some time. This tenant looks after the house and garden and it's under market rate, raised minimally.

It really is.

Agreed.
Any landlord who is able to choose not to fuel that particular fire gets a thumbs up from me.

Accept his offer of £1000. You don’t have a mortgage so that’s a fabulous return.
We rent out a three bedroom terrace for approx £100 less than the house next door.Our tenants are a couple with two children. The mum has additional needs. We don’t have a mortgage so why charge them more than we already are charging just because we could. It pays to be kind. Good tenants are worth more than a few hundred quid a month extra.

More people on mumsnet are tenants than landlords and are telling you what they would want their own landlord to do. Every £200 a month you subsidise this mans rent by is money out of your child’s pocket.

yes you are putting the rent up, but still below market rate. So I would stick to your guns- i doubt he will leave as another comparable property will cost him more.

keeping the property in good condition and paying rent on time is what he should be doing anyway. I know many have trouble with shit tenants, but really as a negotiation technique I do find “I should pay below market rate because I haven’t trashed the place” a little difficult to be grateful for.

I think the problem is putting it up so much in one go. Better to put it up a bit each year, so it doesn't feel as much as a shock.

I think I'd go with the £1k as you know him, but then put it up by a set percentage each year.

I rent out my house at £500 a month which is £300 below market rate, I haven't increased the rent in the 7 years my tenant has been there for a couple of reasons. 1, I own it outright so still make a small profit every year, 2, he's looking after an investment that will continue to gain value unlike investing the money which may be worth less by the time I need it. 3, I'm not a greedy arsehole.

@Wasbedeudetetdas I meant on landlord threads generally.
I agree with @Haydenn.

To be fair some landlords deserve all they get. Some tenants do too though.

Update if anyone is interested.

I asked the tenant if he would consider meeting in the middle at £1,050 and he has agreed.

In future I will be increasing the rent on an annual basis in line with inflation.

Thanks for everyone 's input.