Should I increase the rent?

[Everywheretwice]

I own a property that I rent to a lovely family, a couple and their primary age son. They both work full time. The wife's father also lives with them, he works full time too.

They've been in the property for 6 years, they have always paid £800pcm, on time, no issues, and I've never raised the rent. Market value now would be at least £1100.

I'm torn between raising the rent slightly to help cover increasing costs associated with the property, or leaving it as it is because I like them.

Are you currently covering your costs and setting enough aside for repairs? if no then totally fair to raise it.

You sound like a very generous landlord.

I think it’s fairly normal to have a rise most years, I do in my rental property. They have 3 incomes so should be able to stretch to a higher amount

Give a generous amount of notice to increase and increase to £950.

I rent out a house. I don’t cover my costs but I’ve kept it low because, like you, I liked my tenants and I wanted to make life easier for them.

they’ve now stopped paying their rent in full and are paying it as and when (didn’t pay full rent in feb, nothing yet for March) and I suspect part of that is because I didn’t see it as the business that it is.

raise the rent.

@RandomButtons I've always absorbed the costs as they were minimal but now the difference in materials and insurance etc is noticeable 6 years later and post covid!

You are not a charity, so need to cover the costs involved in running the place. It's a business, raise the rent. They've been lucky not to have one so far. Maybe you don't need to increase it all the way but enough that the business is working and covering the costs involved.

Thanks for your post, yikes that seems like a lot!

What increasing costs are there? Is it actually hurting you financially? A young family who is renting is unlikely to have a spare couple of hundred quid lying around every month. That could be the difference between them going on holiday this year or not.

They’re your tenants, not your friends. Not raising the rent for 6 years, especially of your costs aren’t covered, is crazy.

Charge market rate and be a good landlord. I’d increase to market rate over the next couple of years.

@PotteringAlonggotkickedoutandhadtoreregister

I'm sorry you're having issues! How long were they reliably paying before they did this?

OP isn’t running a charity. There are 3 adults working full time in the house and they’ve had lots of time paying under market rate.

I don’t think increasing costs should be passed on to tenants who often can’t afford to save for a deposit for their own house due to paying someone else’s mortgage.

Someone has to pay the increasing costs. So the landlord's family should go without to cover another family?

£950 is far too much. That's a lot more than inflation.

Op I gave my tenants a small rental increase of 5% to cover the increased costs of insurance and mortgage. etc. On a £800 rent I'd increase to £840 or you may want to go £850.

From experience it's better to do small annual or every other year increments rather than a massive £150 increase to recoup what you could have earned.

Not keeping abreast of current rents is not your tenants problem and they shouldn't have to suffer. I'm speaking as a landlord here, see username.

@FollowTheMusic The lack of house building means housing is now scarce asset and so the increase in market rent is far outstripping the increase in average salaries. Most people who are renting have no choice because they can't afford to buy. Rent increases come directly out of already tight family budgets. If you want to profiteer from a housing market that is on fire then you're fully within your rights to but I couldn't look myself in the mirror personally.

Small incremental rent increases are more palatable than a sudden shift. My parents were the same as you. They rented out my grandmother’s house to help with her care costs when she moved in with them. They didn’t raise the rent for 10 years. It was already below market rate when the family moved in, as the tenants offered to do general household maintenance in return for a substantial discount. They haven’t looked after it as well as annticipated and now my parents are stuck with expensive repairs they can’t afford, in part because the rent is now half the market rate. They also feel unnecessarily duty-bound to the tenants because they have been there for a long time and wouldn’t find anything else for the same rent they pay now. It’s such a mess and never would have been if they had charged enough rent to cover future maintenance and raised the rent a small amount each year.

If they're good tenants and you want to err on the side of kindness I would split the difference between market rate and what they're paying now and increase it by that. Obviously give them notice of the change. My mum is a landlady and was a bit soft with her previous tenants, they took the pots and pans with them that were on the inventory to leave behind when they left, meaning my mum had to shell out £200+ for more, plus missed a number of monthly payments whilst there.
If they are good tenants by all means increase the rent but keep it below the market value as a gesture of goodwill, but it is also a professional service.

No increase in 6 years is unfair to you.

BUT, a big increase now to catch up is unfair to your tenants.

You should have made smaller increases every year.

However, given Covid, the COLC, etc., I can see why you didn't as it's been a bad time.

But you need to start now. I'd suggest an increase to £850 now. Then £900 in a years' time, then £50 per year looking forward until it matches reasonable market rent. Just tell them you held any increase back because of Covid and COL, but that you can't carry on at an undervalue.

They can afford an extra £50 per month per year, but probably couldn't afford a jump of £300 in one go and it would be unfair to put them in that position, especially seeing as it is partly your fault by not increasing by smaller amounts on a yearly basis.

Op, if you do decide to raise the rent and you manage the property yourself make sure you do it properly using section 13 and give at least a month's notice.

Last time I looked private renting wasn’t an investment scheme 🤣 what a ridiculous comment!

Joined for this: I’ve lived in my house for 8 years and my rent has increased £25 in that time. I look after the house and she gets paid on time every month. I pay very far below market value but I’m a good and reliable person. She has not kept up her side of some of the things at all. But I rent a 4 bed house with a drive and garden for £600 a month? I cause her no isssue. Don’t increase it.

@Everywheretwice my mortgage went up £1000 a month , you can absolutely raise the rent to £950. That’s life at the moment for everyone, you are not a charity. I think that’s way below the increase you’d expect over 6 years!

I'm a tenant. If you need to raise the rent, the kindest thing would be to raise it by say, £50 pm at the next suitable point and then again the following year, and so forth. If you raise it by a sizable amount in one go, your tenants may need to move out quickly and that will be a problem for both parties.

If it’s a business then raise the rent, https://england.shelter.org.uk/housing_advice/private_renting/rent_increases

id suggest emailing and suggesting £75-100 increase. Then next year increase by £50, the following year by £50.

id always keep rent increasing in very small amounts but keep rent below market value for a good tenant, it’s a balancing act

It's a business, you're entitled to make a reasonable profit. Increase the rent.