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.

@Amelie2024 I think it is most definitely not me that needs to grow up!

The average landlord in London makes £996.76 in profit per month, in Manchester £423 - so yes I think we can safely say they are lining their profits nicely!

Obviously on an individual basis it will depend when they brought the house, how big the mortgage is etc. Places where they rent out the rooms and have more occupants will make more profit.

Landlords that brought ages ago, barely do maintenance and keep hiking up the rent are definitely lining their pockets!

I'd like to see where your statistics come from. Everything I am reading suggests that profits are at a record low, and well below the averages you quote.

Those numbers look more like income numbers (I.e. average rent charged) than profit (I.e. what's left after expenses).

It was from this: https://manorestateagent.co.uk/the-most-profitable-places-to-become-a-landlord/

Its from 2022 so presumably pre interest rate hike.

My point wasn’t about whether or not it’s profitable to be a landlord though. If you look at my original post we were discussing whether the OP should charge market rent just because it’s the market rent.

Landlords do extremely well in popular places in London & Brighton where there’s a housing shortage and huge demand. They can make vast profits because the ‘market rent’ is so high.

In my eyes it’s greedy - I don’t agree with pricing out people and hiking up rent because you can. I get it’s the same as anything else in life - why wouldn’t you maximise your returns. However, people do need somewhere to live and we need people to do low paid jobs as well. Moving is a huge ordeal so having big increases and forcing people to move as a result is awful. I don’t agree with landlords who just see $$$ when they rent out a property.

That’s not all landlords and it’s certainly not the OP!! But we would have a much fairer world if some people were a little less money grabbing and a bit more reasonable.

My rent has increased each year since I lived here. They calculate it with the RPI index. Its gone from 1100 - 1210 - 1290 and the 1290 is only that figure because we pushed back from a 9% increase proposed. We pay on time every month and I would go as far to say we are amazing tenants. We get on well with them but it does sting to see them raise it so much which we struggle with, and then take the Aston Martin out at weekends for a "jolly". However, this is the price we pay to have a nice house in a nice area. It stings but its just one of those things, if you don't have to increase the rent I wouldn't, but I've never owned a house and I'm coming from purely a tenant perspective

That article doesn't list all the actual costs either, only the compulsory ones, so the real profits are much lower.

I take your point about greed, although personally I object to the greed of landlords who do not maintain their properties, or do basic repairs in a timely manner to save money. I don't object to market forces as they can go down as well as up, and the landlords have to cope with these lows as well as the highs. Also, there are an increasing number of bad tenants these days which is why many landlords are selling up. This will make the problem worse.

The thing we probably both agree on is that there is a housing issue, and that people are often stuck between a rock and a hard place in terms of housing affordability. The government (in fact successive governments) have exacerbated this by under investing in social housing and relying on private landlords to pick up the gap.

I think you're an absolute pushover.

Well said, and let's not forget the likely doubling or tripling of the assets value over the next twenty years or so. Often with mjnimal expenditure.

Now look at those yields again as a long term jnvestment...hum not so bad 😁

The only idiots exposed to misery ,and really shouldnt be in business because they dont see it as a business,are those who've taken on too much debt .Unfortunately these are often the ones who inflate the market rate.