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.

I read most, but not all. Doesn't change my thought though, she needs to start increasing the rent. I agree that they won't be leaving ny time soon, but that doesn't appear to bother the OP at this stage.

Besides, if the OP decides to move back in, or sell, they would still need to leave, albeit they could make it a difficult and lengthy process. Don't ask me how I know, I just know 😞

Ah yes but if its a business, they do also make losses, and dont the LL LOVE to go on about that.......

A factual post.
Another reason why we always let via LA and have legal cover for evictions etc for a peace of mind

It is important to use LA's IMO for good AST contracts and legal cover in order not to add burden to burden when a LL has a T that refuses to leave/pay rent etc etc

I really wish people would stop talking about "market rate" as if that's fair. "Market rates" in my area have gone through the roof in the last 5 years. No one is getting a better house or service than they did 5 years ago, it's all driven by shortage of supply. The market rate is whatever you can convince someone to pay you and when it comes to housing people have no choice but to pay. Increasing rents in line with "market rate" when your costs are not going up by the same amount is profiteering.

Even with an excellent letting agent (which I fortunately had), it can still be a nightmare to get shot of tenants who were sub-letting, altering the electrics to wire in clothes driers to light sockets, generally wrecking the place, not paying any utility bills, council tax etc etc.

Don't ask me how I know, I just know 😞

If the costs have increased, I suggest you raise the rent each year in line with CPI. This is manageable and fair to the tenant, and the right thing to do.

I have a similar situation and my tenant is amazing. My rent is way below what "could" be charged but as my costs are all covered I AM NOT raiding the rent. I don't want to run the risk of them moving. They look after the property, they always pay on time, they don't cause any issue, they never give me problems.

Previous tenants stung me terribly, ruined the house, had to redecorate every room, replace doors, every room full of rubbish. Took me 4 days to clean.

To me, keeping a happy tenant is far more important than skinning them for a few more pounds. Their wages haven't gone up, I don't want to make their life harder by demanding more money.

All depends on what's more important to you.

@Amelie2024 @WavesAndWildflowers

It's fine, we have different views.

My view is that OP already owns property and should absorb their own related costs.

It's an unpopular view but that's the view I hold. I've had the debate with countless people and it is just a fundamental difference in the way we view the world and societal responsibility.

And yes I am a landlord.

But the purpose of a business is to make a profit. No one sets out to make a loss.

Exactly. 100%.

No, but profit is not guaranteed. There are years there are losses and there are years you breakeven.

LL seem to be the only 'business' who seem to think every year is going and should be profit.

I think calling it a business is generous anyway.

Housing should not be a business but a basic human need.
It's so hard being a tenant.

Not always. It can balance out the times when the market rate is lower than costs. The market goes down as well as up.

I have been a landlord for almost 25 years. I didn't set out to be one, it just happened by a strange quirk of fate. Even at the market rate, which looks on the surface to be more than monthly costs, I haven't made a profit for years. There are many reasons for this, and I am not saying that there is no benefit to me, as there is, but it is a long term gain and not a short term one. I believe I am a good landlord, so when something breaks, it is usually repaired or replaced within 24 hours, but that level of response is very expensive.

So much so that I would sell if I could, but a) the market is depressed, and b) I like the tenants I currently have. If I do sell, all it will do is remove another property from the rental market, so it is in everyone's interest to have a viable business model of rental properties.

As an example, the rent I could obtain didn't change for pretty much the entire time, right up until the Trussterfuck, after which point interest rates went up, mortgage costs went up, and so did rental prices / costs. Don't blame the landlords for responding, blame the Conservative party for fucking up the economy.

How on earth do you think costs would be over 800? Or are you expecting the tenant to cover the entire mortgage amount as well as costs?
It's the landlords asset, they can still make a profit without avoiding putting any of their own money into building their asset.

If the property is mortgaged, you have to make a profit as part of your mortgage conditions. The rent must cover your mortgage plus 25%. Contrary to what people believe, most rental properties are mortgaged.

They aren't paying someone elses' mortgage, they are paying to rent a house.

If the government want to see landlords pay tax and meet standards and operate as a business, then the rent needs to be treated as such. It can't work one way. If it isn't covering iteself and giving profit, it needs to be increased.

Absolutely raise the rent. You are not a charity are you? Do a bit of research for like for like and then give them notice of increase. Say that in order to cover insurance and repairs and upkeep of property you will increase to £1000? Per month because need to catch up on previous 5 years no increase .Explain that from now on rent will increase to cover inflation say 5 % annually.

Many mortgages on standard properties are £1000+ and then maintenance and upgrades on top.

Shes not a charity, she needs to charge enough to cover mortgage and repair costs.

Removing landlords like the OP from the system will result in higher rents for everyone.

Yes, lets get all private landlords to withdraw their properties from the market 👏

What a great idea!

I've had this dilemma too having had the same tenants for 4 years. I have raised the rent once last year at 5% of the monthly rent to cover increased insurance and maintenance costs. I have decided to keep it the same this year again as they are good tenants and never miss payments. Personally, I would increase more gradually so it's not as much as a shock to them and to keep good relations. They sound reliable and if they were to move out, it may be you end up with new tenants who trash the house, don't pay the rent etc.

Food is a basic human need, but you still need to pay for it.

We are exactly the same charging way below market rent for two houses. But we like the tenants in both houses. In the last two years we have started with small increases to cover increase in council tax and increase on insurance. My advice would be an increase of say £50 a month this year and then increase annually with inflation. I would not increase to the full market value in one hit though.

And water!

Costs can easily be more than 800 per month. My last 3 sets of tenants have wrecked the place. That's 3 heavy sets of repairs (carpets, kitchens, bathrooms, garden renovations etc.) Add to this all the legal obligations of gas safety certificates, electricity installation reports, EICR reports, insurance, appliance breakdowns (I've never understood how tenants can break washing machines, fridges and freezers so often), and letting agent fees and you can soon be running at a loss. Add in the mortgage, tax on the income, the elevated interest rate that a buy to let mortgage costs, and you are very soon making a loss. And the fact that the landlord carries all the risk of a tenant who refuses to pay and that it could take a year or more to get them out.

As I said in a previous post, I am not saying there is nothing in it for landlords, but it is very much a business and when it isn't worthwhile, landlords will stop renting and sell up. This is what is happening now which is making the rental prices higher as demand outstrips supply.

Bet half the people on this thread own their houses.