Increasing rent

[namechange7373]

I am just looking for opinions I rent out a property there is no mortgage on the property and when the current tenant leave I am likely going to sell it.

it needs some work doing which will of course be getting done. The estate agent I use to manage the property have asked if I want to increase rent this year and encouraged it…. For context I am charging around £200 under market value for the type of property it is.

In over 10 years they have been with me I have only increased the rent 3 times. Would I be the a typical ‘horrible’ landlord to increase it by £20. My reason being increased insurance cost and the cost of the work I will be doing some of which is cosmetic.

I know some people would just increase but they are good tenants and I don’t want to put them under pressure.

£20 a month? Would that even cover the increased insurance cost and costs of the work, over a year?

I think I’d increase it by £50 to cover your costs but make sure you get the works done. No-one wants to live in a dump and the tenants will be resentful if the rent is raised but they live in a sub standard property.

No, but that’s why a % of the rent they pay throughout the year is kept separate and used for repairs/maintenance on the property this will increase is purely as the work needed will eat in to that account and I will need to build again for any more costs incurred.

That won't even cover inflation? Surely? Unless the rent is already incredibly low.

Do whatever you feel comfortable with. If you can manage without raising the rent then leave it as it is if you want to. I can't imagine £20 a month will make much difference to either you or the tenants. Would the agent charge you to do this?

@Florencesndzebedee that’s strangely what dh said but it sounded so much you hear people moan about LLs all the time and I don’t want to be one of them. I worry far too much, this is why I am selling when I can, def not cut out to be a LL.

I would increase it to £100, if this is legally allowed. You’re not a charity. That’s still £100 under the market rate. No way would I be subsidising tenants. Your tenants must be thanking their lucky stars every night they have you as a landlord.

If you have only increased the rent three times in ten years that’s uncommonly decent of you.

When did you last increase it, and how much of an increase was it that time?

Please don’t do what the poster above suggests and increase it by £100, that’s an awful thing to do. I know MN hates the poor and those who rent, so you’ll get a few comments like that, but don’t give in to them.

(For context, I don’t rent…)

With the Renter's Rights Act about to come in I will definitely go for £100 increase which still leaves you well below the market rent. Once the Act comes in you are restricted to Market rate and a limited % increase and they can dispute the uplift. This means the rent won't be increased until a hearing and it is anticipated that it will take a minimum of a year to be heard and the rise won't take effect retrospectively. Get your financial situation in order now prior to the Act coming in. Because of the way the act is written it is anticipated all renters will just be advised to dispute any increase however reasonable to delay any increase by over a year.

@Spirallingdownwards that is a fantastic point thank you. While I would like to think I have treated them well enough that they wouldn’t dispute any increase I have no idea really.

Just to add I won’t be increasing by £100 but I certainly will be increasing it by more than £20

Have you thought about offering to sell to the tenants? There's a concessionary mortgage that is ideal for that.

Just charge twice what any mortgage payment would be and exceed any limit a young couple may be able to afford. That seems to be the mantra of landlords around here.

People very often don't repay generosity by being reasonable. Instead, they set what you have given (even if well above what they could expect) as their 'baseline' in their head, and then are just as likely as someone not treated generously to demand even more.

Make no assumptions that they will act reasonably towards you.

Be aware that if a Green/Labour coalition get in next general election, they may hammer landlords even more (see the Green's policy to end private landlords) and with the Renters bill already in place, you'll have fewer options.

Sometimes, offering below market rate rental is worthwhile - to have good tenants, who pay regularly and don't cause damage.

Think how much you're willing to pay them for that - you're currently giving them £2.4k per year for being decent tenants. Is that proportional, and worthwhile to you?

Is renting still worthwhile to you at the rent rate you choose (considering expenses, your time, and risk/lack of liquidity) compared to selling the property now and investing it in a different way? Admittedly, property sometimes has a sentimental value - and the transaction costs of selling/buying are very high, so you want to be sure. This won't be a strictly financial comparison- and that's OK.

All these decisions are quite personal - but do think them through and make sure you're making conscious decisions.

I think you are right not to increase by £100 when there is necessary work needing doing. Maybe they don't push for this work being completed immediately because they know they pay under market value. Seems like there is a bit of reasonable give and take in your relationship with your tenants so well done you as good LLs and good tenants are like gold dust. I would go for a £50 increase and get the necessary work arranged.

We don't have the information to know this. Having work done on the property is part of being a long term tenant (presumably it didn't need doing when they moved in 10 years ago). We don't even know what the rent is, and so what % discount £200/month is.

If you raised rent by £100/month, you would still be giving them £1200 per year as a gift. Only you know whether that's what you want to do.