Real-life MMD: Should I up the rent and risk losing a great tenant?
Comments
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Hello,
Comparing with the others is the best way to be unhappy on a lot of levels
This is all about one's needs. If the situation was fine for you before knowing the difference, then I feel you shouldn't change a thing. If you were already feeling that you were losing money with this house, then you should up the rent.
Well, this is the theory cause I understand this is hard to do now that you know about the neighbours. So why not going for something symbolic that would make you feel like you're cheaper by choice and you're not being robbed? Your tenant being a good one, you could indeed go with a moderate rise of £50/month. He should be able to understand it after ten years without rise. And I am pretty sure he would not leave because of that since it will be very hard for him to find on the market a good house with a 10 year old price.
If you've got time to answer, I am interested in knowing why you chose not to up the rent after one year.0 -
Twelve years ago my rent for a small one-bed cottage was £160 a month. Today it is £370 a month.
Similar properties in this small hamlet are about £450 to newcomers.
Being a pensioner I could not afford the 30% rise that was first proposed after one year's tenancy so I "negotiated" a staggered increase of £20 a month for year two and similarly for the next two years and so on.
This arrangement has proved fair to both parties and I would recommend both landlords and tenants to act fairly and sensibly and NOT expect a tenant to take on a huge increase in one go.0 -
But you are on a lousy deal. Your tenant has benefited from year on year rent reductions in real terms, and consequently you have been suffering from year on year reductions in your rental income. If your tenant could afford the rent 10 years ago, then assuming they have received more or less inflationary based wage increases, they would have been able to afford inflationary based rent increases if they had been applied annually. Clearly to raise the rent by a large sum now in one go would not be a good move if you wish to retain the same tenant, since their outgoings will doubtless have expanded as their disposable income has increased. But it's time to start applying those annual rises, and I'd make them slight above inflation so that you can start creeping back towards market rates.0
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If you ramp up the rent substantially now, your current 10 year tenant will leave and you'll spend the next 3 years with a string of short-term problem tenants punctuated by months of with an empty property generating zero rent.
Overall you probably won't benefit financially until/unless you find a new reliable long-term tenant willing to pay the higher price. I think you have a good thing going right now, and anything more than a small increase is going to ruin that.0 -
Speaking as a landlord you appear to be undercharging but before you leap into decisions check out why there is such a big difference. If all else is equal then you should put up the rent.0
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A few things to consider:
- you know how much his neighbours are paying, but what would his other options be? If you up the rent, he may choose to downsize for the same cost.
- good landlords aren't easy to come by either. He's going to know he's paying under market rate so should be happy to negotiate
- a large rise to market rate would not be fair at this stage. A small rise would be negotiable.
I've lived in my current place for 4 years with no increase. At this stage, I'd stand a 10% increase, but much more and I'd be moving. However, apart from the annual gas check, i haven't had any contact with the landlord since I moved in!0 -
CroydonGeorge wrote: »Twelve years ago my rent for a small one-bed cottage was £160 a month. Today it is £370 a month.
Similar properties in this small hamlet are about £450 to newcomers.
Being a pensioner I could not afford the 30% rise that was first proposed after one year's tenancy so I "negotiated" a staggered increase of £20 a month for year two and similarly for the next two years and so on.
This arrangement has proved fair to both parties and I would recommend both landlords and tenants to act fairly and sensibly and NOT expect a tenant to take on a huge increase in one go.
you may be a pensioner but most of here can read just fine - there's no need to shout!0 -
If you increase the rent, you could lose a good tenant, end up with an empty property which you may then not be able to let, which then costs you money...you decide....?0
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A real moral dilemma, interesting!
I suppose it depends on your situation. The cold answer is that it's business, and if the going gets tough with your own finances then that is what it might have to boil down to.
Otherwise I would say keep him. As you say he is a good tenant and those sound more valuable. Also. Kindness received leads to kindness passed on, if he's such a good genuine person as it sounds - I'm all for making the world a kinder and fairer place.0 -
If your tenant is over 35, check what the Local Housing Allowance (LHA) is for the area your flat is (look on local authority website or phone the Housing Benefit department).
If they are in low paid work they may be entitled to a top up from benefit. So, WIN, you get more rent. WIN, they don't pay more. It also gives you an idea of what a reasonable lower rent is for your area as this has been set so HB claimants can afford (I think 30%) some properties.
I would also look at properties advertised in the local papers/ rental agents. When you have this information you can decide how much the rent is lower than the norm - what you do with the info is up to your need/ conscience.0
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