Advice on Annual Rent Increases

rozeepozee

I am a private landlord with a small number or rental properties, managed by myself and feel terrible each year when I put up the rents! There's something very unfestive about it

I'd love some advice on what is a fair increase and how other landlords go about it. Thanks in advance.

Ian_W

and feel terrible each year when I put up the rents! There's something very unfestive about it

Make yourself feel good, get in the festive mood, spread a bit of cheer -

:xmastree: :xmassign: :snow_laug :xmassmile :rudolf:

DON'T PUT THEM UP THIS YEAR AS A THANK YOU TO YOUR LOVELY TENANTS. :snow_grin

They'll love you all the more -
though your Bank manager may not!! :mad:

tomstickland

Put them up some other time then? In line with inflation.

BobProperty

All I can say is check what the going rate is for similar property in the area. Is there a landlords group in the area you could talk to and compare notes? If your rents are below the going rate then you should put them up. If not, then leave them where they are, otherwise you risk losing a tenant to somewhere cheaper.
Why not put them up in the spring, around budget time, or at the start of the new tax year?

rozeepozee

Ian_W wrote:

Make yourself feel good, get in the festive mood, spread a bit of cheer -

:xmastree: :xmassign: :snow_laug :xmassmile :rudolf:

DON'T PUT THEM UP THIS YEAR AS A THANK YOU TO YOUR LOVELY TENANTS. :snow_grin

They'll love you all the more -
though your Bank manager may not!! :mad:

I did that last year and the year before.......(As well as giving my tenants nice bottle of wine or Laphroaig)! :snow_laug I have to put them up at some point.

BobProperty wrote:

Why not put them up in the spring, around budget time, or at the start of the new tax year?

I will give them some notice, so it probably would be Spring in reality - in order to do that I have to be writing the letters about now.

Ah well, I think I'll worry about it in 2006 - that makes it sound like a while away :rolleyes:

lush_walrus

As the others have said really, pick a different time of year to do it other than now, even giving them notice now is a bit stressful news at Christmas. Generally in my experience landlords do not put the rent up yearly (and myself counted as that). Rental values do not increase on the basis of year to year inflation, they vary according to supply and demand as ultimately the factor the tennant will look at is what they can get for their money and if something of simular standard can be found elsewhere then off they will go. In my agency rental values have remained the same for the last 4 years, purely due to the huge amount of rental properties flooding onto the market with the BTL mortgage brigade. Check with local agents what the present rental values is on your propertys and go from there. If you find that the average values are substantially higher, then put them up, if not leave be.

bizzy_lizzie

Hi
This is my first post so bear with me if things go wrong please.
The Housing Corporation, which controls social rents, uses September RPI plus 1/2% & most increases are on the first week of April. If you did the same its certainly fair & reasonable & a lot better than a lot of private landlords, plus your tenants know where they are with you from the word go.

Hope this helps

Rave

IF you're going to put them up, then IMO spring (March/April) would be the best time to do it, although that's just intuitive advice based on when I myself as a tenant would be least annoyed by it;).

However, it's a big IF- round here, as with lush's experience, market rents have not risen since I moved in, so if my landlord were to put up my rent, I would simply give notice and move on since there's no shortage of flats being offered locally at the rent I'm currently paying. If your current rent is lower than the local average then fair enough- you should, as a businessperson, do all you reasonably can to maximise return on your investment. However, in light of the current fragile state of the market, and assuming that you have no other problems with your tenants, I'd be disinclined to rock the boat unless, in local terms, you're undercharging to a significant degree- say 10% or more.

rozeepozee

Thanks for all your advice. It's good to hear others' experiences/opinions. I've decided not to be so unfestive and give my tenants the usual bottle of whiskey, rather than a rent rise. :snow_grin Maybe later in 2006...? It may be less depressing news when the sun's out

Rickycowslip

QUOTE - Is there a landlords group in the area you could talk to and compare notes?
is this legal ? cartels spring to mind, and Eton headmasters...

QUOTE - The Housing Corporation, which controls social rents, uses September RPI plus 1/2%
this would be an indefensible strategy surely - continually increasing tenents rents in real terms ?

As with any market, the price set is the price you are offered and have accepted, which will be based on other prices in the area. Remember tenents are often a bit more vunerable in society (otherwise they'd have their own home, with exceptions) and landlords need to be careful not to exploit that vunerability

Doozergirl

I empathise with you rozeepozee, I can't bring myself to put the rent up either, even though I rented it out at below market value in the first place, so I have been reading with interest. My tenants certainly aren't lucky enough to get a free drink though!

Rickycowslip wrote:

Remember tenants are often a bit more vunerable in society (otherwise they'd have their own home, with exceptions) and landlords need to be careful not to exploit that vunerability

That's awfully noble of you and social tenants might be thought of as being vulnerable, but private tenants are working people. I doubt there's any marked difference in wealth between them and your average home owner. Many rents are in fact cheaper than the equivalent mortgage.

The prime motivation for landlords is the money, not the welfare of the tenant. Not to say that they don't care, but they don't do it for love of the stranger they're renting to!

No wonder you thank rozeepozee when her tenant's rent is getting cheaper each year!