Is reducing the rent a good idea

Mrsmoneypenny

I have just heard from the estate agent that one of my tenants will be leaving the property at the end of next month, she has emailed them to give one months notice, she has been in there six months.

The agent has said that they have been quite quiet for the last couple of weeks, probably because of the spring break. The agent will be marketing it immediately. The house is never usually empty, as one tenant moves out another is just about to move in

I am considering reducing the rent on the property and wonder whether this is a good idea?

I am only talking about 50pounds a month less.

zone

Depends on the type of property you are renting. If you are already competitive with your local market then a small reduction could attract more tenants to your property.

sooz

It depends on what the rent is to start with, & what other similar properties are going for in the area.
Generally, reducing the rent is one way to let the property faster.
You could also make some improvements to it or redecorate, to make it more attractive to tenants.

Mrsmoneypenny

Its a three bedroom, two and a half bathroom, three storey, about 3 years old.

The price is similar to other houses that are exactly the same, they dont come up for rent very often, if i ask the agent to reduce they will just do as i ask. I suppose i wondered whether rental property is still in demand?

Gwhiz

I've just come to the end of my 12 month and re-negotiated a 20% reduction in rent. I told them I'd be off if they could not move on price because prices have dropped and I could get a cheaper place (although prefer not to go through hassle of a move)

If you like the T and want them to stay ask the Q -" what would make you stay"?

princeofpounds

Any realistic answer is going to be very specific to your local market to be honest, and the condition of the specific property.

Probably the main thing you can do is find out what similar properties are being let for, price very slightly below those asking prices and accept very slightly below achieved rents.

That makes you number one to go visit and you should hopefully be able to pick a decent tenant without losing too much money from what would be achievable if you had to wait and wait for a max price offer - the void would probably cost more.

Generally, the situation with rents is weak at the moment. Many people who wanted to sell their properties and cannot are putting them on to the rental market. At the same time unemployment is increasing and commission or bonus-based wages falling.

One thing to bear in mind (and I'm a seasoned renter so I know what goes through our heads). The most productive thing you can do as a landlord to get immediate positive reactions and offers is correct major deficiencies in the house.

For example, tenants will often look at a house
- with electric heating or
- without a dishwasher or
- with single glazing or
- with a half-broken sofa etc.
and immediately say no to the rental even if every other factor works except the one that is wrong.

You would be surprised at the number of landlords who couldn't imagine themselves living in a house with a severely deficient aspect who seem to think that renters don't mind. The truth is the better (and wealthier) renters really do care about these things.

Faded carpets, walls that need repainting - these are all livable, secondary things but sometimes landlords do these up yet can't see the wood for the trees in terms of what really matters.

Something like installing a dishwasher probably won't make a great deal more rent (although it should pay back over time), but it drastically improves tenant searches and void periods.

sooz

Have you asked the current tenants why they are moving.
Also ask, if they have any suggestions as to what they think the property needs, or what would improve it. They have, after all, been living there.

Mrsmoneypenny

Yes the current tenant is moving out after six months because her daughters school is too far to travel. Although the agent did mention a few weeks ago, that either the tenant or the tenants boyfriend (doesnt live there) had an ex that had moved onto the development, perhaps that is the reason.

Sooz, that is a good idea, hadnt thought of that, i will ask the agent to speak to the tenant and see if there is any feedback on what might improve the property.

We have another house on the same block and that is rented out for 12 months at a time with the same tenant and has been since it was built about 3 years ago. I dont know what it is about this one we have had one tenant after another.

Piggles12345

As a tenant, I am always dubious about properties that are marketed at a lower rate than the others in the area of comparable size/type. It makes me wonder 'what's wrong with it?!'

Perhaps you could keep the rent the same but tell the letting agents to let the tenants know that you are willing to negotiate slightly on the rent if they can take the property sooner rather then later.

gazfocus

I am in the process of applying for a house to let and I put a lower offer in on the house I wanted purely because it needs decorating (I mean the wallpaper in the living room is falling off the walls) so I think if lowering the price can get you a tenant sooner, it saves you money in the long run. Afterall, £50 a month less works out at £300 over the 6 months...if the property was empty for a month, you'd be losing more than £300.

One question though...if you did reduce the rent, would the rent stay at that rate if your tenant renewed the contract after the 6 months?

SouthCoast

Supply and demand.

A shortage of rental property is a myth in the four postcodes that I track on RightMove.

Number listed:
April 08 136 52 154 26 = 368
June 08 160 50 208 36 = 454
Aug 08 177 80 271 58 = 586
Sept08 222 98 337 64 = 721
Oct 08 230 103 324 58 = 715
Dec 08 245 153 378 106 = 882
Jan 09 248 143 401 94 = 886
Mch 09 253 132 446 102 = 933
Apl 09 280 123 468 94 = 965