can you increase rent if interest rates go up?

Fitzy29

I would say it depends on the demand for rental property in your area, if you think you can increase, subject to the terms of the lease or the contract coming to an end, then speak with three local agents and get an average price and icrease it accordingly.

At the end of the day, your mortgage payments have or will go up however you don't want to scare the tenants away and create a financial blackhole!

I currently lease out a property, the tenants have and are going to be there long term. The lease allows 3 yearly rent increases only, and it states they must be fair. A last point, always make sure your rental income is around 125% of the interest only mortgage payment to allow for rate inreases etc...

Debt_Free_Chick

searcher30 wrote:

when you are landlord can you increase the rent if interest rates go up as the mortgage goes up? what is the law on this?

As explained, it depends what's in the agreement. If nothing, then the rent is fixed for the term of the agreement. If it's an AST, then it's fixed for 6 months and every extended month after that. If you want to increase the rent, you'll need to issue a new AST - so that runs for 6 months and then month by month extensions.

I would caution you to use interest rates as a reason though .... would you reduce the rent if interest rates when down? Of course you wouldn't, as no landlord would.

Rent should not be fixed according to interest rates, but to market demand and what is appropriate to the area and the property. If you're feeling the pinch due to an increase rate rise, then you might have paid too much for the property or taken out the wrong mortgage.

If you really want to increase the rent, then make sure it's comparable with the local market and find a more durable reason for doing so e.g. refurbishment, new appliances, new fixtures/fittings etc.

Regards


p.s. Nelly's reply was actually quite funny and I'm sure you would have found it so, were you not the "target" No offence, it was simply irreverently funny

F_T_Buyer

I was talking to a friend over the weekend (who rents), and his landlord said interest rates have gone up so i want to increase the rent (he followed on saying he will put it in writing Monday morning). He replied that his gas bill has gone up, so he wants to reduce the rent.

Needless to say, no rent increase in writing Monday morning.

He did look at comparable rents, and there's plenty of places on offer, and he's willing to move if the rent goes up. It would be a share to the landlord, as he's been a good long term tenant for three years. Oh, and his rent hasn't increased in the three years.

Increasing rent without some good reasons that the tenant will accept, will probably result in you losing tenants and have trouble in attracting new tenants in the future.

Of course, this rate increase and the ones to come should be have been fully costed when deciding on that investment. Just like I keep telling people now when they look at BTL.

ginger_nuts

when interest rates went down did anyone reduce the rents .

kit

as mentioned above, you need to look at the rents charged in your area.
I dont think its acceptable to up the rent just because interest rates have gone up.... if the rent you charge is lower than everyone elses then maybe you should look at increasing it slightly but keep it to once a year at most.

Highering the rent may increase the risk of losing your tenant and then you have a void period..... you could end up losing 1 or 2 months rent for the sake of a tenner a month!

nelly_2

ginger_nuts wrote:

when interest rates went down did anyone reduce the rents .

^ Head...nail...hit

steveb147

This seems like an attempt at moneygrabbing IMO. It is you that has the mortgage not your tennants.

clutton_2

""Oh, and his rent hasn't increased in the three years ""

Is there anyone reading this site who would not expect a Salary increase every year ?

Why should landlords be any different - this is our business, our job, our income.

Dan29

clutton wrote:

""Oh, and his rent hasn't increased in the three years ""

Is there anyone reading this site who would not expect a Salary increase every year ?

Why should landlords be any different - this is our business, our job, our income.

Good point but the onus is on the landlord to request an increase at the end of each tenancy. If you leave it for three years and then ask for a 10% increase many tenants would tell you where to go. Of course these days tenants see rent as negotiable anyway so you have to ask for more than you actually want..!

F_T_Buyer

clutton wrote:

""Oh, and his rent hasn't increased in the three years ""

Is there anyone reading this site who would not expect a Salary increase every year ?

Why should landlords be any different - this is our business, our job, our income.

I do think rents 'should' rise at a reasonable rate. Such as everything 'should' rise at a reasonable rate, but that just isn't cricket. The reality is, is that it is a market. Increase supply of rented property and rent inflation is unlikely.

But how many on this site have not had pay rises? It's just a market... and market forces apply.