A Reasonable Rent Increase

LILY52

I rent a 2 bed farm with 30 acres from a friend of mine. We have a 10 year business agreement. I was told at the time that it was a business tenancy as it would enable us to offer horse livery if we wanted to in future. I since discovered that it is also easier to get rid of business tenants at the end of the tenancy.
Anyway we do not conduct any business here. It may be a farm but it is not a working one simply our home where we keep our many horses and some pet sheep. We conduct no business of any type infact we recently discovered that as the land is agricultural we are only allowed to ride on our land for 28 days of the year so we couldn't run a business if we tried!
The agreement states that at five years we have the right to walk away if we want and the landlord has the right to increase the rent if he wants, which he does.
Apparently his agent suggested a 50% increase making the rent £1500 per month but she thought that a little steep and has gone for 30% an extra £300 a month.
I simply want to know if people here think that it's fair. In the agreement we are responsible for all repairs he simply pays the buildings insurance. In our 5 years here we have spent almost £2000 on the water system as we have no mains drains, we pay to have serviced the central heating every year but always have to get the guy out again as it really needs replacing and goes wrong. We have spent a fortune on replacing the wooden fencing which was barely standing when we got here. In addition to that we have had to patch the roof as part of it is leaking. We only have an oil fired aga for cooking and hot water and no shower. I suspect that the extension done 50 years ago is some what dodgy as behind the woodchip there is no plaster!
Our stables outside were built over 60 years ago and are being held together by bailer twine! Every room has been redecorated and in many cases carpets replaced at our expense. Apart from that we love the place and our friend it's just at the back of my mind that this increase is too steep. Nothing to do with him but my husband's daily commute of 100miles costs more because of petrol and the oil tank used to cost him £300 to fill up cost us £1400 before the prices went up.
Your opinions welcome

Jowo_2

There is a commercial tenancy forum on Landlordzone, plus a residential one and long lease one there, too. You may perhaps find more specialist advice there.

Shelter offer free advice to residential tenants and perhaps they would be able to give you pointers on whether you should have been issued with a residential tenancy which would oblige the landlord to undertake repairs.

Residential tenancy agreements offer little security of tenure, too. Typically a landlord issues an AST of 6 months duration, though some tenants negotiate longer.

I don't understand from your post if you actually want to remain there so long as the rent doesn't increase substantially or whether you want to know if you have the right to a residential tenancy in a farm building. Do you prefer to find somewhere else to live? What is it that you want?

BitterAndTwisted

How competitive is this rent including the proposed increase? As far as I know business rents have fallen in the last few years so I don't understand why yours is increasing and a 30% one looks unrealistic and greedy to me. Perhaps this friend of yours is relying on your emotional attachment to the place.

LILY52

Thanks so far for your replies, I'm sorry I haven't made myself clear. Firstly I have no desire to move from here even if I won the Euro Lottery. The landllord happens to be my best friend but friendship doesn't come into it when money is involved and I accept that. In his will I have first refusal to buy the farm. Following 2 inheritances I am in a postion to buy the farm but it would take everything I have which scares me and in addition to that it seems that 5 years ago he was given what seems to me an extra ordinary high valuation in comparison to others around here and the price he would ask now would be that price and more (he seems to be the only person who believes that property prices have risen from 2006). If I wait until he dies then the property would be at a lower value as the property is tenanted.
I was always led to believe that it was a business tenancy in case we wanted to run a business from here ie horse livery but as I said we couldn't offer this without changing the use of the land and secondly knocking down our stables and starting again as paying customers just wouldn't entertain them at the moment. I also had to sign away my tenants rights so that theoretically if he wanted me out at the end of the 10year term I wouldn't have any tenants rights. He said all of this was because 10 year tenancy was so unusual. Before you say I was naive I did employ a solicitor because I am not familiar with any of this I have always had a mortgage before. The solicitor seemed to find the deal ok but I must admit that she failed to point out that the repairs were all mine and had I known that I think I would have insisted on things being brought up to scratch. The house is 60 years old and nothing has been repaired since it was built. I often wondered whether it would be cheaper to knock it down and start again.
My gut feeling is that the increase is greedy that's an extra £300 a month. Our salary hasn't risen that much since we've been here and nothing to do with my landlord the cost of living here has risen hugely in the form of heating oil and petrol to work. The repairs needed were there 5 years ago when he left here we've done the minimum as we are afraid to replace fully as it will increase the value of the place and then we will have to pay a larger amount for the place when we buy so in effect we will be paying twice for the improvements.
That being said that it seems a lot to me I don't know that perhaps he is right it's not my expertise and there is nothing to compare it to around here. I think that the suggestion that he is relying on our emotional attachment could be very true as well as the knowledge that I've recently inherited. The inheritance means that I now have more money but its poor compensation to losing my parents young being an only child and having just a partner & 2 kids and no one else. (sorry i can hear violins)

LILY52

Moving thread up

princeofpounds

Please put spaces between your paragraphs. It makes it very hard to read. Please also keep to the point, as it makes it hard to extract relevant information. Not trying to be rude, just think that will maximise replies.

The only 'fair' rent to charge is market value. Establishing that for such an unusual property is difficult, but perhaps looking at country estate and business agents could give you an idea (just bear in mind asking prices are likely to be a bit higher than market prices).

Given I know nothing about the property besides the number of bedroom and amount of land I can't even give you a steer. However, given that for a 2 bed in a nice zone 2 part of london you could be paying 1500-2000 pcm it seems very excessive for the house alone, but quite possibly not a bad deal with the 30 acres of land (which is a good chunk!). I have no idea about agricultural land rental rates but they aren't zero!

In general you would expect rents to track wages quite closely. So 30% over 5 years is too high if from an acceptable starting point, but that doesn't mean the starting rent was the right figure in the first place.

Given that you employed a solicitor to draw up an agreement, then you probably are a live/work tenant without the normal rights and obligations that make it easy for us to advise under an AST framework. Quite a lot of your questions can only be answered if we are a) sure of your exact status as a tenant and b) know the rules of your particular tenancy. Both are proper legal questions.

Finally, you mention a will. Hope you realise that can change at any time.

aintshesweet

Wow. I'm no law student, but 30% increase sounds a little... excessive. Why isn't it in line with inflation? Could you get an independent evaluation done of the house (without his knowledge in case it's even higher!!)?
I think you should speak to a proper solicitor or at least someone at CAB to get advice.
I know you said the money doesn't come into your friendship but why does he think you can suddenly afford to lose another £300 a month?! If he knows your personal circumstances and he presumably also knows how much money you've pumped into his property without him lifting a finger.

What are you going to do, worst comes to worst? Would you move if he says he must have the extra money or would you suck it up and pay?

Mrs_Arcanum

It may be let on a business basis because it will have an Agricultural restriction. In as much as the LL would not be allowed to rent it out as a purely domestic dwelling unless the tenants were agricultural workers. Nor would you be able to purchase it as a purely domestic dwelling with land unless you could show it could never be viable as a business.

As for the rent, you would need to investigate how much it would cost to rent 30 acres then add on the cost of a 2 bed house at the lower end of the rental price (because of the Ag tag) this should give you some idea of what is fair.

princeofpounds

30% increase sounds a little... excessive

30% in itself is a meaningless number. 130% of £100 would be £130 and still a ridiculously cheap rate. 130% of 100000 would be 130000 an expensive either way.

ONS indicates that household non financial wages are up roughly 18% over the last five years, so even if the initial price was fair the increment is likely to be hefty.

darkpool

it will be a business tenancy because if he rented it on a traditional agricultural lease your family would have the right to rent it for three generations.

regarding rental on 30 acres, if it is grazing i would expect to pay under a grand a year for that.

imo it sounds like you are paying more than a full price for it at a grand a month. i would walk.

Geenie

I would employ the services of a Chartered Surveyor. They are used around where I live frequently to value farms, rent increases and all the other stuff to do with agriculture. 30% seems very excessive, but you will not truly know if this is so unless you get an independant value from someone who knows the market. Then you will be in a position to know how to proceed with your friend.

Good luck OP.