can the rent be increased?

Deals_2

we have taken out a 6 month renewable contract going to 1 year. (basically a 6 month break clause). our mortgage is up for renewal and wth the 2 rate rises we have noticed that our rental is quite a low figure particularly for renegotiating a buy to let mortgage.
the tenants are really great and want to stay ideally another year after this before they emigrate. what do people suggest ? bearing in mind we dont want to p... them ..f. thanks in advance.

abaxas

I'm sorry to be negative but rents are NOT based on your costs but on market conditions. If your costs have gone up you can ask for a rent increase when the AST converts to periodic or break at the 6 month mark.

Remember that a void will hurt you much more than the situation you are in now.

prudryden

I generally leave my rents unchanged if I want the tenants and they want to stay another year. But they also have to give me two months notice to terminate in return. However, because of the rate increases, you don't want to be left high and dry either.

If you are only thinking about raising it, say £25/month, the tenants might be OK with that, but after you take 40% tax off, it may not be worth raising it at all.

silvercar

we have taken out a 6 month renewable contract going to 1 year

Is this a 1 year AST with a break clause? If so, I doubt you can increase the rent mid term.

You need to compare the rent you are charging to local rents for similar property.

As a tenant I wouldn't be happy to have an increase after 6 months; I would be concerned that you would increase the rent every 6 months. An annual increase would be more palatable.

As a landlord I would be worried of upsetting decent tenants and hold back on the increase until they have been there a year.

Remember a 2 percent increase is about a weeks rent, if the tenants moved and the place was empty for more than a week you've lost out.

rosysparkle

You cannot increase the rent for an existing tenancy until the tenancy has been running for a year. Thereafter you can raise the rent at yearly (or greater) intervals as long as you serve the requisite notice.

You can raise the rent if you have new tenants without waiting for the anniversary date, so if your tenants leave after six months you can readvertise at a higher rent.

If you raise the rent for existing tenants you must give them two months notice of the increase.

Deals_2

thanks first of all for your input. basically the mortgage is up for renewal at the same time as the 6 month break clause happens. the rate i am being quoted so far seems to not cover the rent (still looking into the option of a variable rate alternative to see if we can avoid annoying them though we would be able to rent out practically immediately again as it is a very good market at the moment. also for the type of mortgage i was looking at i believe the rent has to cover the mortgage to get the mortgage on buy to let. what are your thoughts? thanks again.

rosysparkle wrote:

You cannot increase the rent for an existing tenancy until the tenancy has been running for a year. Thereafter you can raise the rent at yearly (or greater) intervals as long as you serve the requisite notice.

You can raise the rent if you have new tenants without waiting for the anniversary date, so if your tenants leave after six months you can readvertise at a higher rent.

If you raise the rent for existing tenants you must give them two months notice of the increase.

scrummy_mummy_2

Normally, the annual rental income from a property needs to EXCEED the annual cost of the mortgage!
Try the following link
https://www.themoneycentre.co.uk
I have used them for BTL mortgages and they are really helpful trying to get a competitive rate.
BEWARE they charge an agent's fee ON TOP of arrangement fees levied by the lender so ask UP FRONT before you begin the buying process with them (if you choose them!) what their fees are.
Good luck.

Rick62

the rate i am being quoted so far seems to not cover the rent ....... also for the type of mortgage i was looking at i believe the rent has to cover the mortgage to get the mortgage on buy to let. what are your thoughts?

This is going to become increasingly common particularly as many BTLers have fixed rates taken out a couple of years ago at about 4% and new rates are typically 5.5% plus. Many lanlords will have trouble remortgaging for enough (due to the rrental cover requirements) and even when they do will have a large increase in their mortgage (4% to 5.5% for instance is a 38% increase in the mortgage cost). Generally they won't be able to pass this on, rents have generally remained resiliantly flat with effective market competition.

rosysparkle

Deals wrote:

thanks first of all for your input. basically the mortgage is up for renewal at the same time as the 6 month break clause happens. the rate i am being quoted so far seems to not cover the rent (still looking into the option of a variable rate alternative to see if we can avoid annoying them though we would be able to rent out practically immediately again as it is a very good market at the moment. also for the type of mortgage i was looking at i believe the rent has to cover the mortgage to get the mortgage on buy to let. what are your thoughts? thanks again.

My thoughts are that you are bound by the law, which says you may not increase the rent in the first year of the contact, nor more often than yearly. If you serve the current tenants NTQ you might be able to relet at a higher rent, but you have to be aware that the cost of a void period (between tenants) might be more than the increased amount you get in rent.

If the rent charged doesn't cover your costs, then unfortunately that's the risk you take on a rental property that you don't own outright. If you can restructure the loan, that might help.

Guy_Montag

I guess it makes it kinda hard to remortgage when the time comes if the rent doesn't cover the mortgage:whistle: