Rent increase

Innys

Hi guys

I was wondering how much any landlords out there will be putting up rents this year. I have a house where the tenansts wish to say on - now for the 3rd year. I didn't put up the rent for the 2nd year but feel I have to in year 3 to cover costs.

How much, in % terms do you feel is reasonable?

The four bedroom house is in South West London and close to good transport links.

Thanks for any advice.

I

CB1979_2

well surely it depends on a number of things:

1) how much have your costs gone up? if just interest rate rises ask for 0.5-1% increase (if you don't want to seem like a money grabber)

2) how much do similar properties go for in the area? no point raising your prices £1-200 pcm more than your next door neighbours

also what's the likelihood of them staying if you up the rent?

do they love place for what it is, ie "their" home or are tehy wanting to stay as yours is £100 a month cheaper? if they are emotionally attached then all good, but if it's cos it's cheaper you could lose your tenants, if they can get better for the same or cheaper locally

chant1l

Irrespective of your costs, the rent can only go up if the locality will bear it. In its current condition what would it achieve to a new tenant?
If the local rent has not improved, I wouldnt be increasing it as you may score an own goal by losing the tenant and having a void (paying the council tax/advertising/refurb in the interim too).
My London rents have pretty much frozen for the last three years, I won't be trying to force them up.

iwillretireatfifty

Innys wrote:

Hi guys

I was wondering how much any landlords out there will be putting up rents this year.

I

Hi, we put our tenants rent up by just £25 recently and to be honest I wish we hadn't bothered because it has caused more hassle than it was worth!

They have decided that they can't afford £425 pcm for a 3 bed semi with large garden, as they only receive £380 pcm in HB and hence would have to contribute about £10 a week!

So, we served S21 as they are just getting more and more into arrears as the months pass but they have categorically told us (and the police - thats another story!) that they won't be moving on, but will wait to be housed by the council and so will wait for court and bailiff action.

I would think twice again I have to say about putting the rent up by such a small amount!

Good luck anyway

clutton_2

you could always challenge the HB amount by asking the Rent Office to do a re-assessment of the Pre Tenancy Determination.

skintas_2

my ha has put my rent up by £3 a week, ok not a lot but £12 a month, and council tax to go up, my wages arent

franklee

I would agree that it all depends on your local market.

One other point though, presumably you have good tenants, is that worth something, devil you know and all that? There is always the chance that if you lose good tenants due to a rent increase you'll get bad ones next time.

Maybe propose a small increase and if the tenants object be prepared to waive it?

PS If my landlord wanted to cover his costs he would be priced out of the market. His gross yield is just a shade over 4%. Clearly he's in it for the capital gain and doesn't mind a small monthly loss in the interim.

sm9ai

As said, local market determines the costs.

Its has absolutely nothing to do with what your costs are, its supply and demand, the same as the house prices.

In real terms rents are dropping. You might be able to scrape an extra £10 out of them, but with the added hassle its really not worth it.

mystic_trev

http://www.themovechannel.com/News/2007/February/27a.asp


"But the effects of the interest rate increase in November are yet to be fully absorbed by the market. If rates continue to rise throughout 2007 this sector of the market will inevitably be effected, said the agents’ association. Some landlords may be forced to increase rents in order to cover the increased overheads"

silvercar

A 2% increase is roughly a weeks rent.

If, by putting the rent up by 2%, your tenants leave and your property is empty for more than a week you have lost out!

Gorgeous_George

Innys

Only you can do the sums.

You need to calculate how much, after CGT and selling fees, the property could realise. How much interest could this give you if invested in various ISAs, savings accounts etc. If you have a residential mortgage, how much would you save by paying any gains from the BTL off the balance of the mortgage? (Number A)

Now, calculate your profit from the BTL (Number . The gross rent minus:
* mortgage repayments (BTL interest)
* insurances
* repairs
* potential voids
* income tax
* etc

If Number A is greater than Number B, increase the rent so that it isn't. Now, increase it again so that the BTL is worth the hassle/risk.

You may, of course, lose your tenants. You can re-advertise for new ones or sell. There is no point subsidising your tenants by making a loss because you may well hit financial difficulties and lose the BTL anyway.

FWIW, I increased my BTL rent from £75 to £80 per week in May last year. The tenants left and I increased the rent from £80 to £85 per week for the tenants from Jan this year (a total rise of 13%). This was the first rise in 5 years and my BTL is still £15 per week cheaper than similar (but smaller) properties in the same street. I shall be considering increasing the rent to £90 next year.



GG