Rent increase

frogula

Our rent went from £500 to £540 this month, after three years with no rises.

movieman

As said, local market determines the costs.

Costs are irrelevant: what matters is what tenants are willing to pay. When I last moved about eighteen months ago there was a huge supply of rental properties, and I saw some drop in price by 20% just in the few weeks I was looking for somewhere.

The simple reality is that if your tenants are renting because they can't afford a mortgage, they can't afford to pay your mortgage plus costs... and in most places there are plenty of landlords around who have much smaller mortgages who'll be happy to have them as tenants at a lower rent.

Some landlords may be forced to increase rents in order to cover the increased overheads

If landlords facing higher mortgage interest payments can increase rents to cover them without losing tenants, _why haven't they done so already_?

Gorgeous_George

I've never had a shortage of people wishing to rent my BTL. Partly due to it being 15% - 20% below market value but also because there are so many people who prefer to rent than buy.

I'm fortunate that I can make the numbers work while keeping the rent competitive. If I couldn't make the numbers work, I'd consider selling.



GG

silvercar

Totally agree with GGs calculations but this does not consider the non-financial implications.

people end up with rental properties for all sorts of reasons including inheritance. People also keep properties for all sorts of reasons including future retirement (either to live in or with a view to an income from the property after the mortgage is cleared), future home for children / family, future capital growth.

Sometimes the non-financial benefits out weigh the current costs.

Jay1b

Well inflation is about 3%. So assuming they're fair honest people they will understand if you raise the rent by UPTO 5%. If they can afford to rent a 4 bedroom house in that area, i'm sure they are acute enough to understand inflation.

movieman

So assuming they're fair honest people they will understand if you raise the rent by UPTO 5%.

Yeah, right: they get a 2% pay rise, inflation in essential items is exploding, and they'll happily hand over 5% more rent.

I think you need to reconsider your business plan.

If they can afford to rent a 4 bedroom house in that area, i'm sure they are acute enough to understand inflation.

If they understand inflation they'll understand that they have less money each year to waste on housing after they've paid for essentials.

Gorgeous_George

I think that putting prices up because of inflation is a poor justification.

Price increases should drive inflation. Not the other way around.



GG

barnaby-bear

Jay1b wrote:

i'm sure they are acute enough to understand inflation.

Acute?

Acutely ill?

OR simply people shaped with angles less than 90 degrees?

Jay1b

movieman wrote:

to waste on housing

I would rather 'waste' money on housing then live on the streets.

Their is a big difference between being 'happy' to hand over money and 'understanding' inflational rises.

The end result is that most people expect things to go up. If their rent went up by 5%, they would probably pay it. If its raised more than that they will think you're taking the !!!!.

barnaby-bear wrote:

Acute?

Acutely ill?

OR simply people shaped with angles less than 90 degrees?

Can i recommend https://www.learndirect.co.uk?

Scooby_Man

For a particular property that I let, the rent had stayed the same for 3 years and it was pretty decent. I did try to increase it each year with the change of new tenants but had no success because there were far too many properties for rent at the same or reduced price.

However, in the fourth year I decided to take a cut in rental income by letting out to a lady on HB who needed a long term contract (5+ years). I found that I am better off taking a cut with a longer term contract because there are less times the property is empty between tenancies; for the 3 years at the higher rate the house was empty for, collectively, about 4 months.

I know this HB lady can leave at anytime, but given her personal situation it seems highly unlikely.

Its a fine balance between rent amount and sustainability. There was another property where, in retrospect, I had the advertised rent too high initially and as a consequence it was empty for 2 months longer than it had to be - it eventually went for a lower amount.

I guess you're in a stronger bargaining position if your tenants are keen to stay on, but be cautious about potentially losing them if the price ain't right.

Good luck.