Real-life MMD: Should I up the rent and risk losing a great tenant?

StaceyJW

I'm quite surprised that you haven't reviewed this sooner or decided on an approach prior to renting out the property. I think a dramatic increase in rent with little warning would be very unfair to your current tenant, however, you're running a business and I don't see the harm in raising the rent by £10 a year in line with inflation and other expenses. In theory, their salary should also increase each year and be able to accommodate a small rent increase. Also assuring that the rent is in line with nearby properties.
Another way to think about it, if you don't implement a raise now, will you ever? If the tenant stays there for 20 years with no increase in rent, that's one lucky tenant!

bigmac77uk

just explain to the tennant that you are running a buisness and discuss / try to come to an agreement with which you are both ok with. No tennant is ever going to be happy paying more, but if they know what the current rents are in the area then perhaps that will lesten the blow. maybe agree a time scale in which the rent will go up. thus if the tennant simply can not afford any increase then it will give them time to find some where else. some times some people take advantage of other peoples good nature. you are not being nasty, if anything i would say your tennant has been very lucky over the years. you could have put up the rent every april like my land lord does, although i have looked around and found what i pay to be very fair, so i just accept the fact that rent like other bills will go up and very if ever come down.

Savesome£s

Echoing what others have written, it can be really hard to find good, reliable tenants and you don't want to risk losing the one you have. As someone who does rent, the price increase to our rent is something we always have to carefully consider and decide whether it is just too much for us to continue living where we are. Small annual increases are fine but I don't think you can just up it by £250 without losing your tenant. You need to think about the potential long-term loss of money if you lose your tenant particularly if you don't need the extra money. If your tenant does stay then you may find that the massive rent increase has caused some resentment and they end up ringing you for each little problem that they might have just sorted out themselves in the past.

golddustmedia

When I set out my tenancy agreements I have a clause in there for annual capped rent increase, that way there are no surprises for anyone.

Don't assume a new tenant (if the existing one left) will be bad. Taking up references should safeguard you against most bad tenants.

End of the day, the existing tenant will continue to rent somewhere. If your price is in line with the market price chances are they will stay.

milvusvestal

You evidently have a good relationship with your tenant, who presumably complies fully with the agreement you made - that alone is worth it's weight in gold, as the majority of tenancies in my experience are nothing but trouble.

Obviously, you can't demand the kind of rent your neighbour levies, without losing who you have. Why not invite him/her in for a cup of tea or something, and give a gentle reminder that your costs as landlord have risen. You can surely negotiate a figure that will still be acceptable to both of you and, that way, you will continue to have a trouble-free tenancy - something that many landlords would give their right arms for.

Besides, if you really know your tenant's finances as well as you think you do, how would you feel about serving notice to quit when you know that this could make them homeless?

Barryfan

Presumably you were happy with the rent being paid to you before you found out that next door were paying more. However, as others have said, a reliable tenant is worth their weight in gold. If you feel that the rent should be increased then I suggest a frank discussion with your tenant to talk about some sort of staggered increase.

suchgreatheights

pc1271 wrote: »

Surely a good, reliable, long term tenant is worth sacrificing some income for. If you increase the rent by £250, he will likely move out and potentially leave you with no income, or tenants from hell.

Have your costs increased? If not, why do you believe you deserve to take more money from your cash-strapped tenant?

Obviously his costs have increased - in line with inflation if nothing else. £250 ten years ago is worth around £340 now if you use the Retail Price Index as your basis for measurement.

Agree that a proven, good, long-term tenant is worth taking a reduced rent for, but you have to balance that against the extra income if you re-let the property at the current market rent.

As others have pointed out, it depends on what the total rental income is, but he "deserves" more money because that is the going rate for everyone. Should he accept £250 per annum less for ever more? Would you be happy to work for a fixed salary for ever more? Of course not, because the cost of living is constantly rising.

At the end of the day, the tenant has been getting a good deal for 10 years. While you don't want to lose him, I would say it would definitely be worth approaching him about a fair increase in rent to reflect the fact it hasn't been changed for 10 years! It is all about compromise really.

Jo09

The landlords cost have probably gone down in line with the cost of borrowing.

If I was a tenant I wouldn't agree to an increase nor would I appreciate the suggestion of taking an increase because I could get help with benefits.

What the neighbour gets isn't totally relevant. The tenant is paying your mortgage and if they stay a few more years may fully pay it off. Some landlords are greedy and want tenants to pay rents they cannot afford.

If you need the money and it's justifiable put the rent up but the other posters have pointed out the risks.

NB I rented for 6 years and paid less rent for the last 5 years. Landlord remortgaged twice whilst I was there.

sutee1

Jo09, could it be that your landlord had to remortgage because s/he did not get sufficient income from the property to cover his/her expenses?

I also rented, allbeit only for 5 years with one couple, and they did not put up the rent during that time. It was covering their mortgage/expenses and, when the husband came out of the RAF, they wanted the house back which caused my quite a problem, as I had a (well-behaved) cat and it is not easy to find places which will take them!

I understand the question of not increasing the rent and I would have struggled but I knew nothing about claiming housing benefit (to which I would have been entitled). Most people now understand it and, if they are entitled to it, an increase of say £50 per month would not necessarily cause too great a hardship.

I think that the landlord in question probably has a good relationship with the tenant and should invite him/her to a discussion/explanation and see how that pans out.

As several have already said - a good trouble-free tenancy is worth more than the hassle of continually changing troublesome tenants!

happyinflorida

If the tenant is keeping your property well looked after and clean you are extremely lucky.

I have had many tenants over the years and I don't know if I was just unlucky but I only had one tenant who left the place in a reasonable state. Most caused damage and left it filthy.

So be very careful. I would say that 10 years at the same rent is unusual so therefore I would expect the rent to go up a little - as I'm sure your tenant's wages/salary have in that time but possibly haven't done so for the last few years.

I would visit your tenant and start up a conversation along the lines of "I've discovered that next door to you has a rent £250 more than you are paying. I haven't raised your rent for 10 years or since you moved in which is 10 years" Go along these lines - say you think it'd be fair to have an increase now of around - whatever it is you think is fair. Personally I wouldn't increase it very much, maybe £50pm maximum as this guy's on a low wage and I'm sure you don't want to lose him.