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

hvd201

blameitontheboogie wrote: »

Thank you all for taking the time to reply.

"one thing no-one has asked is what the rent is" £500 vs £750 next door. Having since done a bit of research another house was going for £725 but was asking the tenant to pay the £50 a month service charge [bit cheeky since it can be claimed for in tax purposes] but it's apparently still empty.

"Have your costs increased? If not, why do you believe you deserve to take more money from your cash-strapped tenant?" Yes and no. The mortgage payments have gone down [it was round the 10% mark when I first took it out] and the service charge has only gone up by £60 in the last couple of years. The rent covers the mortgage. In terms of maintenance the general costs have stayed pretty much the same but over the last year the house has been completely redone - new bathroom, kitchen, carpeting, new back door which has cost roughly a years worth of rent - a rent rise would help offset that cost. In fairness to the tenant though, they didn't complain about it before it was done.

"I suspect that you are not mortgaged to the hilt" By the grace of chance, no. I'm not a multi-landlord - it's just my old home. When I got married, I wanted to keep my house [whisper it -just in case] and as I'm down South now and the house is oop North it made sense to rent it out.

"is the landlord game really for you" It was never my ultimate aim it's true, but I won't ever sell my old home, so it does have to earn it's keep. I rented for years before I could afford my own property and had some 'interesting' landlords - just didn't want to behave like that with my tenants

"We recently signed an extra five years to keep the rent the same" An interesting idea. Just out of interest, what would happen if the landlord had to sell, say, or if you had to move for work say?

After improvements, and 10 years at the same rate, the tenant is probably aware that a price increase is long overdue and (I hope) know how lucky they are at the moment.

Just think 12x £250 = £3,000. That is a lot of money and you are not a charity.

If your property can genuinely be rented at a higher rate then I would organise a date to have a sit down conversation with the current tenant and see if you can come to an agreement - maybe suggest a £75 or £100/month increase this year and see what they say. A £50/month increase, minimum, would be what I consider fair.
I wouldn't whack them with the full £250/month as this would probably unfeasable.
I would consider what they do to help with the upkeep of the house, if any, and how much that might be worth to you.

Also if your tenant is on housing benefit (you mentioned they are in a low paid job) then I can only assume that this will have risen at least with inflation so there will be some flexibility there.

Good luck!

Ebenezer_Screwj

We were in a similar situation with somebody who was renting our garage at a very low rate. We decided to increase her rent in line with other garages in our area and wrote to her accordingly. She paid the increased rent without comment as she obviously knew the score, so I would suggest you adopt similar action.

tinkerbel*79

you were happy charging this rent b4? and now you found out mr jones charges more rent than you. it's called keeping up with the jones's.
Rental properties for the most part are over priced. If you pay cheap rent you pay in costs to heat the house and elec meter or you pay more in rent.

joehoover

A reasonable adjustment would be fair after 10 years but a big hike of £250 isn't, not if you want to keep your teneant.

Every house I have lived in the landlord or agency has been amazed how clean I kept it, just shows how many wrecked properties they must witness.

A good tenant is worth their weight but I think they can't begrudge an increase after none for 10 years but you need to find something you can agree on.

Some landlords are taking advantage of the lack of opportunity for first time buyers which forces them into rent and prices in London where i live have sky rocketed, somewhere I used to live which was further out not on the tube network has now tripled from when I lived there, preventing people from saving for a deposit for their own place.

That bubble will burst eventually and landlords will be struggling to rent places and they will have to drop their prices, but they could have lost a good tenant in the meantime.

Butterfly

That's very generous of you to have charged a low rent and also be considerate enough of your current tenant. I too am in a fortunate position, I've lived in my shared house for 7 years on a relatively low rent compared to my neighbours. However, we do look after the property, although our landlord does not spend much money on it but that doesn't bother me and my housemates.

Our landlord sometimes raises our rent, sometimes he doesn't, there's no set rule. He's a generous man and I'm very grateful. If he did raise the rent signifcantly to match our neighbours then we would expect him to do much more work on the house, and then I think there would be a higher turnover of tenants. I think he does value us as long term tenants as it means much less stress for him - he obviously values his health too!

Your tenant sounds good. If it's really about money and you'd like more then may raise it marginally every year but not enough to risk losing him. But as tenants we do know that nothing lasts forever. I'm sure he's enjoying living in your property while it lasts, until one day you do decide to up the rent completely or even sell. Good luck with your decision.

Voyager2002

Firstly, explore the LHA/Housing Benefits aspect of the situation. If your tenant has a low income then her/his rent would be subsidised (up to the LHA level for the place in question) by the Benefit System. Look on-line to see whether you are charging less than the current LHA figure: if so, then now is the time for an increase, but obviously help your tenant with letter and documentation for making a claim and don't expect any extra money until the claim has been processed.

Otherwise, try to put a value on the high quality of your tenant. For example, professional landlords reckon that there will be two months "void" (no tenant) each year, so compare your current revenue (12 x 500 = 6,000) with what you could expect to receive if charging a market rent (10 x 750 = 7,500). Again, changing tenants every couple of years would involve costs in agency fees, advertising costs and miscellaneous expenses, so the amount you lose by keeping the rent low is probably less than appears at first sight.

The bottom line is, there is no reason why you should subsidise the accommodation costs of someone on a low income, any more than the grocer should provide them with cheap food. To some extent the community provides help to people on low incomes through the benefit system, and we all rightly contribute to this. At the same time, do your sums properly and put a fair figure on the value to you of a good tenant.

gordothegopher

I think a discussion with your tenant is best. As others have pointed out, a good tenant who has stayed over 10 years is like gold dust. As a landlord, you kind of have it made if they have been with you for so long and not given you any trouble. If they leave, you could end up with people who don't pay rent on time, cause damage to the property, plus the hassle of cleaning the flat, agents fees etc.

If you did raise the rent £250 and your tenant left, they would be in a position of trying to find another flat which would undoubtedly be more expensive (as they are currently used to paying rent set at 2002 prices), so it would be in their interest to stay put as well.

Find out what would be a reasonable amount for them and come to a compromise, even if it's only an extra £50 pcm. It's certainly not worth the additional expense and hassle of finding another tenant.

MoneyFan

I was recently on the tenant side of this issue, and they imposed the increase without discussion. It was a surprise as we got on well and I'd given them no trouble, and also because it was quite a large hike for a relatively short time. It prompted me to look around and I found a lovely place and handed in my notice. They quickly offered me the place for the same rent as before but it was a bit too late. In hindsight, I believe they regretted not discussing it with me first. Don't make this mistake if you value this tenant at all.

roaminn

Choice is yours - if this is an 'investment' property - then most landlords would put the rent up - after all you want the best possible yield.

However, if money is not an option - i.e the property is paying its' way - then the honourable thing to do would be to let the current tenant stay - however, that DOES NOT mean that you could not implement a small rent increase - say £50 a month, to cover your costs, which must have increased over the past 10 years.

I am sure that your tenant realises that they are paying a below market rent and appreciate that you haven't implemented rent hikes whenever you are legally entitled to.

Hime

Bringing rent in line with market value would mean a huge jump for your tenant and if you have not increased it at all in ten years maybe consider why now, you want to. Because your neighbours get more for their place? A small incremental yearly increase is fairer and you should let the tenant know what you would like to increase it by, well in advance, they can think about it and possibly negotiate something like more maintenance for less rent if it is tough for them, or reject it. IF your tenants did go, chances are that you could have significant redecoration/upgrading to do and you may find your property empty for longer than planned or hoped. The cost of finding new tenants needs to be borne as well. Even one month of of no rent coming in is income lost.
I am a landlord, but move cautiously on the rent as I would rather the good tenants I have stay put.
Hope this helps.