Increasing the rent - tenants angry.

Thrugelmir

Conrad wrote: »

I'm sitting opposite my lettings agency manager. One of her landlords, a Lithuanian, with 10 properties today instructed her to increase all rents.

Listening to my lettings manager making calls to all the tenants, they are very unhappy and she's getting it in the kneck.

The landlords stance is that rents have risen locally (true) and that's the going rate.

Tenants just don't get this point about the landlord being engaged in a money making business, period.
Some have said they will go elsewhere, but it's unlikely as rents have genuinly risen quite dramatically.

Sounds more like someone who is desperately squeezing as much money out of their business and transferring it abroad. Before defaulting on their debts.

Most successful businesses have contented customers. Those that don't, one day most likely will fail.

Thrugelmir

Graham_Devon wrote: »

Housing benefit seriously alters the demand side, in terms of ability to demand it.

Many BTL lenders exclude letting to this type of tenant.

marathonic

The big mistake people make is thinking that they don't need to start saving for a deposit until later in life.

If rent costs 30% of someones salary and they get away with 10% toward parents expenses whilst living at home, they should be able to easily afford to save 30% of their salary whilst living at home. The people that actually do this are in a minority.

When you move into rented accommodation, the average person should still be able to save but, perhaps, at a rate of 5% of salary. Therefore, what would take 2 years to save whilst living at home will take 12 years when living in rental accommodation.

Then add children into the mix and things become almost impossible.

Take, for example, a 21-year old looking for a mortgage of 3 times their salary and wanting to provide a 20% deposit. The deposit would thus equate to 75% of their salary. This could be manageable in 2.5 years.

If that person were to spend all their money on gadgets and entertainment until the meet a partner and then move in with that partner at 25, that 75% salary might take 15 years to save.

So person A has a house at 23 with an option to extend their mortgage term when they have children (with them being so far away from retirement).

Person B has a house at 40 with less options for extension.

Also, whilst person B is paying rent at an equivalent amount as person A's mortgage AND saving 5% of their salary towards a mortgage, person A can use that 5% to overpay their mortgage.

In general, most people who complain about rents being a limiting factor to buying a house have left it too late to start considering saving for a deposit.

marathonic

In my personal case, I done things slightly unusual - I paid 26% of my salary into a pension in my early to mid twenties. Add the employers 4% contributions and my total was 30%.

With my pension equal to 1.5 times my salary by my mid-twenties, I could reduce my contributions to the minimum required to receive my employers contribution without too much worry about whether it's adequate (because, the 150% of salary lump sum is sitting there and will grow over the next 35-40 years).

When I reduced my contributions, I saved for a house deposit and, at 30, have just bought. I lived at home until this year and paid 5% of my salary towards my parents household expenses.

I couldn't tell you with much certainty why I chose this route and it's probably not the best idea for most people. However, my timing was pretty good because house prices in Northern Ireland at the moment are at their lowest level in about 10 years.

marathonic

My personal opinion is that this, more than any government policy regarding housing benefit or tax incentives available to landlords, will resolve the problem that many young people face with buying their first home:

http://www.moneysavingexpert.com/news/family/2013/02/financial-education-to-be-added-to-the-national-curriculum

In the very, very long-term, this is likely to reduce the role the landlord plays in todays housing market. Until then, landlords can, and should, make as much profit as the current market allows.

chewmylegoff

So, all 10 of the properties have tenancies running which happen to be at a point where it is actually possible for the LL to increase the rent? By some coinicidence none of them are in a fixed term period? I guess that means that either this is just made up or all the fixed periods have ended and the tenancies have reverted to statutory rolling tenancies in which case the LL hasn't put up the rent on any of them for a while.

Since most tenants would be at work at 2pm on a weekday and wouldn't be answering their phones and no letting agent I have ever dealt with has attempted to increase the rent by telephone, I'm leaning towards the "the OP is bullish!t" explanation.

headcone

Conrad wrote: »

I'm sitting opposite my lettings agency manager. One of her landlords, a Lithuanian, with 10 properties today instructed her to increase all rents.

Listening to my lettings manager making calls to all the tenants, they are very unhappy and she's getting it in the kneck.

The landlords stance is that rents have risen locally (true) and that's the going rate.

Tenants just don't get this point about the landlord being engaged in a money making business, period.
Some have said they will go elsewhere, but it's unlikely as rents have genuinly risen quite dramatically.

Billy Liar!

nollag2006

I've been putting my rents up 5-10% per annum over each of the past three years, and they are still cheaper than local market rates.

Only tenant that got irate was a STR fool. He moved out shortly afterwards. Ho! Ho!

marathonic

nollag2006 wrote: »

I've been putting my rents up 5-10% per annum over each of the past three years, and they are still cheaper than local market rates.

And why not - it's a business, not a charity.

One of the main reasons rents are increasing is because property prices are decreasing in most areas. In general, first time buyers are usually happy to sit back and rent whilst prices fall. It's the investors that put a floor to the market when the yields become too good to ignore any longer.

When property prices turn, I expect a large number of potential FTB's who are currently renting (and also STR's) to jump back on the band wagon.

As it's in everyones nature to look after their own interests, these people will suddenly jump from thinking that low property prices are the foundation of a sound economy to thinking that prices should rise so that people can equity release to buy cars, gadgets, etc - and as a result, increase the number of jobs available within those industries.

For now, you are giving potential first time buyers the option to sit out the falls (in nominal terms in some areas and only in real terms in others). I salute you for providing such as necessary service to the youth of today :T

Carl31

marathonic wrote: »

The big mistake people make is thinking that they don't need to start saving for a deposit until later in life.

If rent costs 30% of someones salary and they get away with 10% toward parents expenses whilst living at home, they should be able to easily afford to save 30% of their salary whilst living at home. The people that actually do this are in a minority.

When you move into rented accommodation, the average person should still be able to save but, perhaps, at a rate of 5% of salary. Therefore, what would take 2 years to save whilst living at home will take 12 years when living in rental accommodation.

Then add children into the mix and things become almost impossible.

Take, for example, a 21-year old looking for a mortgage of 3 times their salary and wanting to provide a 20% deposit. The deposit would thus equate to 75% of their salary. This could be manageable in 2.5 years.

If that person were to spend all their money on gadgets and entertainment until the meet a partner and then move in with that partner at 25, that 75% salary might take 15 years to save.

So person A has a house at 23 with an option to extend their mortgage term when they have children (with them being so far away from retirement).

Person B has a house at 40 with less options for extension.

Also, whilst person B is paying rent at an equivalent amount as person A's mortgage AND saving 5% of their salary towards a mortgage, person A can use that 5% to overpay their mortgage.

In general, most people who complain about rents being a limiting factor to buying a house have left it too late to start considering saving for a deposit.

You are quite right, but using your example

at 23, person a will probably have a much lower salary, and a more active social life, and a number of 'grown up' things ahead of them, having children etc... At 40, person b will have a much higher salary, and less active social life, more than likely had children and reduced number of outgoings, hence would be able to service a mortgage a lot easier