Am I foolish to reduce monthly rent?

Boyley

I am about to take over the management of a property from the EA and will effectively be better of to the tune of 9%+ VAT.

I have a very good tennant who is seldom at the flat due to work commitments and have had no issues during the term of the first years tennancy.

Pending a review of service charges, to which there is a slight increase this year, I verbally agreed to see what arrangement we could come to by way of reducing the rent a little (but still remaining at market rate).

Arguably rents shoud be increased year on year but I believe in whats good for the tennant is good for me and so giving a little back whilst not breaking the bank and squeezing the tenant dry would not do any harm.

I am mindful that this is a commercial venture however hiking up rents with good tenants brings its own set of problems these days.

What are peoples thoughts? I was thinking something along the lines of a £15 pcm reduction.

Mr_F_Dorsetty

Boyley wrote: »

.......I am mindful that this is a commercial venture however hiking up rents with good tenants brings its own set of problems these days.

What are peoples thoughts? I was thinking something along the lines of a £15 pcm reduction.

Having been a landlord at one point, imo, if you have a good tenant who pays the rent and doesn't destroy the property then they are very much a 'keeper'.

Whilst you might lose £15 a month to keep your tenant happy, that is a whole lot cheaper than 6 or 8 months without rent, then a court, solicitor and bailiff bill probably followed by a builder.

As ever, do as you think right, but by what you have written I'd very definitely keep hold of the tenant you have.

bsms1147

Sounds like you're one of the good ones

Fluff15

Boyley wrote: »

I am about to take over the management of a property from the EA and will effectively be better of to the tune of 9%+ VAT.

I have a very good tennant who is seldom at the flat due to work commitments and have had no issues during the term of the first years tennancy.

Pending a review of service charges, to which there is a slight increase this year, I verbally agreed to see what arrangement we could come to by way of reducing the rent a little (but still remaining at market rate).

Arguably rents shoud be increased year on year but I believe in whats good for the tennant is good for me and so giving a little back whilst not breaking the bank and squeezing the tenant dry would not do any harm.

I am mindful that this is a commercial venture however hiking up rents with good tenants brings its own set of problems these days.

What are peoples thoughts? I was thinking something along the lines of a £15 pcm reduction.

That's very nice of you. If you're in a position where you feel you're going to be able to cope with the £15 a month difference and you trust the tenant, then I can't see why not. As a tenant, if my landlord did this I'd be extremely grateful and be more mindful to take even better care of the property.

DRP

given the saving you'll make by managing the property yourself you'll still be better off.

If you're happy with the tenant then it is win-win.

JimmyTheWig

I'd say increase rent by 3% but then split the estate agent saving down the middle thus reducing the rent by around 5.5%. So, in effect, reduce the rate by 2.5%.

Boyley

Thanks all, great for piece of mind.

A reduction of £15 works out at a 2.0% decrease, £20 = £2.7%.

Takeaway_Addict

If the tenant isn't asking for a reduction and they are a good £15 won't make much difference, however if your costs rise it gives you a better leeway to keep the rent the same for a longer period of time.

jjlandlord

Rent increases if you can increase it, ie. if the market allows it. If you have a good tenant it is a good idea to keep the rent slightly below market rent in order not to encourage him to leave.

What is unclear in your post is the reason for you to reduce the rent.
Please don't tell me that you have volunteered that proposal out of your good heart...

Boyley

jjlandlord wrote: »

What is unclear in your post is the reason for you to reduce the rent.
Please don't tell me that you have volunteered that proposal out of your good heart...

No of course I haven't volunteered it. The tenant enquired as to whether I would be willing to deal with him directly rather than through the EA (which unbeknown to him I was going to do anyway once the term was up) and if there would be any movement on the rent given the circumstances.

As a reasonable person with a growing portfolio I am willing to consider such requests if I see a benefit in the long term.

Worry_Wart

If there's a change in circumstances and he knows he will be dealing with you directly, then I think splitting the difference and reducing his rent by £15 a month is fair. He will feel you are treating him as a respected tenant and should be happy with his lot. Then if you do need to increase the rent in the future if your expenses increase, he should trust that you are being fair and not trying to fleece him for the sake of it.