Am I foolish to reduce monthly rent?

jjlandlord

Boyley wrote: »

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

There is no reason to reduce the rent because you manage the property yourself instead of hiring an agent, as you are just in effect bringing the work back 'in house'.

You must make business decisions, not decisions based on the tenant's request.
If rent is at market level or below, there is no reason so reduce it unless the tenant gives you something valuable in exchange.

If you want to do something, tell the tenant that you won't increase the rent in the coming year.

G_M

JimmyTheWig wrote: »

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%.

Remember, although you are saving money by sacking the agent, you are taking on extra work yourself, so it is reasonable to 'pay' yourself for his.

I would certainly not pas on the whole of the saving to the tenant.

But as others have said, tenant relations are important too and keeping a good tenant happy is worth a lot.

jayss

Not raising the rent and not charging for a 'renewal' would make me as a tenant very happy, don't need a reduction.

Boyley

jjlandlord wrote: »

There is no reason to reduce the rent because you manage the property yourself instead of hiring an agent, as you are just in effect bringing the work back 'in house'.

You must make business decisions, not decisions based on the tenant's request.
If rent is at market level or below, there is no reason so reduce it unless the tenant gives you something valuable in exchange.

If you want to do something, tell the tenant that you won't increase the rent in the coming year.

I do agree with your points and I did point out that I wasn't planning on increasing the rent this year. The value in exchange is that there is minimal wear and tear on the property and on inspection it is exactly how I left it (i.e in pristine condition) with no issues whatsoever during the last year.

If I can afford to reduce by £15pcm whilst still receiving a 6%+ return AND retain a happy tenant then in my eyes this is a good business decision.

Boyley

G_M wrote: »

Remember, although you are saving money by sacking the agent, you are taking on extra work yourself, so it is reasonable to 'pay' yourself for his.

I would certainly not pas on the whole of the saving to the tenant.

But as others have said, tenant relations are important too and keeping a good tenant happy is worth a lot.

£15 equates to less than 20% of my saving managing the property myself.

Boyley

Worry_Wart wrote: »

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.

My thoughts exactly!

Boyley

jayss wrote: »

Not raising the rent and not charging for a 'renewal' would make me as a tenant very happy, don't need a reduction.

Fair enough if you dont want a reduction! I have been a tenant myself and would take it if it were on the table.

JimmyTheWig

Boyley wrote: »

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

£15 sounds about right, then, to me.

Remember to point out to them that they are getting a further "reduction" because other landlords would be putting their prices up.

ConfusedofYorkshire

A tenant who pays their rent on time and isn't giving you hassle sounds worth the reduction.

jjlandlord

Boyley wrote: »

If I can afford to reduce by £15pcm whilst still receiving a 6%+ return AND retain a happy tenant then in my eyes this is a good business decision.

Only you can judge that.
From what you said, I do not think that it makes any business sense, but clearly you already have decided as you seem to be trying to convince others.

Your tenant will remain happy even if you say 'no' if he is happy at the moment.