Fair rent increase?

Apoorwoman

We rent out a cottage close to our home and the current (very good) tenants have now been there nearly seven years. In that time we have never increased the rent which is £895 a month. The current market value is in the region of £1300-£1500 a month.

We are planning on increasing the rent to £995 a month giving three months notice of the increase.

This rent includes: emptying cess pit (twice a year), window cleaning, boiler service, chimney sweep (once a year) and garden maintenance, the cost of all of these has increased substantially over the years.

Do you think we are being reasonable?

Can I just give them a letter advising of the increase or must it be on an official form.

It is now a periodic tenancy.

G_M

A friendly visit. Take a cake and have a chat. Check that they are happy, no repairing issues they want you to deal with etc.

Explain as you have above - perfectly reasonable, though perhaps introduce the increases gradually eg now and and again in 12 months rather than one huge increase.

Then use a S13 Notice.

See

* Rent increases: when & how can rent be increased?

Marktheshark

Can you afford them to not be able to afford it, move out and have the loss of bad tenants that wreck the place.
If these are paying and you are making money then getting greedy might come back to haunt.

ellie27

Marktheshark wrote: »

Can you afford them to not be able to afford it, move out and have the loss of bad tenants that wreck the place.
If these are paying and you are making money then getting greedy might come back to haunt.

Their tenants have been there for 7 years paying the same rent of £895 without any increase when the current rate is around £1300. I certainly do not think the OP is greedy!!!! Sounds like the most generous landlord ever!

boliston

What does the agreement actually say regarding the rent increase? - it will be typically rpi+2% on an AST and rpi is quite low right now

selement

As a tenant £100 sounds like a big increase. My rent is not as high as this, but if ours went up by that amount I think I'd look elsewhere even though we really like the house - we couldn't afford it. Would probably stay for £50 increase though. Could you do 2 smaller jumps perhaps?

Apoorwoman

boliston wrote: »

What does the agreement actually say regarding the rent increase? - it will be typically rpi+2% on an AST and rpi is quite low right now

Rent increases are not mentioned on the agreement. What we are proposing is just over 10%, but this will be the first increase for seven years, so works out at less than 2% per year.

dinkylink

selement wrote: »

As a tenant £100 sounds like a big increase. My rent is not as high as this, but if ours went up by that amount I think I'd look elsewhere even though we really like the house - we couldn't afford it. Would probably stay for £50 increase though. Could you do 2 smaller jumps perhaps?

Yes but this £100 increase is still at least £300 less than the market rate by the sounds of it, so in reality can the tenants afford not to take it?! Sounds like a blooming good deal to me!

Davesnave

dinkylink wrote: »

Yes but this £100 increase is still at least £300 less than the market rate by the sounds of it, so in reality can the tenants afford not to take it?! Sounds like a blooming good deal to me!

Yes, they can probably afford not to take it, by downsizing or taking something in a less salubrious area.

But we don't know the tenants' circumstances, so the likelihood of them doing this cannot be judged. Some people's incomes fall as they get older.

The increase in % terms over time is reasonable, but in one leap, it may be too much. That's why I think GM's approach is better; a staged increase over a longer period. What that should be depends on a number of unknowns.

Jon_B_2

On the contrary, they could be in the situation that myself and my wife were in where we were continually surprised and happy that the rent didn't go up over a 5 year period. If our landlord had put the rent up to keep in line with market forces we certainly wouldn't have complained or looked elsewhere.

mildredalien

ellie27 wrote: »

Their tenants have been there for 7 years paying the same rent of £895 without any increase when the current rate is around £1300. I certainly do not think the OP is greedy!!!! Sounds like the most generous landlord ever!

Depends on your perspective, current market rates are higher because house prices are higher - so landlords buying a property now will be paying more and need to recuperate their costs through higher rent. Someone who is renting out a house they bought many years ago may be paying a great deal less in terms of their mortgage payments.

That being said, if even the increased rent will be quite a bit less than market value that seems reasonable to cover increased costs of maintenance etc. There's no point a landlord not covering their costs, if something goes wrong both the landlord and tenants could be at risk if there isn't the money to fix it.

If the tenants haven't had a rent increase for many years however, suddenly asking them to pay £100 extra a month may be quite a surprise to them, it's a fairly big jump.