Landlords - would you increase the rent?

Mr.Generous

Hi, I'm interested in other people's opinions, not just landlords - the thread title was to give everyone a clue about the threrad.

I've got a 3 bed house rented out with a good tenant. Always pays the rent on time, been there almost 4 years. I put the rent up £30 last year - first rent increase - as it has fallen well below the market rent.

Last year the tenant gave notice to quit, and I thought I'd be able to get back to close to market rent, but she changed her mind and decided to stay. Since then she has spent quite a bit of her own money on new carpets and flooring, and done a decent job of decorating - after asking me if that was ok.

Now I wouldn't expect to renew carpets at 3 years old (house fully refurbed before tenancy) so it isn't an expense I would have had. The carpets weren't worn out or dirty, she wanted a colour change to match decor.

The current rent is £150 below the cheapest 3 bed property in the area, and less than a 2 bed in many instances.

The house market rent would be about £175-£200 more than the current rent.

Because I didn't increase it for 2 years I think the tenant isn't expecting an increase on this years anniversary but although mortgage free every other cost has gone up for me, landlord insurance, gas safe, electrical testing and of course and repairs both materials and labour have shot up.

So should I put it up? I'm thinking £15 to bring it up to the price I'm getting on a recently let 2 bed similar property. Does the fact the tenant spends their own money improving the house stop me - in that I'd feel like she won't want to move on having spent her own cash on the place.

propertyrental

Great tenant. Property improvements.

Leave well alone.

theartfullodger

Which country -eg NI, Wales etc? (laws and regulations vary...)

(Assuming England) Unless landlord agrees, tenant has no right to permit withdrawal of any valid notice to quit.  Why did you agree and how? (eg verbal, txt, email...)

What improvements or additional security of tenure were you considering giving tenant along with attempting to increase rent, although your costs are not increasing, please?

Artful: Landlord since 2000

BeerSavesMoney

If you increase the rent and the tenant does decide to leave then there is a chance the property could become unoccupied although this is probably unlikely to be for long given the current rental property demand.

However if this did happen then that extra £15 you hope to gain will quickly be lost.

Gavin83

Mr.Generous said:

Last year the tenant gave notice to quit, and I thought I'd be able to get back to close to market rent, but she changed her mind and decided to stay. Since then she has spent quite a bit of her own money on new carpets and flooring, and done a decent job of decorating - after asking me if that was ok.

She probably got angry you increased the rent, went to find somewhere else and realised she was getting a great deal at your place and therefore decided to stay.

I think your name is apt in this case, you're being far more generous than I'd be. £15 is nothing and she'd be insane to move out. Given she's spent money on doing the place up she's unlikely to want to move and a more sketchy landlord would likely take advantage of that.

Personally I'd be looking at market rents, knock a bit off for her being a good tenant and charge that. Even if you did increase it a fair amount and ignoring the improvements she's still unlikely to find a better option elsewhere. Personally in your shoes I'd be increasing it by at least £100 but ultimately it's your choice and dependent on how much you need the money.

Just remember though unless you completely take the pee she won't move out. She might threaten to, like last time, but she's unlikely to go through with it. There's no logical reason to given she'll need to live somewhere.

Mr.Generous

BeerSavesMoney said:

If you increase the rent and the tenant does decide to leave then there is a chance the property could become unoccupied although this is probably unlikely to be for long given the current rental property demand.

However if this did happen then that extra £15 you hope to gain will quickly be lost.

There's about 50 applications per rental at the moment. It would only be empty while I did a bit of cleaning & decorating. I'd heft the rent up to £50 below market value, a £100 increase on current rent.

Vectis

theartfullodger said:

...What improvements or additional security of tenure were you considering giving tenant along with attempting to increase rent, although your costs are not increasing, please?...

The OP has clearly said that costs ARE increasing.

Vectis

I probably wouldn't increase as much as some are suggesting, but you're probably right to bring it in line with your other, similar property.

Sounds like the tenant is getting a bargain even at the increased rent.

Mr.Generous

theartfullodger said:

Which country -eg NI, Wales etc? (laws and regulations vary...)

(Assuming England) Unless landlord agrees, tenant has no right to permit withdrawal of any valid notice to quit.  Why did you agree and how? (eg verbal, txt, email...)

What improvements or additional security of tenure were you considering giving tenant along with attempting to increase rent, although your costs are not increasing, please?

Artful: Landlord since 2000

England, I forgot to say.

I agreed because she's a good tenant, and would have been left with an issue or possibly homeless - she was going to buy a house with a new partner, but at the last minute they fell out and split up.

Improvements - I do pretty much whatever my tenants ask - I recently made some built in storage at tenants request and planed the doors when her new thicker carpets were fitted in the bedrooms. Additional security of tenure - I don't feel the need. If tenants look after the property and pay the rent I have never tried to remove. I've offered to contract an extra 12 or 24 months in the past but nobody has ever taken me up on it. Does that work for you?

My costs are increasing. If your landlord insurance has stayed same who is it with? My policies have gone from £110 to £160 on last renewals. I have shopped around.

lika_86

You're mortgage free so your actual costs are minimal in the scheme of things in comparison with what you're making and are a cost of investment. Market rents are only market rents because they're driven by people who whack up their rates as far as possible either because they over leverage themselves or see the chance to make as much money as possible. If you're making a decent return, why not do the decent thing and keep the rent as is for your admittedly good tenant?

Kim_13

£100 extra would quickly be swallowed up were you to end up with a bad tenant. Given she has done a good job with the decorating, I’m guessing she doesn’t contact you unless there is a genuine issue that needs attention - get a bad tenant and you could end up unnecessarily paying tradespeople/having to make repeat visits to the property yourself, even seeking possession and unpaid rent. A bird in the hand is worth two in the bush as they say. 

As regulations change, it feels even more important than ever to retain a good tenant. Put the rent up now and again, but having done so last year I wonder if she’ll feel there’s a pattern emerging. After all, broadband providers et al used to increase a rolling deal every now and again, but now do it every year.

The tenant needs to live somewhere, but she might have a partner and decide to get a place with them instead, or be considering buying herself with rents continuing to increase while property prices look set to head the other way.