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Rent out of Sync with area

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Author Topic: Rent out of Sync with area  (Read 118 times)
Newbie
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« on: September 08, 2021, 11:13:39 AM »

After renting out my house for a few years to the same tenants and with a small yearly increase to keep pace with things I am slightly alarmed at the massive increases in rental prices in the area. Itís a 4 bedroom detached and is currently £825pm. If they leave and new tenants move in the the agent has pointed out that the area normal for that property would be £1100 and this is confirmed on Rightmove. Now while I donít particularly want to annoy my tenants by increasing rent to the area standard I also donít want to fall behind as this is basically pension payments for my future and itís a business not doing people favours by renting out low. Any thoughts on how a proposed compromise could be reached.
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« Reply #1 on: September 08, 2021, 11:54:43 AM »

I don't think in all good conscience you can hit the Tenants with a full on increase of hundreds per month.

You have been implementing modest rent increases on an annual basis. And I assume your long-term Tenants have accepted these with good grace and have continued to pay and maintain the house to your satisfaction.

Just be careful of what you wish for and don't trust the Agent's motives. Think about what compels the Agent... it's tenancy set up fees and suchlike, isn't it? Whereas Landlords should be turned-on by good long-term Tenants.

You can start to ramp up the annual rent increases... but you can't really start bringing them in at a frequency of more than yearly (I mean, anything can be agreed, right?) but put this down to effective mismanagement of your asset that you've now recognised (sure you were implementing annual increases to keep pace of things - at least you were doing that much - but you got it wrong). Action taken, Shareholders pleased.

Just be careful. Your comment about "falling behind" and "doing people favours" is somewhat naÔve... you know this. The Tenant here is paying down any debt you may have on your behalf. Be grateful and don't chase the rainbow too much.
Newbie
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« Reply #2 on: September 08, 2021, 12:02:24 PM »

Frankly they arenít keeping it to a good standard. They have till Christmas to sort things out and clean it properly or I will have little choice but to remove them. Huge cobwebs everywhere and boxes piled up. I think they are hoarders who will expand into any size property they have. I donít agree with your be grateful comment one bit. If it wasnít them then other people would rent it. Thatís a bit like my old boss who said ďI pay your mortgageĒ I said no I pay it with the money you give me to work for you.
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« Reply #3 on: September 08, 2021, 12:42:12 PM »

So turf them out now then. ;-) Or increase their rent from £825 per month to £1,200. Who cares? What advice were you looking for? Or was it absolution? It's your own mismanagement of your asset that got you here. It can't be my fault you're an unprofessional Landlord who took their eye off the ball - but please bear in mind it's not the fault of your Tenants either. You're looking for a compromise to suit Tenants that you aren't even bothered about? Doesn't sound right to me. Sounds like you want to hit them with a rent increase that forces their hand because you've probably not got the guts to evict. I'd start to ramp up the annual increases, as I said... over time you'll start to feel better about your entirely notional losses right now.

The difference between £1,100 and £875 is obviously £225... or another £2,700 per year. If you ramped-up over 5 years that would still be £45 per month, going up by £45 per month after each year passes.

£920... £965... £1,010... £1,055... £1,100... but then you'd likely feel you're behind again! Sometimes the only way is to start again with a Tenant who will at least be able to have some realistic expectations.
« Last Edit: September 08, 2021, 01:04:52 PM by Hippogriff »
Newbie
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« Reply #4 on: September 08, 2021, 04:56:51 PM »

Priceless
« Last Edit: September 08, 2021, 05:44:08 PM by Lesstatt »
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« Reply #5 on: September 08, 2021, 05:54:28 PM »

Two thoughts on your query.You obviously cannot suddenly expect to raise the rent that much,even halfway would be excessive.I don't put rents up often,and only by 5% when I do.I have come to accept that having someone reliable who pays the rent on time is a godsend,even if it is a bit below market rates..Unless something odd has happened lately to make rents shoot up in your area,you must have set the rent too low at the outset,which is hardly the tenant's fault.
The only way you can achieve what you want is to serve s21.
Second thought is don't take the agents word for it.Keep an eye on the adverts yourself.How quickly are these places being let? If they are being snapped up within days,then I would say go for it.However,just a couple of months void,plus the agent's fees,would use up the extra profit for many months to come.


Accidental Landlord
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« Reply #6 on: September 08, 2021, 06:24:02 PM »

This was the situation with my property and I managed to get back on track with a more realistic rent (just a bit below market rate in fact) increase with brand new tenants. However, I was only able to do this after a lot of my own research in my area at the time. I had several agents give me their opinion and I decided on what I thought was a fair rent to expect. I used the void period, only a month thankfully, to completely renovate the interior top to bottom with painting and new carpets throughout. It sounds like you don't want these tenants anyway so I would give notice and hope they leave without any problems and you can remarket. I have heard stories from tenants who were given notice to leave after being long term tenants and see their former home back on the market at an increased rent. No matter whether justified or not. It happens.
Newbie
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« Reply #7 on: September 08, 2021, 06:36:07 PM »

Yes ok thanks for the polite and reasonable replies to what I thought was a reasonable question.
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« Reply #8 on: September 08, 2021, 07:19:39 PM »

If you were happy with £825 per month before, why not be happy with it now? Your costs haven't changed substantially. The only thing that's changed is you've noticed other properties asking more.

Realistically, your only option if you want £1,100 per month is to ask for it formally and, if your tenants don't agree, evict them and get some new tenants in at a higher rate. There's no law against it, so long as you can still sleep at night.

Alternatively, play the long game: rents may have gone up steeply recently, but they'll level out again soon enough, so keep doing a steady annual increase, even when rents in the area are flat, and you'll catch up eventually, like the proverbial hare and the tortoise. By the sound of it, your tenants aren't likely to be going anywhere in a hurry of their own volition.
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« Reply #9 on: September 08, 2021, 09:23:53 PM »

Yes ok thanks for the polite and reasonable replies to what I thought was a reasonable question.

You're welcome. Let us know which grasping approach you take.
Newbie
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« Reply #10 on: September 08, 2021, 09:55:25 PM »

👍 Perhaps best not to.
« Last Edit: September 08, 2021, 09:57:14 PM by Lesstatt »
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« Reply #11 on: September 09, 2021, 09:15:28 AM »

If you were happy with £825 per month before, why not be happy with it now? Your costs haven't changed substantially. The only thing that's changed is you've noticed other properties asking more.

It's why Landlords have the reputation they do, isn't it?

I would urge every professional Landlord out there to consider reasonable annual rent increases. Not ones that let the property fall behind like has been described here. What that does is have a negative impact on the Tenant (believe it or not) because when they eventually do move they're going to get a shock... you have to boil the frog... but also the Landlord and the property because only £ signs are in their eyes... and they think they're not getting their due (even though they're getting exactly what they asked for... for some reason they now want more!) and then it's a slippery slope to not doing things the property needs, or doing them on the cheap... or not considering useful upgrades (which Tenants always like but you need to be careful of for tax reasons).

When I say reasonable I mean modest and regular (every year)... and in-line with something, something justifiable... something like inflation is always very good (no-one can really argue against that either). Not what this Muppet is describing... something akin to a 30% increase... that's an invitation to a First Tier Tribunal. Yes, you can use the Market... you can do your semi-professional 5-minute browse of Rightmove and even call it 'comprehensive research'... but no-one knows what those properties are actually let for... all it is possible to see is the advertised price and I've learned over the years that taking price estimates from Agents is a recipe for regret.

My rationale on unencumbered properties has always been... annual modest increases that I can justify with a figure along the lines of inflation (citing things like my rising Insurance costs or GSCs etc. - no Tenant has ever come to me and said I'm just trying to make money - even though I would be... because a, say, £15 a month increase seems like nothing, but it's £180 and it's £180 for ever, it's the gift that keeps on giving).

My rationale on mortgaged properties has always been to get a long fix... so, if I'm on a 5 year fix that's set... my rent payment will always be at least £200 more than any mortgage payment (just my own personal heuristic)... then the Tenant is paying down any debt I have (in exchange for a product and a service, of course)... but my rent will increase, my mortgage payment does not.

The largest rent increase I've ever set is £20 per month. Usually they would be £10 or £15. I have properties ranging from £500 per month rent to $1,200 so a fair range. I've reset the price higher than £20 per month when a tenancy has ended. That's what feels like needs to happen here. It feels like the OP is probably having a hard time, financially, and looking at how they can kick downwards.
Newbie
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« Reply #12 on: September 09, 2021, 10:09:32 AM »

Muppet😂😂😂, hilarious. If you werenít a moderator on this site Iíd assume you were a keyboard warrior / troll.
« Last Edit: September 09, 2021, 10:29:28 AM by Lesstatt »
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