UK Landlord Forum / Life

I'm looking to impose a rent increase on my tenants today. They may or may not accept. However, along with this I'm considering 'resetting' the periodic tenancy so there's a new contract in place.

The only change to the contract - apart from the rental amount sought - would be the dates

A couple of estate agents (urgh) I spoke to recently casually suggested that if a new contract were agreed I should insist on a full 12 month term with no break clause, rather than the usual 6month break within a 1 year AST. Their logic was that IF the tenant agreed to the new higher rent, removing the break would deter them from sucking it up for 6 months then just leaving in Nov / Dec when the market is dead.

Has anyone done this, or have a view on the wisdom of this? Feels like a risk should they trash the flat and I cant get them out (theyve been solid so far tbf), but also, keeping that rent locked in until next April would be preferable!

Thanks

Quote from: machomanrandy on March 15, 2023, 03:53:06 PM
However, along with this I'm considering 'resetting' the periodic tenancy so there's a new contract in place.

The only change to the contract - apart from the rental amount sought - would be the dates

No, that's not a "change to the contract" or a "reset". That's a new contract.

You would have to serve notice, have the tenants agree to end the current periodic contract, and then have them sign a new one.

The tenants are not obliged to do any of this. If they ignore the notice and just stay put, then the existing periodic tenancy would continue.

If, as you say, they have been solid so far, then why would you want to treat them like this?

Quote from: HandyMan on March 15, 2023, 06:09:35 PM

Quote from: machomanrandy on March 15, 2023, 03:53:06 PM
However, along with this I'm considering 'resetting' the periodic tenancy so there's a new contract in place.

The only change to the contract - apart from the rental amount sought - would be the dates

No, that's not a "change to the contract" or a "reset". That's a new contract.

You would have to serve notice, have the tenants agree to end the current periodic contract, and then have them sign a new one.

The tenants are not obliged to do any of this. If they ignore the notice and just stay put, then the existing periodic tenancy would continue.

If, as you say, they have been solid so far, then why would you want to treat them like this?

Rent is way off market, needs increasing and I'd rather avoid remarketing. Pretty standard stuff really

Quote from: machomanrandy on March 15, 2023, 03:53:06 PMHowever, along with this I'm considering 'resetting' the periodic tenancy so there's a new contract in place.

Why? What value do you think this adds? Landlords usually dream of having periodic tenancies... it implies lots of good things.

And imposing a rent increase that someone can not accept isn't really imposing. It's more like suggesting or... asking.

This whole thing about contracts and the protection they provide does not mean much when exposed to real life.Why do you need to start tinkering? If they are behaving well and paying rent be grateful.

Quote from: Hippogriff on March 16, 2023, 06:54:10 AM

Quote from: machomanrandy on March 15, 2023, 03:53:06 PMHowever, along with this I'm considering 'resetting' the periodic tenancy so there's a new contract in place.

Why? What value do you think this adds? Landlords usually dream of having periodic tenancies... it implies lots of good things.

And imposing a rent increase that someone can not accept isn't really imposing. It's more like suggesting or... asking.

The 3rd paragraph of the post explains the rationale for contract change. I dont want them to agree to the rise then bugger off after 2 months, leaving me remarketing

Ultimately the rent needs to go up, good tenants or not. It's finding the most optimal way to do that and keep them in there.

Quote from: machomanrandy on March 16, 2023, 09:08:26 AM
The 3rd paragraph of the post explains the rationale for contract change. I dont want them to agree to the rise then bugger off after 2 months, leaving me remarketing

Ultimately the rent needs to go up, good tenants or not. It's finding the most optimal way to do that and keep them in there.

On the face of it, you sound like you want to control your tenants rather than work with them.

You need to stop calling it a "contract change". It is not a change to (i.e a variation of) the current contract. It would be a new contract.

The tenants have a Periodic Tenancy (either Statutory or Contractual, you haven't said) and that will continue month on month. The tenants are not obliged to agree to a new contract. You can't impose a new contract on them.

Advice:

Leave their contract as it is.
Serve them a Section 13 notice of rent increase.
Keep the proposed increase to a reasonable amount so that they are content to stay.
Do the same next year.
Be happy that you have a regular income, happy tenants, and no rent voids or re-letting costs.


Alternatively:

Serve a S21 notice
Wait for the tenants to leave (they might not, so be prepared for subsequent court action to evict)
Advertise and re-let with the contract of your choice.

Unless the rent increase in mind is an eye-watering sum then I don't see why it can't be communicated informally and feedback sought.

I have never issued a Section 13. The most formal route that I have agreed rent increases with is by using email.

I'd be proposing the increase. Backed-up by inflation figures and other examples on the market in the area. Then gauge the response.

If the rent increase is an eye-watering sum then the Landlord really only has one person to blame for allowing this situation to arise. Hint - it's not the Tenant. It's called mismanagement.

Quote from: Hippogriff on March 16, 2023, 01:27:19 PM
Unless the rent increase in mind is an eye-watering sum then I don't see why it can't be communicated informally and feedback sought.

I have never issued a Section 13. The most formal route that I have agreed rent increases with is by using email.

I agree with you.

However, MachoManRandy said "Rent is way off market", which suggests that the increase he wants to impose (his word) is large.

The Govt's a Section 13 notice (Form 4) gives helpful advice to tenants regarding what they can do if they don't agree with the proposed increase. I think it's only fair of MachoManRandy to make them aware of their rights given what he is also proposing doing with their tenancy agreement.

QuoteIf the rent increase is an eye-watering sum then the Landlord really only has one person to blame for allowing this situation to arise. Hint - it's not the Tenant. It's called mismanagement.

Agreed.

Quote from: HandyMan on March 16, 2023, 02:14:31 PM

Quote from: Hippogriff on March 16, 2023, 01:27:19 PM
Unless the rent increase in mind is an eye-watering sum then I don't see why it can't be communicated informally and feedback sought.

I have never issued a Section 13. The most formal route that I have agreed rent increases with is by using email.

I agree with you.

However, MachoManRandy said "Rent is way off market", which suggests that the increase he wants to impose (his word) is large.

The Govt's a Section 13 notice (Form 4) gives helpful advice to tenants regarding what they can do if they don't agree with the proposed increase. I think it's only fair of MachoManRandy to make them aware of their rights given what he is also proposing doing with their tenancy agreement.

QuoteIf the rent increase is an eye-watering sum then the Landlord really only has one person to blame for allowing this situation to arise. Hint - it's not the Tenant. It's called mismanagement.

Agreed.

If you could pause the back-patting for a moment, answer me this. In order to mark the rent to market - and we're talking the London market here - would YOU have imposed perhaps 2-3 rent hikes in the space of 18 months (the period in which they've lived in the flat)? Not forgetting that during that time - not 5-6 months ago - rates have tripled for many?

Because this is the reality for a lot of landlords. Hike or end up with a far far less profitable rental property. You might not be in this situaiton yourself, but I'm fairly sure you wouldn't be satsified with a 'modest' rent increase just to appear fair.

The same old story on this forum.

(I did have a rented out London flat until mid 2022)

Quotewould YOU have imposed perhaps 2-3 rent hikes in the space of 18 months (the period in which they've lived in the flat)?

No. I would, when the AST went periodic at the end of the initial fixed period, have increased the rent by an amount that I considered acceptable to me and to the tenant. It's a balance that has to be worked out based on actual income and expenditure, and not necessarily governed by the so called 'market rent'.

Then 12 months later I would be preparing to do this again.

IMO, keeping a good tenant happy and in place, thus not having a void period or the need to do Check-out / Cleaning & repairs / Advertising / Viewings / Tenant selection / Inventory / Check-in is more important than being at 'market rent'.

I very much doubt if your tenant has had 3 pay rises within a matter of months.If you  and the tenant are not going to be satisfied with say 5-10% increase,you have no alternative but to serve notice and remarket.It is time consuming,and even a short void can wipe out the extra income for months.You seem to want to have your cake and eat it.Dammit,now I am thinking of cake.

You now appear upset because you've been identified as one of those Landlords who has not kept their eye on the ball and has got themselves into a tricky position. Let's be clear - what you want to do, you cannot do. So you now have to think of unnatural things to bilk your Tenants because your rates have tripled. So what? All you are wanting to do is pass the impact coming to you onto others whereas, instead, you should have been prepared. If Interest Rates were at something like all-time-lows for such a long period of time... there's really only one way they can go, correct?

I heard that SVB Bank didn't have a Risk Management C-level position in place for months and months... the previous person left in 2022 and they just didn't get anyone new in until too late. Seems like your 'business', maybe? As you add more to the story it becomes clear that all you're interested in is passing on the impact of rate rises... it's not years and years where they've been happily living there, paying less than market, it's more short-term than that, I see this now. It feels like the hard choice of ending this tenancy and re-letting (void included) to someone else who is willing to cover your increased costs is the only way forward. Let's just hope the market rate does that. I just can't see a Tenant of 18 months willing to step-in to 'save' you (maybe a bit, an increase should be expected, but maybe not to the level you need).

I could see the rate rises that were coming in the middle of last year... it didn't take a lot of research. The last fixed-rate deal that I signed up to was in October 2022. Even then I was a little late. I will work to pay down capital at an accelerated pace just in case, when my next fixed term comes to an end, we're somehow still in this dung-hole.