Average rentals index?

[AlecF]

Our present tenant has been in our house for a total of four years under under two Assured Shorthand agreements, and over that period the rent has not been increased.

She would like to renew in August, but this time I really must review the rent. Apart from anything else, I have spent over £20,000 on major improvements and maintenance during that period. Obviously I will search online for comparative offers, but I was wondering whether there is a recognised index of average rentals for various areas covering a four year period, so that we can show a justification for the rise?

Many thanks for your help.

[Richlist]

When justifying a rent increase I just usually quote:

* The increased market rent for a similar property in the area.

* Increases in loan interest rates.

* General increase in cost of living / inflation which affects insurance premiums.

* Any other increases that affect a landlords costs e.g. licencing, agents fees, accountancy etc.

* Property improvements made since original rental level was set.

* Additional legislation affecting administration of rental properties.

etc etc.

Your lettings agents should be able to advise you on the current market rent for your property.

 

[AlecF]

Thanks, Richlist, for that comprehensive list - all worth bearing in mind, and very helpful.

I don't use an agent, other than Visum on-line who I've found helpful and very prompt in placing ads in Rightmove, but I will be checking very carefully what else is on offer in the area.

However, I do seem to recall having seen a website offering some sort of index on average rents year by year? I must search again for that...

[Richlist]

I'm not sure how an index of average rents would help you in any way. There is an enormous difference across the country and between regions often skewed by the inclusion of London & the South East. Better to visit a couple of local lettings agents, which should take you no more than 10 minutes to get the info you need.

 

[Grampa]

A large increase to bring the property up to current rent levels will likely:

1. Cause bad feeling from the tenant and jeopardise good tenant/landlord relations

2. Likely produce a large list of maintenance and upgrade requests from the tenant

3. Potentially increases the risk of the tenant giving notice therefore incurring void period and works required before reletting.

Trying to save a few pennys paying agent fees by self managing as the agent would have increased the rent yearly may end up costing you more.

I always increase the rent every year even if its just £10 pcm. The tenants come to expect it and the rent doesn't fall behind greatly. 

Remember a tenant will never thank you for not increasing the rent and will conveniently forget that fact when you give a large increase 5 years later..   

[Melboy]

Like Grampa I increase my rents by small increments each year mainly between £15 to £20pcm. I have never received any complaints by doing this but as mentioned if you whack a tenant after say 4 or 5 years with a large monthly increase of say £2 -£300 to make up for the years you haven't done this they are not going to be very happy with you and it could  mean that they would move on or demand more for the property by way of improvements. 

[Carryon Regardless]

This might depend on restrictions within the AST, but to give the tenants chance to budget, and lessen the blow, you might increase each four months over the coming year.

[AlecF]

Thanks to you all, especially about the advisability of regular annual increases in rent to lessen the blow.

One point with regard to Grampa, who I think is being unduly hard on those who choose to avoid agents. I have been a landlord for well over twenty years, and have used a couple of letting agents in the past, mainly while living abroad, but apart from the costs being more than initially expected (certainly more than a "few pennies"), they have proved indiscriminate in accepting tenants (references aren't the only guide, sometimes you have a "gut feeling" about someone). In addition, they chose the dearest and not necessarily best) repairers such as a "24-hour" instant plumber, and the personal contact with a tenant tends to be lost. If a tenant's problems are reported directly to the landlord, usually accompanied by photos to show what's wrong, I will usually inspect the same day, often suggesting a temporary solution (lending them a heater, that sort of thing) while waiting for a reliable but trusted company to put things right. I am sure there are plenty of good agents out there but do choose carefully, preferably on recommendations by others.

Alec.

[Grampa]

On 2/9/2023 at 10:55 AM, AlecF said:

Thanks to you all, especially about the advisability of regular annual increases in rent to lessen the blow.

One point with regard to Grampa, who I think is being unduly hard on those who choose to avoid agents. I have been a landlord for well over twenty years, and have used a couple of letting agents in the past, mainly while living abroad, but apart from the costs being more than initially expected (certainly more than a "few pennies"), they have proved indiscriminate in accepting tenants (references aren't the only guide, sometimes you have a "gut feeling" about someone). In addition, they chose the dearest and not necessarily best) repairers such as a "24-hour" instant plumber, and the personal contact with a tenant tends to be lost. If a tenant's problems are reported directly to the landlord, usually accompanied by photos to show what's wrong, I will usually inspect the same day, often suggesting a temporary solution (lending them a heater, that sort of thing) while waiting for a reliable but trusted company to put things right. I am sure there are plenty of good agents out there but do choose carefully, preferably on recommendations by others.

Alec.

There is little regulation in the letting industry for agents so it is important to grill any potential agent before instruction just as you would a tenant. If you don't nail down exactly what the costs are going to be, the added extras many agents try to charge, referencing process, the policy for instruction of contractors surely that is a fault of the landlord.

Remember there are many good pro-active independent agents out there who will tailor a service to meet your needs. Finding them just takes a little effort and knowing what questions to ask before instruction and getting your requirements confirmed in writing. It surprises me how many landlords choose an agent on % fee alone without any further enquires. We get them all the time and I am gob smacked sometimes when I hear of the poor service they many have received from other agents.

They will also be ahead of the game regarding the constant change in housing law and the documents that have to be served/provided to tenants. Which failure to do potentially incurs a financial penalty and/or the inability to serve notice on the tenant.

I would suspect most self managing landlords are unaware of the numerous legal changes and obligations and then have to play catch up when problems arise which costs time and or money. Just re-serving a S21 because it was done incorrectly due to typo or a certain document not given previously is going to cost a minimum of 2 months time (likely longer) and possibly 2 months rent income. Compare that to fees charged you can do your own maths.  

[AlecF]

I certainly agree that there are good and bad letting agents, and good and bad landlords.

However, as far as my original enquiry is concerned, I have now unearthed the statistics I needed. Obviously they are a national average and it's always necessary to take local supply and demand into account. However the statistics are a useful guideline, and there's one that specifically includes housing.

It's on the government's website, ons.gov.uk, the Office of National Statistics. Ignore the usual cost of living figures, which tend to be higher, but take a look at the chart of annual figures called the CPIH. The "H" refers to housing, based on rental costs. As I said, it's an average, but may be useful to others as a general guideline.

[Richlist]

1 hour ago, AlecF said:

 

It's on the government's website, ons.gov.uk, the Office of National Statistics. Ignore the usual cost of living figures, which tend to be higher, but take a look at the chart of annual figures called the CPIH. The "H" refers to housing, based on rental costs. As I said, it's an average, but may be useful to others as a general guideline.

It's as useful as a chocolate teapot. Only people who 'think' these statistics are useful will take any notice. I'm my opinion much of the information produced by the ONS usually turns out to be wrong but the Gov (& others) support the organisation. If they closed down tomorrow I doubt they would be missed. Why you think this information is useful to you when a trip to any local lettings agents will provide far more local, focused, accurate data is beyond me. But I wish you luck.

[Grampa]

Don't over complicate it. Your best bet to bring your rents up to current standards and justify it to the tenants is to find comparables on the property portals ie: Rightmove, Zoopla and On the Market.

That is what tenants will be looking at.  

And moving forward make sure you do a rent increase every year even if its a small one. It will make life easier.