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Should I or shouldn't I raise the rent?


CH1

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Hi,

I have a tenant on a 6 month AST they are now in the 4 month of the AST.

I recently heard from the tenant saying that they like to stay on possibily for another 6 months after the current AST ends in 2 months time.

They also informed me next months rent maybe 3 days late as they are changing banks but will pay in cash into my a/c.

Now my dilemma is I would like to raise the rent marginally (in line with inflation ~2.5% which would only mean another £5-6 more a month) in the next 6 month AST I issue. At the same time I don't want to risk losing a good tenant, as then I'd have to find another one (Letting Agency found me this tenant -but I manage the property myself so far no problems and rent seems to be paid on time sometimes though is 2-3 days late but i think this is the way standing order is set up -it leaves their account on the day it should reach me!

What would you do? Keep the rent the same? Or use this opportunity to raise the rent (with risk of losing a good tenant)

and lastly do I just buy a contract in WHSMITH? or how do you renew AST's?

Thanks in advance.

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Let's see Tenant pays on time, tells you they changing banks so you can now ensure the day or two late issue is resolved and will pay money in on time and you think would be good idea to increase the rent ?

Think if they decide to leave then you will lose least a months rent in fees and set up.

Would get the S/O to come out on time but thats always a prob with S/O's anyway but hold off on the increase until the year is up.

If you use the arguement of inflation then I would shoot back that will pay for the inflation increase from time went in i.e. 1% so why bother in losing a good tenant for £3 a month.

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Not worth increasing on such small sums. Shouldn't really increase until a year unless things have changed significantly, i.e. rent has rocketed in the area and you could get 25% more for example.

Even when the year is up don't automatically uplift, check the competition and see what else he could get for money.

Rent has not increased much over the past 10 years or so and I think that inflating each year from 10 years ago would mean a tenant was paying well over the odds. This is partly due to low interest rates, competition and high capital gains being made.

Having said that I now expect rent to start increasing ahead of inflation over the next few years, so the best thing to do is keep monitoring the market and ensure that the new charge whatever that may be is in line with the competition(preferably a tiny bit less).

Remember interest rates have increased over 25% in the last year, this, I expect will start to filter through to rents in the years to come.

Ciao!

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I wouldn't........a good Tenant who looks after your property and pays their rent more or less on time and gives you no grief is worth far more than a Fiver a Month.

Mel.

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Not worth increasing on such small sums. Shouldn't really increase until a year unless things have changed significantly, i.e. rent has rocketed in the area and you could get 25% more for example.

Even when the year is up don't automatically uplift, check the competition and see what else he could get for money.

Rent has not increased much over the past 10 years or so and I think that inflating each year from 10 years ago would mean a tenant was paying well over the odds. This is partly due to low interest rates, competition and high capital gains being made.

Having said that I now expect rent to start increasing ahead of inflation over the next few years, so the best thing to do is keep monitoring the market and ensure that the new charge whatever that may be is in line with the competition(preferably a tiny bit less).

Remember interest rates have increased over 25% in the last year, this, I expect will start to filter through to rents in the years to come.

Ciao!

Thanks everyone for your advice. I think my reasoning behind considering a slight raise in rent was that originally I had deliberately put the rent slightly lower to start with so I would have no void periods and I didn't; tenant moved in within a week of it being advertised!

There are actually other properties available to rent for less but they don't have the location or character of this building. However, there are 2 further properties currently available to rent in the same building which are being advertised for the same rent as mine (but as far as I see they don't have an extra box room(study) -but don't think I can justify charging extra for a box room -it's rather quirky in that its access is via a wrought iron ladder which is a feature of the living area.

Thanks for the advice, will leave it, I was considering only a small change open to discussion as didn't want to lose the tenant if the change was over £20, agree with your thoughts.

Thanks

So where are you getting your renewal AST's? and how much does it cost? [i don't want to use a letting agent for renewal.]

Do I need to re-inspect the property before I renew it -I've never seen since it was let.

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Wait eleven months, from when the tenant initally moved in, then suggest to your tenant that you need to raise the rent, if the response is icy,

then leave it (that's if the tenant is valued), but if the response isn't icy then get the tenant to sign a new tenancy agreement, stating the increase in rent

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Hi CH1,

Why bother renewing the tenancy at all .. .why not let the tenancy roll on as a "Statutory Periodic Tenancy". After the tenant has been in the property for 11 months I would serve a Section 13 notice (informing the tenant that I propose to increase the rent after 12 months). I would also call the tenant and tell them that you are simply increasing the rent - after 12 months - slightly below the current prevailing inflation rate.

Mark

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A small increase is much more paleteable then a large one ...............to anyone and everyone ............. and £10/ £20 a month increase is not really an issue to most people...or do half now and half in 6 mths..

I would do as reg has suggested and use a thermometer !

You could indicate tha their is a 3rd party interested but as they are resident they have priority on this .......

I notice the lenders are all scared rigid of losing thousands of customers and dont dare put up rates or set up fees..NOT..

If you have a better quality prop than your neighbours be confident in increasing the rent - the average 2 bed flat in my area is £550 Most of mine are let at £650 why becuse they are nicer, have jacuzzi baths and i look after tenants .....word gets about..

Last night i agreed with a tenant that she could move from one of my smaller flats at £550 to a slightly larger one at £650 (no jacuzzi !) same area - she told me that she wanted to stay with me as i am a good landlord and sort problems quickly and felt she can trust me ... she was also impressed that when she asked for a security light to be fotted o/s her current flat it was up before she got home from work the same day .....when the bolier broke down a new one was fitted within days etc....Look after them and they will look after you ....

As for rent rise YES i would definately do it ........but carefully ....as with all negotiation ...put it up for six months and if you get a frosty reply have in reserve the fact that you will leave it as is if they take a 12 mth ast....Also explain interest rates have gone up so clearly you need to be able to pay the mortgage !!!

You can always go away and "think about it" and ring them later to say you will not raise it on this occasion ...

You are now in business and will always have resistance on price rises -be professional about it ...Or in 10 years you will still be charging the same ...

The flat above was also advertised with a letting agent and about 30 mins b4 i let it i got a text from him saying that he had advertised it at £575 as he thought this was a fair price ! I cannot type my response on here !!!!!!! or repeat the conversation we had an hour later when i had "let " it !!!

Simon

Ps Stop bimg a >><<>><<>>< !!!

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A small increase is much more paleteable then a large one ...............to anyone and everyone ............. and £10/ £20 a month increase is not really an issue to most people...or do half now and half in 6 mths..

I would do as reg has suggested and use a thermometer !

You could indicate tha their is a 3rd party interested but as they are resident they have priority on this .......

I notice the lenders are all scared rigid of losing thousands of customers and dont dare put up rates or set up fees..NOT..

If you have a better quality prop than your neighbours be confident in increasing the rent - the average 2 bed flat in my area is £550 Most of mine are let at £650 why becuse they are nicer, have jacuzzi baths and i look after tenants .....word gets about..

Last night i agreed with a tenant that she could move from one of my smaller flats at £550 to a slightly larger one at £650 (no jacuzzi !) same area - she told me that she wanted to stay with me as i am a good landlord and sort problems quickly and felt she can trust me ... she was also impressed that when she asked for a security light to be fotted o/s her current flat it was up before she got home from work the same day .....when the bolier broke down a new one was fitted within days etc....Look after them and they will look after you ....

As for rent rise YES i would definately do it ........but carefully ....as with all negotiation ...put it up for six months and if you get a frosty reply have in reserve the fact that you will leave it as is if they take a 12 mth ast....Also explain interest rates have gone up so clearly you need to be able to pay the mortgage !!!

You can always go away and "think about it" and ring them later to say you will not raise it on this occasion ...

You are now in business and will always have resistance on price rises -be professional about it ...Or in 10 years you will still be charging the same ...

The flat above was also advertised with a letting agent and about 30 mins b4 i let it i got a text from him saying that he had advertised it at £575 as he thought this was a fair price ! I cannot type my response on here !!!!!!! or repeat the conversation we had an hour later when i had "let " it !!!

Simon

Ps Stop being a >><<>><<>>< !!!

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A small increase is much more paleteable then a large one ...............to anyone and everyone ............. and £10/ £20 a month increase is not really an issue to most people...or do half now and half in 6 mths..

I would do as reg has suggested and use a thermometer !

You could indicate tha their is a 3rd party interested but as they are resident they have priority on this .......

I notice the lenders are all scared rigid of losing thousands of customers and dont dare put up rates or set up fees..NOT..

If you have a better quality prop than your neighbours be confident in increasing the rent - the average 2 bed flat in my area is £550 Most of mine are let at £650 why becuse they are nicer, have jacuzzi baths and i look after tenants .....word gets about..

Last night i agreed with a tenant that she could move from one of my smaller flats at £550 to a slightly larger one at £650 (no jacuzzi !) same area - she told me that she wanted to stay with me as i am a good landlord and sort problems quickly and felt she can trust me ... she was also impressed that when she asked for a security light to be fotted o/s her current flat it was up before she got home from work the same day .....when the bolier broke down a new one was fitted within days etc....Look after them and they will look after you ....

As for rent rise YES i would definately do it ........but carefully ....as with all negotiation ...put it up for six months and if you get a frosty reply have in reserve the fact that you will leave it as is if they take a 12 mth ast....Also explain interest rates have gone up so clearly you need to be able to pay the mortgage !!!

You can always go away and "think about it" and ring them later to say you will not raise it on this occasion ...

You are now in business and will always have resistance on price rises -be professional about it ...Or in 10 years you will still be charging the same ...

The flat above was also advertised with a letting agent and about 30 mins b4 i let it i got a text from him saying that he had advertised it at £575 as he thought this was a fair price ! I cannot type my response on here !!!!!!! or repeat the conversation we had an hour later when i had "let " it !!!

Simon

Ps Stop being a >><<>><<>>< !!!

Well this is interesting. Originally like the majority who gave their views on this I thought why bother/change something when I've got something good going... a good tenant.....then I read your reply and thought.....well this is what I was trying to push for anyway (but in a manner thats negiotable open manner) but in such a small way that would make one think is it worth the hassle of moving just for a few pounds...in the end I went for it!!

I took my chances and after agreeing to them staying on after I visit the property suggested a small raise in rent which would be fully negiotable and open to discussion -and I seem to have got a result! The response from tenant was it sounds good and they ae happy there for time being -the tone seemed friendly, they even offered to pay cash into my account for the rent being late a few days each month as its standing order. I feel so relieved.

Simon sounds like you are landlord to lots of tenants and have subtle negiotating tactics thats good for you and keep the tenant happy. Good for you.

Next question -How/When do I do arrange the inspection? a month before AST ends or a bit earlier? I assume they need to be there?

and how do I extend the contract myself -what written documents are required?

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Hi CH1

Write a line into your ast saying that you reserve the right to do a monthly inspection (wether you do or not is up to you !!) personally i am not the world's best at doing these regularly ! but will do one immediately if i think there may be a problem !

You just need to give 24 notice ..

Never extended a contract so dont know ......BUT if you are putting the rent up you will need to do a new contract with new rent on it .....you dont have to put dep in custodial scheme you can keep it in your acc ...and use ins scheme but this will cost around £58 to set up and £30 per deposit ...(my preference for a myriad of reasons...)

Simon

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My suggestion would be to increase the rent by the 'permitted' amount (i think it's about 5%) and go with the flow.

If they are happy then just run with it.

With regard their S/O, i'd be tempted to set this up 3 days before their rent is due because at least you'll know that it's in then.

Simon - "Also explain interest rates have gone up so clearly you need to be able to pay the mortgage !!!"

Awful sorry mate but this does not constitute a REASON, you take the mortgage on, not them, and it's not their responsibility!

Simon - "The flat above was also advertised with a letting agent and about 30 mins b4 i let it i got a text from him saying that he had advertised it at £575 as he thought this was a fair price !"

Simple answer is don't instruct an agent without consulting them 'properly' 1st!!!!!

CH1 - "There are actually other properties available to rent for less but they don't have the location or character of this building. However, there are 2 further properties currently available to rent in the same building which are being advertised for the same rent as mine (but as far as I see they don't have an extra box room(study) -but don't think I can justify charging extra for a box room"

You charge what you feel is correct, don't worry too much about the others, they'll fall into line soon. I've said for a long time that rentals need to be upped in price and I personally put £50 on each one we've got on to allow for negotiation aswell so stick with it, unless LL's do this NOW then the market will never reach it's full potential!!

CH1 - "Simon sounds like you are landlord to lots of tenants and have subtle negotiatating tactics thats good for you and keep the tenant happy. Good for you."

Yes Simon has lots of experience in these matters and it's always wise to listen when he speaks. But 'make your own mind up' on many comments on here, he sometimes shows haste in his approach and his is not always the 'best' option so just take heed a little.

Simon

Ps Stop being a >><<>><<>>< !!!

I'd love to know what this ">><<>><<>><" is insinuating!!!

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Hmmmmmmmm...........

Gareth would appear to have had a bad day!!!

Can we do or say nothing right today!! Chillout big boy......!

Okay lets do these one by one..

Simon - "Also explain interest rates have gone up so clearly you need to be able to pay the mortgage !!!"

Awful sorry mate but this does not constitute a REASON, you take the mortgage on, not them, and it's not their responsibility!

Not their responsibilty ..agreed... but if i cant pay the mortgage then T is going to be "very" affected ie HOMLESS so i think, a pertinent point ....the IR has gone up considerably more than the rent as we are all well aware...

Simon - "The flat above was also advertised with a letting agent and about 30 mins b4 i let it i got a text from him saying that he had advertised it at £575 as he thought this was a fair price !"

Simple answer is don't instruct an agent without consulting them 'properly' 1st!!!!!

The agent visited the porperty and gave his "fair" assesment and advertised it accordingly ..............There clearly was a lack of consultation, but on whose part ? mine or his ?

As i ,rather strongly, suggested to him : he should have "consulted" with me with regard to price BEFORE advertising it...

It should be noted that the agent at least HAD THE DECENCY TO VISIT THE PROP AND TAKE PICS AS OPPOSED TO

"MAIL ME SOME PICS AND I'LL SLING IT ON MY SITE AND SEE WHAT HAPPENS" as per J4L marketing campaign....

Have i fallen out with him ? NO but we have cleared up a "little" misunderstanding !!! he has let lots of prop for me and i will continue to use his services and happily pay him for this ....

TIP (For Gareth)

When you point your finger ther will always be three more pointing back at you .....................(try it)

Simon

PS <><>>>><>> was ">><<>><<>><" but resident removed it for some reason (i didn't intend or believe it would cause any offence but there we go..............!)

It happened again!! the word was another word for cat - puss ie

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"Not their responsibilty ..agreed... but if i cant pay the mortgage then T is going to be "very" affected ie HOMLESS so i think, a pertinent point ....the IR has gone up considerably more than the rent as we are all well aware..."

I don't think for one minute that you care about the Tenant being homeless, it's more about you not having a Tenant in place.

The J4L marketing campaign?? haha Couldn't you find a bigger font??

"There clearly was a lack of consultation, but on whose part ? mine or his ?"

Of course it wouldn't be your fault would it!! And for reasons I can't understand, he failed to ask the fundamental question of how much 'you' were thinking of getting per month, or you even offering up a suggestion. I see this as being BOTH your fault.

I think you should read some of your own advice off another post. "it's good to talk" haha.

Glass houses and stones springs to mind.

Oh I've had enough of this, I really do have better things to do with my life . . . . . . . .

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I don't think for one minute that you care about the Tenant being homeless, it's more about you not having a Tenant in place.

the purpose of this (post) was to qualify verbally "reasons for increasing rent - the answer is simple - The LL wants more money, more profit and maybe ..............a new motorbike! but to quote these, I feel may not enhance negotiations reguarding rent increases, any more than "you're not paying enough" or "everyone else round here pays more than you".!

I am open to any "reasons" for rent increases which can be cited in our negotiations for "rent increases" ......any thoughts anyone....?

The easiest way to stop or prevent an arguement about "prices" in this context is to defer responsibility to a third party as most businesses do every day........

eg the price of the mattresses i buy went up considerably a few months ago - when i challenged the manufacturer the answer was non arguable- "raw material prices had gone thru the roof - so he had no choice but to follow suit...............

If interest rates go up then, YEP, where possible I will put the rent up ..............at every available opportunity! .......but not to the point where it is detrimental to my business...........

As for "caring about the HOMELESS" - If my vocation in life were to be a full time social worker or work in this sector then this comment may apply .......

but i dont.

Interestingly enough as you gain experience in this industry you will find that you start doing an awful lot of free "social work" for your tenants as it kinda comes with the territory.............

"There clearly was a lack of consultation, but on whose part ? mine or his ?"

Of course it wouldn't be your fault would it!! And for reasons I can't understand, he failed to ask the fundamental question of how much 'you' were thinking of getting per month, or you even offering up a suggestion. I see this as being BOTH your fault.

I think you should read some of your own advice off another post. "it's good to talk" haha.

Well if it makes you feel better then I'll type it for you "yes, it is my fault the LA didn't call me and advertised it at a price that i was not aware of and had not agreed to....................."

You will go far in business with this attitude ................................

BXXSXXX.

Oh I've had enough of this, I really do have better things to do with my life . . . . . . . .

Is this a promise........?! hahaha

Simon

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  • 2 weeks later...

Thanks for the feedback and opinions...you 2 been having some friendly banter I see;

Well T didn't seem to mind to a rent increase as it is so small ~2%. Will approach subject matter when I meet T and inspect property next month.

CHeers

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Tracker rent is a very good, sound and fair idea - why should home owners be battered whilst T get protected?

It would also stabalise the market very quickly along with interest rates..................alas i dont think we are going to see it in themear future ..................

10/10 for a simple but very effective idea though........

CH1

Friendly banter! - Yes from time to time Gareth and I do feel the need to cross swords !!

Glad you got your rent up - as i pointed out a few small increases are far more paletable than 1 big jump !

Simon

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CH1 a big thanks to you...if it wasn't for your post, we would have been bereft of an excellent exchange between Simon and J4L :)

Like you, 6 months ago I had advertised my apartment for a slightly lower rent in order to get a tenant in - yesterday it was 5 months into the 6 month contract and I met him to collect the rent and casually mentioned about a 40 quid rise for the next 6 months....as I had anticipated after a lot of sighing and thought, he agreed to a 20 quid hike....exactly what I had anticipated...my reason was the increase - The interest rate hikes - (I think it is a valid one! ) It is a give and take process...you don't want to loose out on a good tenant but you also got to see that fiscal arrangements are to your liking as well.

On another note, I like to see the apartment atleast once every two months....You can do so on any pretext....checking the smoke alarms, was in the area etc. I always courteous and friendly with my tenants and it saves me the hassle of serving notice if I need to check the property. I always collect the rent in cash so automatically it gives me a pretext to go to the apartment.

Mike

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  • 2 weeks later...

Only registered today, primarily to find advise on TDS.

Unsure about a comment above having 'quickly' read through the thread.

If you issue a New tenancy to an existing tenant does that not mean that any Deposit held would have to be placed into a TDS?

And why issue a New tenancy. Let it lapse into Periodic. Assume T/Agg has referance to future rent increases in it.

Appreciate someone clearing up my confusion,

Paul

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Simon,

I have added to my purchased TA with an amendment sheet of my own. It just outlines the bullet points within the TA plus a few things which I felt were required.

A couple of those (mainly in my HMO's )are that if someone installs a washing machine they are financially responcible for any damage caused by such. I just had too many fire ceilings down caused by peoples 15 year old clapped out automatic washers.

Secondly, I state clearly that if people wish to remain in the property after the expiry of the fixed term then they must write to me 1 month before. At this time i specify 3 options.

1. Issue a new TA

2. Allow to stay on as Per Ten

3. Issue a notice to vacate

In my mind this lets the tenant know exactly the situation and that I 'may' recover my property should I so wish.

Does anyone else do anything like this?

Paul

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Not worth increasing on such small sums. Shouldn't really increase until a year unless things have changed significantly, i.e. rent has rocketed in the area and you could get 25% more for example.

Even when the year is up don't automatically uplift, check the competition and see what else he could get for money.

Rent has not increased much over the past 10 years or so and I think that inflating each year from 10 years ago would mean a tenant was paying well over the odds. This is partly due to low interest rates, competition and high capital gains being made.

Having said that I now expect rent to start increasing ahead of inflation over the next few years, so the best thing to do is keep monitoring the market and ensure that the new charge whatever that may be is in line with the competition(preferably a tiny bit less).

Remember interest rates have increased over 25% in the last year, this, I expect will start to filter through to rents in the years to come.

Ciao!

hi ,intersting to read all your thoughts on this, i did not raise the rent for more than 3 years with a good tenant in the property ,however the management charges went up every year a lot ,came to a stage it was not worth keeping the flat unless i put up the rent up quite a bit.

The tenant did not mind the increase, it still is low for the area ,keep it low to keep a good tenant,but in the future a small yearly increase is better than what i did ,the service charge goes up every year so i am making less and less!

ripoff managing agents are a nightmare ,arrogant when you query large bills ,we had painting done to the outside of the building,the scaffolding cost £1000 but it came too late and was never used! we still apparantely paid ,i think the manging agents kept the money ,when i enquired about this she became very aggressive ,no need for aggression if innocent!

could start another discussion on agressive ripoff managing agents!perhaps not ...hein25

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CH1 a big thanks to you...if it wasn't for your post, we would have been bereft of an excellent exchange between Simon and J4L :angry:

Like you, 6 months ago I had advertised my apartment for a slightly lower rent in order to get a tenant in - yesterday it was 5 months into the 6 month contract and I met him to collect the rent and casually mentioned about a 40 quid rise for the next 6 months....as I had anticipated after a lot of sighing and thought, he agreed to a 20 quid hike....exactly what I had anticipated...my reason was the increase - The interest rate hikes - (I think it is a valid one! ) It is a give and take process...you don't want to loose out on a good tenant but you also got to see that fiscal arrangements are to your liking as well.

On another note, I like to see the apartment atleast once every two months....You can do so on any pretext....checking the smoke alarms, was in the area etc. I always courteous and friendly with my tenants and it saves me the hassle of serving notice if I need to check the property. I always collect the rent in cash so automatically it gives me a pretext to go to the apartment.

Mike

hi checking the flat every two months ,I am glad y are not my landlord !...minceing in every two months ..noseyparkering.. ..still at least y are friendly ....hein25

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