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Energy bills - rent increase vs controls


Nathalie

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Hi,

Earlier this year I posted a topic about receiving ridiculously high energy bills where tenants had clearly made no effort to use heating and electricity appropriately. Well I recently wrote a letter to all my tenants proposing what I was going to do about this problem and in short I said:

1 - I would not impose controls so people could enjoy the heating how they wish (from experience controls haven't worked well and leave many people feeling cold even if set at 21c)

2 - but they would have to start taking responsibility for their usage and as such I will be increasing their rent in January and from now on I will do an annual review of their rent and even decrease rents where costs have gone down (supposed to be an incentive!)

So far we have rarely increased rents for existing tenants, in fact only once in the last 10 years that I know of (I have been managing the properties myself for 2 years and therefore the older tenants have got comfortable with not having received increases in the past). I have received support for the proposal by one tenant (who is fairly new) and two complaints by older tenants who are obviously comfortable not having had rent increases and don't like the sound of them now. One of them says they barely use the heating and shouldn't have to pay for others. I haven't had any comments from the rest which is the majority.

I have tried to be as fair as possible with my proposal, but what do you think? I only plan on increasing rent if costs go up which I presume is normal and I have even offered potential rent decreases as an incentive... Am I being harsh though? I ask this as one of the tenants complained I was harder than my mother who never increased rents (he's been living there 6-7 years). I guess I just want to know if I am being reasonable or not and whether the average landlord reviews rents annually? Also what is a reasonable rent increase? Based on bills this year, up to a 5% increase is likely. I should also note that their contract does have a clause saying their rent will be reviewed annually.

Any thoughts appreciated,

thanks

Nathalie

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Hi Nathalie,

Firstly, increasing the rent for long term tenants is always going to get the reaction you have experienced but you should not be perturbed. It sounds like you and your mother have been more than reasonable in the past.

In this situation I always give an illustration of a similar property nearby and what is being charged there and show local ads or flyers from agents as proof. Forget the comparison with your mother - don't we all wish for the old days- not!

I do remember your post about the v.high electric bill and you have to cover your costs more equitablely this year. You could see about putting meters in the rooms - though I am sure this would be unpopular and costly.

I would say definitely increase the rent now and write to the long term tenants saying you will review the rent every 12 months from now on - you don't have to increase it. Just because it is not in the AST does not mean you cannot do it with the right notice. These will be your rules and they will either go or stay. In my opinion you are not being harsh just realistic.

Hope this helps.

Mortitia

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Thanks Mortitia, I needed to hear that... Yes I did think they had just got too comfortable and as longer-term tenants were bound to react. So far it has been the usual suspects that have reacted badly which are just a couple, the vast majority seem ok with it (they haven't said otherwise and I have seen a few of them already) one even said he totally agreed with the proposal. I did warn them earlier in the year that they should expect a rent increase following the huge bills received and they said nothing then...

They do all have a clause in their contracts saying that their rent is reviewable yearly, even those who have been there years so they can not argue on that front, they have been fortunate so far. And in any case I have told them that I will be more than happy to decrease rents if the costs go back down, which could well happen the following year now that energy prices have dropped slightly and they are more aware of their usage... I have ben totally transparent with them and offered to show them all the bills if they wish so they can see how I calculate the rent changes. I have tried to be very reasonable and fair, none of this rent increase is profit. I have considered some other possibilities, like you said metres etc... but I really don't want to go down that route of controls and I doubt the tenants would either having weighed up the pros and cons. It's a nice period house and a home without all this clunky machinery. I think it could also potentially put off prospective tenants as I only take on professionals.

It's just about changing the precedent now.

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I believe the best way to overcome this problem is to match the bills to yours if you live close by and the property size is the same to yours, otherwise try and match it to another accordingly.

My aunt has a few properties rented that are mostly if not all on the same road and the same type of properties. She has also rented out the properties bils inclusive. This is the route she has taken to overcome this situation.

If a tenant seems to go over excessively then they are given a warning that their bills are too high as they are rented to professionals compared to hers where she is living with a family of 6 and including children. So if the bills do go over consistently then they are basically matched to hers which is considerably high and then the differences are paid by the tenant. This has ever happened to one of her properties and now works really well that shes given notice to all her tenants about how she will overcome this problem should it arise and they are all still living there. Its an understably matter and should not be a problem.

However recently i have joined this discount club and reccommended this to my aunt too who has just received her welcome pack (she was skeptical at first too). Where you can offer your tenants a quality and cheaper service on all residentail utilities and also benefit from it yourself by making an extra passive income. This way its a win win situation as you are offering your services and also being rewarded for this. this company has been awarded consequtively over the past few years for the best service and package deals on Which magazine.

Offers include free telephone calls to uk and worldwide when 4 services are taken and they are cheaper than the big 6 companies. Utilities include energy, mobile, telephone and broadband.

This is a way to solve your problems and both benefit from it. For more info please visit http://www.utilitywarehouse.co.uk/biz/vide...af?exref=D50710

I hope this post helps you and would recommend this to all landlords without a doubt. :rolleyes:

Thank you

Jakir

P.S Whats it about? http://www.uwdcvideos.co.uk/index.taf?exref=D50710&v=1

P.S.S Find me on ecademy http://www.ecademy.com/user/jakirmiah

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Sounds interesting but unfortunately the guy in the video is like a used car salesman and its a 20 minute video.

Keep It Simple Stupid, all he needed to remember... I hate overdrawn sales pitches.

Yes its a detailed video with testimonials explaining how it works... wouldn't it be nice to get bonus on your cashflow monthly as well as provide an additional service to your tenants. It works better when your paying the bills as you'l be paying less.

Hope the video dont put you off.

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Hi Jakir

Are a distributor for Utility Warehouse trying to sign up customers and distributiors?

cheers

Selkirk

Hi Selkirk

i see my self as a growing entrepreneur with a diversified portfolio of wealth building vehicles. I have a property portfolio based in east london area and yes i have become a distributor for Utility Warehouse few months back and have signed up my friends, family and my tenants.

So far everyone whose applications are now live, are really happy with the savings they are making as much as £90 on their energy services.

However the reason i have talked about the business here because it works very well for landlords having to make a bonus on their cashflow (passive income) which is the ultimate reason for building wealth just like the millionaires involve themselves in. which includes career, property, business, stocks and shares and the internet.

I dont know for what reason why you are in property but everyone has their own strategy and reasons.

For me the equation is Passive income + Leverage tools = Wealth.

Utility Warehouse fits into the Passive income column and from experiencing it, i am recommending this business to landlords and estate agents. As for me it fits into my strategy and wealth building vehicle.

I know i have dragged on a bit, but i hope this explains the reasons for my input about Utility Warehouse.

Take care and all the best.

Jakir

www.ahelpinghandhq.co.uk

http://lawofattractionvideos.com/?aff_id=52

http://store.sixminutestosuccess.com/?aid=582862

P.S If any viewers are interested in wealth building I recommend these books to you;

Money for nothing and Property for free by Andy Shaw (Strategies and skills) http://tiny.cc/propertyhelp

Rich dad poor dad series - Robert Kiyosaki

Think and grow rich- Napoleon Hill

E myth Revisited- Micheal E Gerber

These books can be found online and in book stores.

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Well after that I am just about to get into my wealth vehicle and head home after a diversification week of painting a decorating.

The only leverage tool I will using this weekend is a hammer and chisel to lift an old floor.

Have I missed something in my basic view of wealth creation?

Only joking - good job we cater for all types on this site.

Mortitia

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Hi Jakir

With 3 posts worth a bit of research, I knew you were a distributor just followed up your ID number - D50710 - I know how this works as I too am a distributor for Utility Warehouse.

What annoys me is instead of being up front you try to be sneaky about it - is that in your books.

Do your books tell you to build an empire on sand.

The best way forward, if you want to try and interest people on here, is to be honest in your intentions and upfront, these people are not as stupid as you take them for, it's just disrespectful and harms what is actually quite a good but low paying sideline.

cheers

Selkirk

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Behind ALL these business type proposals is someone trying to make money out of YOU.

I just ignore them all and always have.

Mel.

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Hi Jakir

With 3 posts worth a bit of research, I knew you were a distributor just followed up your ID number - D50710 - I know how this works as I too am a distributor for Utility Warehouse.

What annoys me is instead of being up front you try to be sneaky about it - is that in your books.

Do your books tell you to build an empire on sand.

The best way forward, if you want to try and interest people on here, is to be honest in your intentions and upfront, these people are not as stupid as you take them for, it's just disrespectful and harms what is actually quite a good but low paying sideline.

cheers

Selkirk

hey mate..

i dont understand how i am being sneaky about what i have written in my previous posts. i have clearly pointed out the benefits and have given the link to my website provided by the business itself for any one who would like more info.

I dont understand the sneaky part here? what is wrong with the business? what im i doing wrong? i dont see my self doing anything wrong. its not like im hiding anything! I have given you the link to check the business out for yourself.

From my point of view i assume your talking about what i get from landlords joining the business well its the team, bigger network and obviuolsly greator cashflow. the reason the business exists is to make money. When companies sell services and products are they being sneaky? by not telling you what they get from it? how much they are really getting it for? the profit percentages?

Being a landlord are you being sneaky by not telling your tenants what your actual mortgage payment is? are you charging more? is that wrong? or is following the rental market wrong? is that being really sneaky? getting your tenants to pay for your mortgage. i guess so....

or have i got the wrong end of the stick? please justify your reasons...As a distributor yourself, what is wrong with the business and why are you part of such a business if you dont believe in its services.

How would i not be sneaky?

What do you mean people here are not stupid how im i doing wrong here. what do you think are my intensions?

So far every member that is in my team and customer base are getting what the business says cheaper bills and better service. So whats wrong? im just pointing out how it may help people out here.

by the way how are you getting along with the business? As everyone has over a million opinions and theres no point in listning to them if they have not done it or made it themselves yet, or if they dont believe in it.

And if you are seeing me as a competition, then please dont. competition means theres a lack of it. That i dont believe in and will only keep your results the same. i am not trying to flog something here to anyone. Im just offering a way to resolve the problem.

And yes Nat, the best way is to get the tenants to pay for the bills and etc. And Mel why do Businesses exist? What do they get from it. is it not to provide a product or service in exchange for money? or is it for free

If anyone is interested in the business do your due dilliegence as you would when buying a property if your thinkings as limited as a few in here. Dont just take my word for it or what ANYONE else says.

cheeers

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  • 3 weeks later...

Hi Nathalie

Reverting back to the subject, I would impose a fair use policy as part of your contract. That you will pay for bills up to a certain amount per month/quarter. If their usage exeeds this then they are liable for the extra usage and will be billed for this each quarter. You should explain that the rent including bills is calculated assuming that gas and electric will be used during nominal times i.e early morning for 4 hours and late evening.

I have applied this and it seems to work.

Pam

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Nathalie, there's really simple solution, just exclude the tenants bills from the rent, and get them to pay. Surely this is the most straightforward option.

Hi Simhar, thanks but actually it's really not a simple solution as I would have done it already! Every tenant has their own AST, to try and put the bills in one tenants name would be difficult especially if they don't stay particularly long (though fortunately they generally do). They might see it as a risk, as they would be liable for the bills if not all the tenants coughed up their share. Then I'm guessing I would have to referee all the disagreements over the bills as they seem to want me to referee most things anyway.

Hi Pam, how did you work out your ceiling for the bills? I suppose I could contact my energy supplier and ask them what the average use for x amount of people would be. I want to make sure I am fair with my ceiling. Have you ever had to bill them extra, and did you have any issues getting the money off them?

I might see how the tenants react after their rent increase in January. All in all 9 out of 11 people seem fine with them, and when I give them copies of the bills to show them how I calculated their rent increase they can hardly argue... The key now is to set a new precedent and stick to it so they know what to expect. Haven't heard anymore out of the 2 complainers, I wrote a letter to one explaining the rationale behind it and he seems to have accepted it, at least we get on fine since and as for the other one well he lives on another planet if he expects next to no rent increase after living there for several years.

P.S. I think the proposals have helped to curb their usage a little, my latest gas bill was a significant reduction on last year, which will help to mitigate that rent increase! Though the electricity seems to have gone up :huh:

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