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I'd go with no.2. We used to have a flat in Durham which had tenants who changed every year (targeted at the University - foreign students and staff) and only put the rent up once over 6 years - a decision I disagreed with. One year we didn't anticipate getting stiffed by the taxman who took all of our profits!
As someone who rents, definitely 1! 😀 Be the good guy.
6% gross return is ok,but i wouldn't be paying the heating bills at that.
As most people have said look at the long term and letting without interuption.When the people move out you can re-look at the figures and an agent would probably get you more money.
If i was looking to buy more investment property 8% gross return would be my minimum figure.
i'd go for somewhere between 1 and 2. As someone who rents a house in Sheffield due to circumstances (We moved to France and couldn't sell in time).
Maybe ask them if there is anything they would like doing to the flat with a relatively low cost to you. New front door? New Shower? something like that, for a moderate increase in rent that would cover the cost of the above, plus increase in cost that you are covering at present.
Then when new people move in consider a higher rent increase.
Ta folks
Surprised no one went for option 3 🙂
Dunno what we will do - I will have a chat with Mrs TJ but probably 1. I will ponder if I can be content with that.
You live in rented accomodation IIRC, TJ. Put their rent up by the same as yours has increased over the same period.
#2
I have a 50% with my sister in a small house that we paid for outright about 9 years ago. It came with sittnig tenants that used to work with my Mum. They pay a low rent but are always on time, recently we've increased it about 5% but that was the first rise in about 5 years.
Wouldn't push them any more as we want them to stay.
#2
Small increase if you are paying the bills to cover cost of heating etc.
I rent out a house and the rent has been the same for 3 years. I make enough out the house and times are tough. As long as the flat is in good condition and all maintenance is kept up to date they have a pretty good deal.
I rent out as well. We've actually given our tenant a rent reduction by cutting out the estate agent, who was charging a management fee for collecting the rent each month. We cut the saving in half. The tenant is excellent and has been in the flat for ~five years. I'd much rather have a tenant like that - worth it in terms of a complete lack of hassle.
Do you have to ask? No. 2.
Or if you feel guilty please let me know or send me a cheque as donation for greater depletion of mankind.
😆
Surely if the price of evrything is going up , and the value of money, due to inflation, is going down. By not puting the rent up at all you are not standing still but actually giving the tennants a rent reduction?
Long time since school, but doesnt fiscal drift dictate money not keeping up with inflation is loosing value , therefore a 3% increase , inline with inflation and utilities increases keeps everything in balance .
PLus small rises are easier to ask for by you, and easier to budget for by them rather nothing for 3 - 4 years then bham ,big increase.
TJ - I'm confused, you say £500 is cheap, £550 is market ? What's your dilema, the two prices are only £50 a month or 10% apart ?
Jambalaya
Yes its cheapish at 500 - market rent would be 550+
I am happy its below market rent as it means we get plenty of choice of tenants and no void period.
A 10% rise would be harsh tho for sure
I'd leave it for the second year.
I rented a basement flat for three years or so, rent stayed at £500 the whole time. Like your tenants, we were a young couple trying to save. If there was a rent increase I'd have definitely looked about to see what else was available, and would have been happy to pay a bit more for more space. But as the rent stayed the same there was no trigger to make us even think about moving to another property.
If you increase it and they just look about to see if its still value for money and find somewhere they like, you could go a month or two without rent, plus your next tenants could be a nightmare and trash the place, just after you've done your improvements to the layout!
I would increase the rent in April.
This is how my housing association works. Every April my rent goes up, whether I want it to or not.
Unless you are running a charity, it is not your concern if they can afford the increase is it?
Option No. 1.
You are making enough, there is no reason other than personal gain to put the rent up, and you get the satisfaction of doing someone a good deed.
If you feel you must put it up, do it by £10 and make it clear that the money is going to Shelter or some other charity.
Be the change you would like to see....
4) Surprise your tenants with a rent reduction for being all round good eggs. I'd say that an increase after a year would be unwise for reasons already mentioned. Less of an issue after say 3 years imo.
I'd say there is an option 4 - rent reduction of say (for sake of argument) £10PM * BUT * pass the responsibility of paying all bills on to the tenants. That way you could engineer it such that the reduction is what the rates were last year (before the rise in prices). You are morally in the clear as any increase is down to the big bad energy companies.
2 seems fair, but, you do need to offset the possibility of loss from not immediately filling the flat if they had to move, and the possibility that the next tenants will have "hell" as a previous address.
All I can echo is that I am in a similar position - I rent a small flat in a town where they let fairly quickly - and I at £580 a month am porbably £50-70 light per month - but have been here 6 years. I don't demand renovations, indeed, the landlord and I have a "understanding" that the carpets were shagged when I moved in, and that if the rent doesnt go up, I don't mind a bit of wear and tear unaddressed. He knows a void month or two from a non paying tennant or if there was a slump in rents and I moved out would be greater than any increase. I think as he's never had a complaint about me, and on one occasion my quick thinking in draining down all water services on a failed pump probably saved hundreds in renovations.
He likes me because I pay, and make few demands. I like him as my rent is cheap and he leaves me alone. Its his flat, it's my home. It helps that he's a semi/commercial landlord and takes that view.
That's a massive rise to the tenant. It costs alot more than a tenner a month to pay for energy to a house. I pay the gas/leccy myself, but a tenner reduction then taking on the bills would have me looking elsewhere instantly if i was in that situation.matttromans - Member
I'd say there is an option 4 - rent reduction of say (for sake of argument) £10PM * BUT * pass the responsibility of paying all bills on to the tenants. That way you could engineer it such that the reduction is what the rates were last year (before the rise in prices). You are morally in the clear as any increase is down to the big bad energy companies.
seosamh77
Yes - I guess it would be £50 a month to heat the flat.
Jujuuk68
Thats sort of teh position we are in.
Interesting comments from folk here and less "go for the money" than I was expecting. More folk saying no increase than I ever expected
You guys may just have saved them a few quid a month 🙂
Think it really comes down to; are you making enough from the property? if the answer is yes, I'd stick with the status quo, if no then, I'd be looking at adding a few quid to the rent. Really has to come down to your thoughts on the matter, after all it is an investment, but clearly you don't want to be ripping the proverbial. I don't think after so many years a slight rise is unrealistic or will come as a surprise to the tenant, just make sure you give them plenty of notice.
I've been 2.5 year in this place with no rise either, I wouldn't be upset if in a year or 2 they decided to up it a little. tis the way of the world, money is worth less as time goes by. As I say you just need to look at what you are getting from it.
these tenants have only been in a year.
But yes - I make enough profit from it - in some ways more than I am comfy with but then the flat is below market rent and we are good landlords.
We will make our own decision but I have been interested to see people responses to this
It's times like this, I like to think. "what would Renton do?"