Landlords: Increasing your rents.
There is a set procedure that should be followed that will be detailed in the contract terms you have signed with your tenant. Here we look at what you should consider and how to manage the process.
If you manage your own property, you should have a regular reminder set in your calendar or diary to consider and manage the rent review process. If you have an agent managing your property they should be contacting you to discuss and coordinate an increase around 10 months from the last one.
There is a set procedure that should be followed that will be detailed in the contract terms you have signed with your tenant – see our blog ‘Your guide to section 13 & rent increases in the private rented sector’ for further information on this. However, here we look at an overview of what you should consider and how to manage the process:
Why increase rent?
Renting property is a business that needs to make money, or at least cover costs. If it doesn’t a landlord may be forced to sell their investment, which is not good for either the tenant or the Landlord.
Should you Increase the rent every year?
Increasing rents by a small increment every year is positive for two reasons;
- The tenant gets used to an increase and will expect one each year
- A smaller amount is easier to absorb into a monthly budget then leaving the rent the same for 3 years and then increasing it by a larger amount
Have the discussion early.
We recommend having a conversation with your tenant at 10 months from the last rent review. This gives them as much notice as possible and gives time for a bit of phone tennis!
What if you don’t want to increase the rent – is there something that should still be done?
Regardless of whether you wish to increase the rent or not it is beneficial to talk to your tenant about the prospect of a rent increase and that on this occasion you have decided not to increase. This is positive as your tenant will think you are ‘great’ and next year will be expecting the same conversation and will understand why you then need to increase.
Confirm everything in writing
There can be no confusion about the amount and when the increase falls due if it’s confirmed in writing. Never be lulled into a false sense of security that you will remember what has been said and when…you won’t!
Be mindful what they can afford and what is reasonable.
If you have a great tenant, looking after your property and paying the rent on time, is it worth losing them for an extra £50 a month? Consider the cost of finding another a tenant, the cost of maintenance that’s required on the change of a tenant and any void periods there may be. Any rent increases we negotiate will bear all of this in mind. As an agent we are working in the best interest of our landlords to ensure the best possible outcome.
Why do some Landlord not increase rents?
For some landlords talking money is not an enjoyable topic – be it increasing rents or dealing with arrears (see our blog - Is your tenant struggling to pay their rent? Do you know what to do about it?). If you manage your property emotions can get in the way and cloud business decisions. Conversations around money can be awkward – they really shouldn’t be! This is where a good agent is worth its money and can take the emotion out of the transaction. Not only does it remove stress from the Landlord it also means that rents stay in line with the market. Should you need help or advice with rent increases do not hesitate to contact us.
Should you have a property that needs an up to date rent or sales appraisal, or you have any questions about rental increases please do not hesitate to contact our office - 01474 321957.