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I try to avoid increasing rents during tenancies and wait until the start of a new tenancy to do so.
However if a tenant has been with me for a while (2 years or more) and rents are increasing elsewhere, I will raise rents however will ensure it is a small increment, normally no more than a £25/month increase.
An example of one of my BTL's rent history:
Tenant 1Feb 2012 - £1100
Tenant 2Nov 2013 - £1175Jan 2016 - £1200Apr 2017 - £1250 (slightly higher because of S24)
Market rent for this property is around £1300-1400 so I plan to increase to £1275 soon. What do others think of this strategy? Interesting to see what others do, maybe I could have been more aggressive? Another approach I considered was having a fixed increase, e.g. £20 increase every year. Interested to hear your strategies.
I think you have to be so careful increasing rent
I have long term customers and I tend to leave rent increase well alone
when I do get a void I then market the rent higher
I have used this strategy for the past years and it’s has worked well
if you put up the rent and the tenant moved out the cost of finding a new tenant can be costly plus you have to pay council tax too
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Depends on various factors, ie state the property, demand in the area, other comparables.
Most of my rents only go up every 2 or 3 years, some have not be increased for 5 or more.
I will be increasing yearly now, and by at least 5% - 7%, or until the market allows.
I see S24, and potential abolishment of S21 actually pushing rents up, rents are going up where I am
I Pretty much follow the same strategy as DL, cost of voids and risk that new tenant wont be as good as current tenant generally drives my strategy.
I generally speak to tenant to explain that I'm not increasing so they know it's a thought out decision not an oversight.
I have occasionally increased rent during renewal but was for a very long term tenant who was significantly under market, so we agreed to move it but still well under market.
The issue I think you may have is as your moving rent up each year the tenant knows its coming and therefore will always look around before it comes to check the market, and may just decide to move as they see something they like. If you dont increase then they have no need to look unless they aren't happy with house, hence you get tenants in situ for longer.
I also look at tenant affordability and they afford a rent increase as I see BTL as a people business not just a numbers game
Slowly working towards financial freedom
Agree with you, case by case. But for us to survive in this industry we need to increase when we can, S24, S21, all of this needs to be paid for with additional income
I agree with the void analogy, but depends how many places you have. if you have 5 properties fair enough, if you have a huge portfolio and fail to increase your rents it can have a devastating effect on the aggregate.
It's a case of doing due diligence and as I always say I am in my late 30's, so altitude to risk will be different to someone in their 60's.
I don't really agree with the extra income to cover a change in costs as that's really a cost of doing business and increasing costs of your customers is only 1 option, but it's an option if you are significantly under market rents.
Why does s21 increase your costs? S24 agreed but if you are well cashflowed it should have a massive affect as you will be taxed on the profit already.
I sort of agree it has a bigger affect on a larger portfolio, but if you have a larger portfolio you are benefiting by economy of scale anyway and if you are well cashflowed then 250 pcm profit across 50 properties is better in my view than 300 across 10. But to be fair I look at overall cashflow numbers not percentages as that is how my targets work. I tend to favour bit less income with a lot less hassle.
But everyone's circumstances are different, so I think your answer really is you need to do what works best for you and your targets/strategy coupled with the time you want to commit to the business. I dont think age makes a huge difference to your risk outlook, but it does to the amount of time you want to spend in your 'job' even if that job is being a landlord. As you get older I think you value your time over a bit of additional profit
Just my opinion, but maybe I'm just old lol
Hi Andy (or Mason?)I do similar to you when I take on a new tenant. I explain at the start that I am not one of those landlords that just increase rent every year because I can, but I do make it clear that after a few years I may review it, and if there is an increase, it will always be below the average for the market. I completely agree with your paragraph about having fixed increases and how it may cause the tenant to potential leave before the next increase. I never thought about it this way but thanks for raising it. I definitely won’t be doing this!I guess it also depends on the tenant. If you’re tenant is great in all aspects, then of course, a bit more money is not worth rocking the boat. However if your tenant is ‘ok’ (e.g. pays rent on time but poor comms, not taking care of property, etc), maybe increasing rent is a viable option. If they pay up then great. If not, evict them and get a better tenant. I guess it's like the gambling saying "Only gamble what you are prepared to lose" which translates to "Only raise rents if you are prepared to lose the tenant"
Love that quote, sums it up perfectly ?
I was in the “only increase when tenants changed” corner, but as a result my rents fell so far behind local average that tenants were not going to move on very often, what with that and the general increase in costs and my income not keeping ip with inflation i’ve started increasing rents annually, this year its the best part of 10%.
i do a search on rightmove for similar properties within 3 miles ( no. beds, size, gch,dg,seperate kitchen etc ) then take the median rent. I then work out what seems fair. Write to tenants 4 months in advance letting them know that i’ll be serving a rent increase notice and reasons why.
For those getting in work benefits it’s going to be a bit of a squeeze, but my letter points out the effective freeze on LHA and to write to their mp.
I don’t know why this was downvoted, I think this is a very valid situation for any landlord to be in. The fact you give them 4 months notice up front is in my view, a good landlord.Imagine this scenario…Market rent is £1000You have the best tenants in the world who have rented from you for 10 years and as you have never raised rents, they are only paying £600. You decide to increase their rent to £700, still £300 below market average. I don’t see anything immoral about that. In fact, if I was the tenant, I would thank you for only increasing it to £700 and be safe in knowing I have a great landlord.