Due a Rent Increase?
Something that I get asked all the time is, 'When should I put up the rent?'
It's a subject that makes both Tenants and Landlords nervous. Landlords get used to the reliable steady income from the rent, to cover any mortgage costs and commitments. As a result, Landlords frequently decide to leave the rent as it is to avoid upsetting their tenants. This is fine, until too much time elapses and you find yourself in a situation where the tenant is paying £700 per month instead of the market value of £850 as was the subject of a conversation with a friend of mine yesterday.
I remember back to my initial legal training 20 odd years ago with 'Letting Legend' Judienne Wood. Her mantra was to take out the emotion and look at the facts. This has been a helpful rule for me over the years as, during any property transaction, emotions can run very high. With this in mind, I gave my friend an estimated current value of this particular house and suggested a rent increase is fair enough. Of course £1800 per year would seem rather a sharp rise so in this instance it isn't possible to stay in line with current rentals but she is a 'very good tenant' and my friend is very kind.
Landlords should consider that the cost to a tenant of moving from one rental property to another has increased and is now in excess of £1000. This takes into account the deposit, agents' fees and removals, add the disruption to people's lives and it makes better sense for tenants to remain at their existing property rather than up sticks at the first sign of a rent increase.
If the rent was increased by £25 per month, this equates to an extra £300 over the year which is less expensive than moving. With this in mind it makes more sense for the tenant to pay little more each month than to move, provided the increase isn't out of proportion.
So what is fair? There is no set amount that a landlord can increase by as long as it is consistent with local rents. I would recommend a small increase annually rather than a sudden uplift after a three year period which might shock the tenant and result in them moving on.