Why you MUST increase your rent

Landlords: we have a problem…

The dreaded rent increase conversation.

Most of us put it off, but doing that has long-term negatives effects for both you and your tenants.

So how can you make it positive for everyone? Hit play to find out.

Links mentioned:

#propertymarket #rental #rentincrease

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[pataleno]

My mortgage is fixed till 2027 on low interest. My tenants have NEVER missed a payment in 7 years and paid all through Covid. I cannot and will not increase the rent, I could not sleep at night doing it to them.
I'm also still in a high paying PAYE job so don't need the cashflow yet until I retire. The mortgages are getting paid so i'm happy. I've even offered to sell them but they are happy renting.

[grahamblake]

I have just remortgaged, I had hoped rates would drop lower but they haven’t. I have informally explained to my tenants that I have to increase rents due to high interest rates. Some have accepted it with good grace others are ignoring me. Next step is Section 13 notices - I am not a charity!

[hooksforestchin]

There will be an issue for landlords who haven't increased over last few years when they come to remortgage, as they may find the rents are too low to pass the latest affordability tests with higher rates.
My policy is to set rents at or just below market rent when a new tenancy and don't increase for first couple of years. I'll then increase the rent by, at most, the local market percentage increase, but always keeping them below the market rent as something of a loyalty bonus - always annoys me when mobile providers etc want to charge me the same as I can get as a new customer and don't see the rental market as any different. Additionally, if a tenant does move out, I'm going to lose at least a month's rent, have to pay the agent a fee for the new tenant and do a bit of maintenance, so definitely best to keep a tenant, even if they're paying less than the market rate.

[Daisy-tllh]

I had this conversation with my tenants a year ago, they refused the necessary increase they are now being evicted ... as a private landlord running on a tight budge I have no intention of becoming a social landlord ... my property is far superior to any council or LA property, my tenants could not never afford to buy the property themselves and if they want to live there they must pay the going rate to live in a superior well maintained property in a good area with good schools!

[chain]

I am 50/50mon this. I see your point though. I’ve been renting the same property now for the last 12yrs. My main focus when I moved in was a short-term plan as I was going through a separation, had the idea I would move back to Canada, however my children and their mother moved to Sweden. So I got conveniently stuck.
After the second year I helped the land lord out buy telling the letting agency I moved out, saving him money on the service. He left my rent alone and kind of forgot about it for a number of years. He did not think I would be there long, and I was thinking of buying the property in the initial years which I probably should have done, but hey, hindsight! He knows he would never get a tenant like me, I have looks after the place, the only major things he has done since I moved in is upgrade the two windows in the flat, the patio doors should have been done as that contributes to the most heat loss and changed the boiler when it broke down. If I move out tomorrow, he could rent it straight away as is.
Now he as had the Property since the mid 90s, almost 27 years, I can pretty much guarantee that the property is mortgage free. Based your your argument, what would be your view here? Most of the people I know in my situation have told me that their Landlord has left them alone, as long-term tenants.
The building I live in has 17 flats, and I have seen the prices if these flats rise and fall, with big differences. Some clearly sold too high and one earlier this year sold 70K cheaper than the most expensive one, same flat, opposite the hall fro each other. In terms of rent, one landlord. Had his rent so high, the people did not stay long and the flat stayed empty for month, inexperience I guess. There does need to be a balance an it is finding it. I am about to inherit a property with my sister, do I rent it out, sell it and use the funds to buy a property and rent it, or get on the ladder myself?

Great channel, buy the way, oh, and my landlord is super cool guy…

[FinnMcCool]

I'm one of those renters, except the landlord has done zero repairs etc in 12 years, no shower, dishwasher, oil thats turned in at switch box. The landlord can jump if wants to increase rent.

[AlexColes-wnjg]

What some landlords fail to realize is critical. Reaching the peak of market rates will impact your rental void periods, haemorrhaging more capital and stress in the process. The reality is BTL unless you got a huge deposit with low rates locked in, you're going to be screwed for the next years ahead. If you want to really increase the rent, can you get a different profile e.g. from students to young professionals? Then you got invest to bring the place up to justify the increase. Our current tenants pay below market rate. Take care of the place immaculate, no void periods.

[constantfear]

Mine tried to increase mine but it wasn't in line with the local market so we agreed on a middle ground. I think this is the risk you face with the BTL interest only mortgage model, what I often don't hear factored into the equation is the capital appreciation on the property.

[stellajanehello]

i agree with some things you say but not all but totally get the dilemmas you describe. I have been a landlord since 2009. I just have the 1 flat. I am in the fortunate position that i paid my mortgage off ages ago. I made a promise to myself that as long as the tenants are lovely and really love my flat like i love it and take care of it that i would never raise the rent for that particular tenant but in between tenants i would increase but to the top market rates but to under, somewhere in the middle. As personally there is no way in hell i would pay market rates for my 1 bed flat with no garden at the market rates. Its bonkers hence in my view and I am a landlord.... i think we must must now have rent caps. Its super important that properties cannot be rented out for sky high stupid amounts of money. Just because one's managing agent tells you that you must raise the rent, or be like sheep and follow the herd or are just downright greedy. I have done a lot of thinking on this and i really believe that is one rents out their property it should NOT be the tenant who has to pay the price. If one is cannot afford to rent the property out and keep the rent low or if one is not able to plan for the future and anticipate that expenses may rise and are not able to pay for property expenses and repairs without relaying on a high rent then don't rent, don't become a landlord. I am not making a lot of money off my flat. luckily i have other work so I don't need to rely soley on the rent. I have have had really high expenses associated with my flat recently but i paid for all this NOT from rent money and increases but by proper budgeting. Its a 2 way thing - the tenant needs to love and care for you property like you do and to leave there for what you could afford to pay on a bad day. Do not make money from your tenants. Do not make your tenants pay for you. This is why the housing market is in the terrible state it is. I agree with this video that by never raising rent for a tenant you do them no favour as they are stuck when they need to move. My tenants are paying well under the market rate, under the average as they are on low 2019 rates which I have not icreased. and I will not increase my rent because that is my promise to myself and them. And I am not going to break my promise. The government needs to bring in strict rent caps and if a landlord cannot afford that then sod you landlord. That is YOUR problem not your tenants!!

[RJH]

Mao had some good ideas about landlord

[zeea]

A lot of tenants decline rent increase. Glad i charge market rate. Eviction increasing as a lot of landlords not covering costs.

[zapre]

My letting agent just called to say they want an extra £105 a month ...I told them to fuck off lol

[Goudaisgouda]

Lol, can’t believe you’re trying to sell an increase of rent would be a good thing for the tenant due to a shock of the increase. Why should you pass your increased interest rates onto the tenant? Did you not consider the risk to your investment when you took the mortgage out?

[simonquy]

In London I think it is prudent to increase rent because if sadique gets his way (labour
Likely to win next year) rents will be frozen, so need to manage this risk especially in light of mortgage rates and inflation

[abdullaha]

I myself increase 5% yearly, or below the market price 7%

[youtubeman]

I’ve not increased any of my rents, they have been good with me and I want them to stay… I will bite the bullit and make less money for a while, the tenants have rising bills so asking them to pay more would not be fair, I’m still making money so I will cope with it,

[marcusrudolph]

The missing piece is what you consider “market rent” is not the true market and is artificial due to apartments being vacant and various other factors

[Hullraa]

Increasing rents due to credit costs is not necessarily a good idea when you are competing with landlords who can buy outright with falling house prices

[perolagrande]

You mustn't put off increasing rents, otherwise they'll fall ridiculously below market rates, and your investment will return less than it could. That's not good management.
I never had any 'conversation' with my tenants, I simply sent them an email containing a rent increase notice, and it was up to them to accept or move elsewhere. That said, I was never one to jack rents, usually raising them only every 3-4 years to catch up with inflation. You don't want to price your rentals aggressively, but you also don't want to be giving them away.

[you-zimc]

I didn't increased the rent. I feel sorry for my tenant. I feel like how one family pay 1550. When average income is 2000. Unless they sublet. But my mortgage gone up and I have to increase the rent.