Factoring cost of improvements into rent

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    Factoring cost of improvements into rent

    I am trying to work out how to factor the cost of improvements to a property into the rent. This must be an almost universal issue, and I would expect there is a standard approach. I have searched for an answer but so far without success. More specifically, if one has spent, say, £3000 improving a property, e.g. by installing central heating, how would one calculate what increase in rent to apply?

    I am a newbie both to the rental sector and this forum, so any help will be much appreciated

    #2
    This is an added benefit for you as LL, and tax deductable I think... it may also show in an Increase in the property value. therefore should not be totally passed to the current tenants in their rent, they move out in 6 months and not have the full benefit of the increase!!

    You would also struggle as Rent is driven by market forces... so you should not ask for more than the property is worth! Look at what similar properties are going for in your area and work it out that way.
    GOVERNMENT HEALTH WARNING: I am a woman and am therefore prone to episodes of PMT... if you don't like what I have to say you can jolly well put it in your pipe and SMOKE IT!!

    Oh and on a serious note... I am NOT a Legal person and therefore anything I post could be complete and utter drivel... but its what I have learned in the University called Life!

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      #3
      Originally posted by robbieBB View Post
      I am trying to work out how to factor the cost of improvements to a property into the rent. This must be an almost universal issue, and I would expect there is a standard approach. I have searched for an answer but so far without success. More specifically, if one has spent, say, £3000 improving a property, e.g. by installing central heating, how would one calculate what increase in rent to apply?
      Are you talking about how much to increase the rent for a particular tenant, ie in a property which is already tenanted but you've just upgraded? Or you've upgraded an empty property and now want to come up with a monthly rent figures?

      The second case is straightforward - it's what the market will stand, as you've already been advised. The first case is slightly more complicated, but essentially similar.

      Either way, I think you're looking at things the wrong way around - you can't expect to come up with a formula equating an rent increase with a capital sum spent on improvements. You should be thinking, eg - "how much more rent can I charge for a property with central heating versus one without?" - it's completely irrelevant whether that particular upgrade cost you £1000, £3000, or £6000.

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