How to raise rent and stay on good terms with tenants?

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    How to raise rent and stay on good terms with tenants?

    I have good tenants who have rented from me for almost 19 months. They are a group of 3 young men and they moved into my property on 23/2/2013. They pay 800 pounds per month, mostly on 23rd of each month – sometimes it can be a day or 2 early or late.
    I generally renew the Assured Shorthold Tenancy Agreement every 6 months however the last one was signed on 27/2/2014 for the term of 6 months beginning 23/2/2014 (we were a few days late in signing it as the term had already begun). This AST expired on 22/8/2014 but I did not renew the AST agreement since then so I presume we are in a periodic tenancy agreement. I now wish to increase the rent from 800 ppm to 840 ppm, an increase of 5 per cent. How can I do this in a friendly but firm way?

    Q1. Is it sensible to complete a section 13 and hand deliver this to my tenants so I can explain face to face the reasons for the rent rise? Alternatively should I attach a letter of explanation as it may be difficult to arrange a time when all 3 tenants are available? Or does it seem superfluous to explain my actions and should I just send a section 13? I wonder if it may seem abrupt to simply deliver a section 13 notice. Is it straightforward to complete a section 13 or should I involve a solicitor to do the paperwork?

    Q2. Do I need to get the tenants to sign a new AST agreement which reflects the increased rental amount? There are 3 tenants – do all 3 need to agree and sign up or just the lead tenant?

    Q3. Is there anything else I need to do? Also I realise that I may need to do this quickly i.e. before 23/9/2014 in order to ensure that the rent rise becomes effective from the rent payment of 23/11/2014 as I believe 2 months notice is required – is this correct?

    I want to give them an explanation as to why I am increasing the rent as I hope they will accept the rent rise and stay on at the house.
    Hope you can advise how I can best raise the rent in a friendly yet professional manner. Any advice much appreciated, thanks

    #2
    Send them a polite letter with a link from Rightmove of similar property rentals. If you can show that even with the increase they are getting a good deal, I can't really see that you will fall out.

    Also, one little tip, is to ask for twice as much an increase as you want. Then you can 'compromise' on the figure you are looking for.

    Comment


      #3
      Originally posted by JK0 View Post

      Also, one little tip, is to ask for twice as much an increase as you want. Then you can 'compromise' on the figure you are looking for.
      Seriously? We generally don't live in a bartering society, a lot of people I know would take that as a firm figure and perhaps be upset by such a large increase and make plans to leave. Would seem easier to be honest IMHO.

      Op what's your reasoning for the increase out of interest?
      "I'm afraid I didn't do enough background checks apart from checking her identity on Facebook" - ANON

      What I say is based on my own experience and research - Please don't take as gospel without first checking the gospel yourself.

      Comment


        #4
        That's negotiation 101: Start by asking more than what you actually want.

        Anyway, I think that a tenant understands that this is business. If it is clear that rents have increased and you propose (or impose through s.13) an increase that keeps the rent slightly below market then it will go down OK, IMHO.

        Comment


          #5
          Originally posted by jjlandlord View Post
          That's negotiation 101: Start by asking more than what you actually want.
          Er, you don't ask for a rent increase... you impose a rent increase. If the Tenants kick-off then you have a secondary decision to make - either to let them go, compromise somewhere else that doesn't make them kick-off or back-down entirely. But you're not asking the Tenants to allow you, as Landlord, to increase the rent. Just a poor choice of words, I'm sure. If you are not raising the rent unreasonably then you obviously hope that they will not up-and-leave.

          At the moment I follow one fixed term with another fixed term so I am able to increase the rent in the new AST. In January I will have a property where the Tenants are unlikely to want a new fixed term, but will want to remain on longer than the current fixed term... so we will go to SPT and I will have a decision like this to make.

          5% sounds 'rounded'... does it relate to anything out there in the world? I try to have my rent increases tie into inflation... I don't round up the %age, but I calculate that and then round up the £s to the nearest £10. I am not an old-hand at this, by any means, but it has gone down without problem so far.

          I would, personally, not leave a property without a rent increase for 19 months, though... I believe it should be raised each year in small, unexciting, amounts. I realise some other Landlords never raise the rent as long as a Tenant is in place.

          Comment


            #6
            Originally posted by jjlandlord View Post
            That's negotiation 101: Start by asking more than what you actually want.
            .
            Totally agree with you and that's what I'd do with the initial asking price of the rent before a T took a contract and would expect some negotiation at that stage. As Griff says though the rent increase is more factual than speculative.
            "I'm afraid I didn't do enough background checks apart from checking her identity on Facebook" - ANON

            What I say is based on my own experience and research - Please don't take as gospel without first checking the gospel yourself.

            Comment


              #7
              If you can or want to use s.13 then obviously you can impose the increase. Otherwise you can't, and you're probably not going to evict, so there is room for negotiation.

              Using inflation to work out how much to increase the rent is factually meaningless. The only purpose is to sugar coat the increase in the mind of the tenant because they are used to prices increasing with inflation (duh...), and obviously these days inflation is rather low so the increase is not worth making too much fuss about. But if the local rental market is going up faster than inflation, then obviously the landlord is losing out and the tenant should be happy enough to accept.
              Bottom line: mentioning inflation is a sales technique, not a factual justification of the increase.

              Comment


                #8
                Of course it is... a technique that works flawlessly (so far). No point busting a gut looking at other factors... inflation is right there to use. Arguing against it makes you look unreasonable as a Tenant. Low annual increases is definitely the way I will continue to go. It is good management.

                Comment


                  #9
                  Originally posted by Hippogriff View Post
                  Arguing against it makes you look unreasonable as a Tenant.
                  If the local rental market is going up less than inflation, or is even going down, I think that it would be very reasonable for a tenant to argue against it.

                  Comment


                    #10
                    I disagree. It would be a rare Tenant that would look into things in such detail to avoid, as we say, a modest increase. In the end, it would happen anyway, year after year, so they would be 'trained' over time. Even if they did argue against it, it's still happening, so it would be wasted effort over a few Pounds.

                    Comment


                      #11
                      Only ONE month notice is required not two (The start of the new rent increase must be from a rent day). You certainly don't need a solicitor for this.

                      Comment


                        #12
                        s13 can be served at anytime after 12 months since last rent increase. It willl exire after 30 days. It is just good practice, and less hassle, to implement increase for next rent due date after Notice expires.

                        Just talk to Ts in person and float your proposed increase/date. They may just agree and pay. If not serve s13. Simples.

                        Comment


                          #13
                          How do I increase the rent, I have considered the market rent and it is justified, don't want to throw the tenant out but if she left I would be fine with that, I could refill very quickly and cheaply for a higher rent.
                          How do I go about it, the tenancy has gone periodic and I don't want to give another fixed period, just in case the tenant is a nuisance later on.
                          Would appreciate some advice,

                          Thanks,

                          Dom

                          Comment


                            #14
                            S13, as said above.

                            Comment


                              #15
                              Why the 2 month delay and s13 apparently still not served?

                              Comment

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