In this three-minute read, we look at the issues Taunton landlords should consider before raising rents.
The uptick in inflation, along with pressure on interest rates, means that many landlords will be considering rent increases right now.
Before deciding on a course of action, here are some points to consider.
Why would a landlord raise rents?
- Rising mortgage and maintenance costs.
- Tax and legislative changes that impact profitability.
- Changes in the supply of and demand for rental properties in the local market.
When can a landlord raise rents?
It depends on the terms of the contract. Your tenancy agreement should clearly state how and when rents can be reviewed, and the notice period required for an increase.
It’s vital that you understand the terms of your contract and – unless you enjoy messing with lawyers and tribunals – abide by them.
If you’re unsure where you stand, contact us here at Gibbins Richards for independent advice.
How much should you raise rents?
It’s a balancing act as an OTT rent hike could cost you more in the long run.
To hold on to top tenants and enjoy good returns, do your research and play fair.
Look at what other landlords are charging for comparable properties in Taunton. Be honest about the condition of your property and determine your price accordingly.
Telling your tenant
Be upfront and start the conversation sooner rather than later. That way, your tenant will have time to adjust to the idea and budget accordingly. Always serve written notice within the required notice period.
What if my tenant is unhappy?
Explain that you’re facing rising costs and talk about any improvements you’ve recently made to the property.
If a tenant is happy and settled, they’re unlikely to bother with the expense of moving if a rise is reasonable.
If your proposed rise causes a stir, make a judgement call. Weigh up the costs of finding a new tenant and the risk of having the property sitting empty against the extra income you stand to make.
Look at the big picture. If your tenant is a keeper, consider negotiating. If you’ve had issues with them in the past, maybe it’s time to part ways.
Where problems occur
Issues arise when:
- A landlord is missing in action for a couple of years and then springs a massive hike on a tenant to make up for lost time.
- The rent is set too low initially, and the landlord tries to play catch-up by introducing a big hike when they can.
- Tenant/landlord relations are so poor that rational conversation isn’t possible.
- A landlord doesn’t understand their contract and tries to bulldoze through a hike at the wrong time.
To avoid these issues:
- Get professional advice from an experienced letting agent so that you set the rent at the right level the first time.
- Have a long-term rental strategy. Some landlords, as a rule, increase rents incrementally every year or two to cover rising costs.
- Ensure your contract is watertight and that you understand it.
- Communicate regularly with your tenant. If you’re time-poor, a letting agent can do it for you.
For advice on formulating a long-term rental strategy, get in touch with us here at Gibbins Richards.