roxy2005 Posted November 23, 2015 Share Posted November 23, 2015 Hi we have a property in the uk which we privately rent out. We used an agent to find the tenants but manage the property ourselves. Our tenants have been in the property for a year and we would like to increase the rent slightly. We have read through the rental agreement and it states it can be raised only according to the index of retail prices. Can anyone clarify what this means? Our tenant wants to stay and we don't really want to engage a property manager to go through this with us. thank you! Link to comment Share on other sites More sharing options...
Guest Posted November 23, 2015 Share Posted November 23, 2015 Hi we have a property in the uk which we privately rent out. We used an agent to find the tenants but manage the property ourselves. Our tenants have been in the property for a year and we would like to increase the rent slightly. We have read through the rental agreement and it states it can be raised only according to the index of retail prices. Can anyone clarify what this means? Our tenant wants to stay and we don't really want to engage a property manager to go through this with us. thank you! Stating the obvious it's the Retail Price Index - a measure of inflation based on retail prices http://ons.gov.uk/ons/taxonomy/index.html?nscl=Retail+Prices+Index I don't think you'll be putting the rent up as it is virtually 0 - not sure why you'd want to either, I wouldn't risk upsetting good tenants that have been there for a year and want to stay! We have had enough bad tenants to know they are worth gold-dust. Link to comment Share on other sites More sharing options...
persianharry Posted November 23, 2015 Share Posted November 23, 2015 I agree with Lady Rainicorn. The RPI increase in the year to October is a measly 0.69% so on a £500 per month rent that would be just a £3.45 increase. I wouldn't upset your tenants for something so little. Link to comment Share on other sites More sharing options...
roxy2005 Posted November 23, 2015 Author Share Posted November 23, 2015 Thank you both for the replies! Ideally we wouldn't want to either but the rent was too low to begin with, and with the estate agents sister renting the property we know now why the rent was pitched so low! We agreed to it without knowing, and whilst they are excellent tenants we do feel compared to other rentals in the area, that it is very low. its our fault, we know that, but we were time poor and it was all put through in a rush. Link to comment Share on other sites More sharing options...
Teejams Posted November 23, 2015 Share Posted November 23, 2015 When we were in between tenants this year, we looked to see what similar properties were rented for to check our current rent was in line with others. When we subsequently rented it again a couple of months later, after a lick of paint, tenants were falling over themselves to pay £125 per month more. We may have got more, but weren't being gready and hope our new tenants are as good as the last. The increase now pays for the management fees. Not wanting to upset a previous tenant,but knowing the rent was low, we put up our previous rent in small increments of £25 or £50 I hope this helps X Link to comment Share on other sites More sharing options...
roxy2005 Posted November 23, 2015 Author Share Posted November 23, 2015 We signed them on a six month agreement, which ended months ago. The original agreement said we could only put the rent up once a year in line with index of prices. Does this mean that we can only increase by 0.69% of the monthly rent? I don't want to be unfair, like I said, they've been great tenants. Link to comment Share on other sites More sharing options...
Guest Posted November 23, 2015 Share Posted November 23, 2015 Thank you both for the replies! Ideally we wouldn't want to either but the rent was too low to begin with, and with the estate agents sister renting the property we know now why the rent was pitched so low! We agreed to it without knowing, and whilst they are excellent tenants we do feel compared to other rentals in the area, that it is very low. its our fault, we know that, but we were time poor and it was all put through in a rush. Ooh awkward - assuming you have an assured shorthold tenancy agreement there is no reason why you have to renew it - you can give the tenants notice on their current lease and advise them you are putting it back on the market at a higher rent. They may choose to move out or they may choose to pay the higher rent. If they choose to move out you have to consider whether the increase in rent is worth a month or two without rent - if you are talking £50 a month quite possibly not on the other hand if may be worth biting the bullet now and having some down time especially if the difference is closer to £100+ Of course they might stay anyway or worst case scenario you give them notice and they refuse to move out and you have to go to court to evict them (we have had to start court proceedings twice with tenants not paying rent and refusing to move out - in fact they will be advised not to move out as that is considered 'voluntary homelessness') If it was me the the difference was less than £100 a month I'd swallow it (also do you know what local proprieties rent for rather than are advertised at - in over-supplied areas there can be as much as £100 a month difference between the asking price and the achieved price) Link to comment Share on other sites More sharing options...
Guest Posted November 23, 2015 Share Posted November 23, 2015 We signed them on a six month agreement, which ended months ago. The original agreement said we could only put the rent up once a year in line with index of prices. Does this mean that we can only increase by 0.69% of the monthly rent? I don't want to be unfair, like I said, they've been great tenants. Yes, that is correct Link to comment Share on other sites More sharing options...
Guest Posted November 23, 2015 Share Posted November 23, 2015 We signed them on a six month agreement, which ended months ago. The original agreement said we could only put the rent up once a year in line with index of prices. Does this mean that we can only increase by 0.69% of the monthly rent? I don't want to be unfair, like I said, they've been great tenants. Just to clarify the agreement hasn't ended - it becomes a rolling contract with one months notice either way (assuming it is a standard agreement) so you can give a months notice on that agreement and issue a new 6 month contract as per my post above. Link to comment Share on other sites More sharing options...
roxy2005 Posted November 23, 2015 Author Share Posted November 23, 2015 Oh that sounds painful! I think we are talking about a £85 difference. The property is rural, there's nothing much like it available now to compare. If it was mortgaged, we would not be covering the mortgage payments with the rental income! Ooh awkward - assuming you have an assured shorthold tenancy agreement there is no reasonwhy you have to renew it - you can give the tenants notice on their current lease and advise them you are putting it back on the market at a higher rent. They may choose to move out or they may choose to pay the higher rent. If they choose to move out you have to consider whether the increase in rent is worth a month or two without rent - if you are talking £50 a month quite possibly not on the other hand if may be worth biting the bullet now and having some down time especially if the difference is closer to £100+ Of course they might stay anyway or worst case scenario you give them notice and they refuse to move out and you have to go to court to evict them (we have had to start court proceedings twice with tenants not paying rent and refusing to move out - in fact they will be advised not to move out as that is considered 'voluntary homelessness') If it was me the the difference was less than £100 a month I'd swallow it (also do you know what local proprieties rent for rather than are advertised at - in over-supplied areas there can be as much as £100 a month difference between the asking price and the achieved price) Link to comment Share on other sites More sharing options...
Guest Posted November 23, 2015 Share Posted November 23, 2015 Oh that sounds painful!I think we are talking about a £85 difference. The property is rural, there's nothing much like it available now to compare. If it was mortgaged, we would not be covering the mortgage payments with the rental income! Not a typical rental property by the sounds of it - I'd definitely let sleeping dogs lie if you are happy with the tenants in all other ways. Bear in mind you'd be taxed on the extra £85 too! Link to comment Share on other sites More sharing options...
roxy2005 Posted November 23, 2015 Author Share Posted November 23, 2015 Not a typical rental property by the sounds of it - I'd definitely let sleeping dogs lie if you are happy with the tenants in all other ways. Bear in mind you'd be taxed on the extra £85 too! No no not typical at all, but to be honest finding new tenants I believe wouldn't be an issue. It's got land and five bedrooms. Would you think it would be worthwhile getting an independent appraisal done? I made a typo earlier, we believe the difference could be as high as £185 not £85! Link to comment Share on other sites More sharing options...
Guest Posted November 23, 2015 Share Posted November 23, 2015 No no not typical at all, but to be honest finding new tenants I believe wouldn't be an issue. It's got land and five bedrooms.Would you think it would be worthwhile getting an independent appraisal done? I made a typo earlier, we believe the difference could be as high as £185 not £85! It could but you do risk unsettling the tenants. Maybe just say you're having it valued for a re-mortgage or something! Bear in mind like I said Estate Agents will but a rental value on it higher than you will probably achieve depending on the heat in the local market. Five bed houses with land are normally pretty hard to find tenants for, long term ones anyway, the kind of people wanting property like that can normally afford to buy. £185 might be worth the disruption! Link to comment Share on other sites More sharing options...
Teejams Posted November 23, 2015 Share Posted November 23, 2015 £185 per month is obviously £2200 per year. A lot of money to loose and I'm guessing your investment is more for financial gain rather than charity? Lady Rainicorn has a good suggestion, wording the valuation for remortgage purposes. As long as you stress to the agent, possibly more than once, not to mention anything to the the tennants. We have done something similar in the past. You do, of course, run the risk of losing good tenants, they may not be able to afford a large price hike. However, if there is nothing else to rent which is so cheap, they may just have to live with it unfortunately. Sorry tenants. I would also have the same concerns regarding losing them, but at the same time, would not want to feel scared to put the rent up. A good tenant can go sour regardless of the amount they pay. It's unfortunately one of those situations where you'll not have all the answers until you take some sort of action. Good Luck x Link to comment Share on other sites More sharing options...
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