How to Set Rent at the Right Level and When, How often and by how much should you Increase Rents
How to set rent at the right level and when and how often should you increase rents and by how much? David Lawrenson of LettingFocus.com advises.
How to Set Rent at the Right Level
Obviously, a starting off point is Rightmove and Zoopla – what do properties like yours in the same area rent for? I’d suggest taking about 5% off the asking prices, because the very fact that the properties are still on the market means they have not let yet. The ones that were priced a little more competitively have already been taken off! It’s a paradox you should never forget!
So run another search looking at where the “let has been agreed” and focus more on the rents for the properties where the let has been agreed. Most people in the UK don’t negotiate on rent levels, so what you see as the prices for “let agreed” will be at or close to the price the property actually let for.
But I’d still suggest aiming to have your rent a little under that – say about 2% cheaper.
Well, you want a buzz around your property and if you can have prospective tenants queuing up for viewings, then that is a good thing. Your aim then will be to pick the most promising tenant based on their past history and what sort of people they appear to be.
Obviously, you must do careful checks on references and ask to see proof of income and affordability before making an offer to let. How to do all this is explained in full in both my books for landlords – see links below. Don’t take risks on this or in any way skimp on the tenant checking processes.
If you have a tenant who is paying a little less than market rent, they will know it and be grateful for having a landlord who is not out to gouge them for every last penny of rent.
Set Rents A Little Under the Market Level
Another positive thing to come from charging a little under the market rent is that we often find that if we do, tenants will be more likely to fix those little niggly things that really are their responsibility and not ours. So, that kitchen drawer that is sticking a bit is really up to them to fix, though many landlords (including us) can and will do it for them.
We find that for many of our tenants who are getting our usual slightly below market rents, they will usually do these fiddly jobs themselves, This is especially true of our tenants from central and east Europe who all seem to be blessed with practical “can do, can fix” skills.
We like that and when it comes to rent review time, we are very mindful of it – and will keep their rents especially competitive. The way we see it is like this: They are doing stuff themselves that other tenants might ask us to do. This saves us time in admin and also real costs of getting someone around to do the fix. So, they get rewarded with lower rent increases.
How Often and by How Much should you Increase Rents
We adjust our rents every year on the anniversary of the tenancy inception for all tenants. We never put the rent up by more than the rate of inflation. The frequency of rent adjustments ought to be stated in the tenancy agreement. Annually is best. We give them 2 months’ notice of a change
If we are fed up with a tenant (which is very rare) we may put up the rent at the exact rate of inflation, though never more. Otherwise, for good tenants, if the general rate of inflation is say 2%, we usually put our rents up by no more than 1.5% and even as little as 1% or nothing for very good tenants.
Of course, Jeremy Corbyn would not believe it, but this is what all sensible landlords do. It is not in our interest to lose tenants and screw our customers for every pound. (After all, they are customers, they have a choice of where to live).
Over time, our rents can end up some way below the level of market rents, (especially as private rents have tended to be a little above the general rate of inflation in London and Kent in recent years), but we don’t care – we would rather have good tenants who look after our places than worrying too much about this.
Services for Private Landlords
We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk. Our advice is completely independent. We take don’t commission payments or fees from anyone, ever.
Services to Businesses and the Public Sector
We advise a range of organisations too to help them develop and improve their services and products for private landlords. David Lawrenson, founder of LettingFocus, also writes for property portals, speaks at property events and is regularly quoted by the media.
HOME PAGE OF THIS BLOG: Blog
THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com
For general information on our CONSULTING SERVICES: Consultancy and Seminars
For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice
CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials
IN THE MEDIA: Recent Press Coverage
“SUCCESSFUL PROPERTY LETTING”:
Our book is the highest selling personal finance and property book in the UK. Click here to Find Out More and Buy it. And if you are from an organisation and would like to bulk buy, please ask us for special rates.
“BUY TO LET LANDLORDS GUIDE TO FINDING GREAT TENANTS”:
Also, get this great new guide here, which covers everything you’ll ever need to know to avoid either you or your letting agent getting anyone other than the perfect tenant. Click Here to Buy It.
BOOK FOR TENANTS:
Kids going off and renting for the first time? My Book for Tenants is also Available
TO JOIN OUR FREE NEWSLETTER MAILER which goes to over 3,990 people (as at Jan 2019) just send an email to [email protected]
We do not send spam or sell our mailing list to advertisers, though we occasionally mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.
OFFERS ON PRODUCTS FOR LANDLORDS and TO ADVERTISE YOUR PRODUCTS to LANDLORDS: Landlords Resources
PERUSE LAST TEN BLOGS BY GETTING THE RSS FEED: Click Here
NEXT ANNUAL SEMINAR EVENT FOR LANDLORDS: Landlord and Property Letting Seminar
TWITTER PAGE My thoughts on property, personal finance, plus a lot of other random things: Twitter
Copyright of Blog: David Lawrenson 2019. Please link to us here or quote us. We actively pursue copyright infringements.