Should you increase rent on yearly review.

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suicra05

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Have 3 bed rented to tenants for 1230 euro in D 16 area. This is approx 100 euro below the going rate. Should I increase the rent a little at the yearly renewal which is next month. Tenants are good as they have been no major hassle. Advice please .
 
Don't think so. You're lucky to have tenants that aren't any hassle. If you raise the rent, they could well move out, leaving you stuck with the problem of getting new, possibly more difficult tenants. I'd be inclined to count your blessings!
 
I put the fact that rents will increase by inflation (cpi I think but not sure) as condition in initial contract which makes subsequent raises easier.
 
suicra05 said:
Have 3 bed rented to tenants for 1230 euro in D 16 area. This is approx 100 euro below the going rate. Should I increase the rent a little at the yearly renewal which is next month. Tenants are good as they have been no major hassle. Advice please .
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I don't see why not - if you're sure it's about 100 under the going rate.

Interest rates have just risen, my building insurance also went up slightly so I'll be increasing rent by €50 per month.
 
Uhh, based upon what have you determined 'the going rate'? I posed this question earlier in the month and it drew blank stares and silence from all of the landlords on AAM.

As for the CPI being a guide, that is one way, if not a supportable one. Market forces are what the PRTB looks at. Nothing more.
 
The heat has really gone out of the rental market, and tenants nowadays would know that they can relatively easily move if needs be. (speaking as a tenant) I don't care that my landlords expenses have increased, if you increase my rent and I can get cheaper elsewhere I'll move.
 
hmmm rather than moving I would advise you to negotiate with your landlord if he is providing a well maintained property. As a landlord I want occupancy. I want happy tenants on long term leases (yearly rather than six monthly). I will always drop rent to get someone for a year as it generally takes a month to relet a sixmonth. To be honest I now market it as a year lease at lower rent. The cpi yearly bumps the rent along but it really always stays slightly below market. As I have said from my perspective occupancy is the key. In a really slow market I might throw in a fill of oil etc (tax deductible for me). So negotiate, develop a relationship with the landlord and do not assume that it is just a rent increase that they want.
 
I'd be the same, as a tenant- if the rent was increased, I'd move.
In fact I'll be looking around to see what the market's like a month or two before our contract ends to ensure that I know and can move if needs be. If I can find a cheaper place than this, I'll consider moving anyway.

I'd assume that if the landlord really didn't want to lose you as a tenant- they would either a) not increase or b) climbdown if you said you wouldn't accept the increase?
 
My point being that as it is in contract there are no surprises.
Rent increase to be expected by both parties.
If landlord liked tenant and wanted to hold them then could negotiate on things like a fill of oil etc.
Did this only a couple of months ago.
Rent charged still went up and as a landlord got deductible expense on oil.
So still nett gain to me whilst no appreciable increase for tenant.
Possibly using tax laws to keep all happy!
If after this negotiation the tenant wanted to renew at same rent then I would not stand in their way if they wanted to go elsewhere.
To be frank if rent does not go up by inflation landlord loses out.
Maintenance and other charges increase but rent decreases in real terms.
The danger is if I accept a no rent increase then my maintenance budget gets too tight and the property suffers as a result.
Property is too expensive at present and rental yields too tight to risk a property going downhill.
If the property goes downhill it is more difficult to relet and the investment suffers.
I feel as if I must do this as I have said above that my rents are generally below market but for 12 months duration.
If I do not increase rents year on year the investment does not remain viable.
 
The trouble here is that you are looking at the rent you charge as being a factor of your expenses - "my costs increased by 100 euro a month, therefore I will increase the rent by that, that's fair". But it's not because rent is a figure decided by the market and not by individual landlords - if you increase the rent you run the risk of having your tenant leave, and if as a landlord you said to me "I'm increasing the rent because my expenses have gone up" my attitude would (mostly) be "I don't care".

In saying that I've been with my own landlord for over 5 years now, he charges slightly below the market rate and treats me professionally. In return he gets a long term and careful tenant.
 
ny increasing rent by 2-3% per annum and throwing in something like oil I feel both sides win.
Your landlord has the same philosophy as me.
Many landlords I talk to do not understand that their greatest expense is vacancy.
Did your rent increase much over the past few years despite being still under market?
 
markowitzman said:
Rent charged still went up and as a landlord got deductible expense on oil.
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Increasing rent by E100 and giving the equivalent in free oil worth E100 will have compensating tax effects so there is no tax advantage to this approach (except maybe timing).
 
Not an equivalent deal though. Rent increase generally more but not always. From a timing perspective you are right. Limit tax liability in present tax year with the assurance of greater rent in next tax year. Suppose it is a form of deferred tax.
 
hmmm said:
The trouble here is that you are looking at the rent you charge as being a factor of your expenses - "my costs increased by 100 euro a month, therefore I will increase the rent by that, that's fair". But it's not because rent is a figure decided by the market and not by individual landlords - if you increase the rent you run the risk of having your tenant leave, and if as a landlord you said to me "I'm increasing the rent because my expenses have gone up" my attitude would (mostly) be "I don't care".

In saying that I've been with my own landlord for over 5 years now, he charges slightly below the market rate and treats me professionally. In return he gets a long term and careful tenant.
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I am increasing my rent by €50 Euro from next month and will still be under the going rate for the area. If the mortgage interest rates and insurance premium hadn't risen, I would be increasing at all - so it's not a case of "my costs increased by 100 euro a month, therefore I will increase the rent by that, that's fair".

The letting of property is a business and not a charity. If the price of petrol rises in the morning, you can be guaranteed that hauliers will increase their prices to pass on the extra cost to their customers. Why should it be any different for a landlord?

I too have long term tenants, charge slightly below market rate and treat them as I would want to be treated myself.

I will only increase the rent in one property next month - in the other one I have a single mother with two young children who I know could not afford an increase, even though my costs for mortgage interest, insurance and refuse disposal have increased.
 
Am in the similar situation right now.. with the recent interest rate hikes it has taken a chunk out of the net income. I did consider a hike but knowing the way the market is (although somewhat bouyant).... tenants are on the move.... the amount I have to make up would be wiped out again due to unoccupancy.

If I had a bad tenant I wouldn't hesitate...but a good tenant changes the situation somewhat.

However there is another interest rate increase pending....this being the case then I would have no choice but to go for an increase.

ninsaga
 
delgirl said:
in the other one I have a single mother with two young children who I know could not afford an increase, even though my costs for mortgage interest, insurance and refuse disposal have increased.
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Is the single mother on Rent Allowance paid by the Health Board. If she is, and you increase the rent, she will only have to pay the same amount. If you are charging below the going rate the HB will pick up the increase.

Your tenant will continue to pay the same tiny amount.


Murt
 
Every time I change tenants I up the rent on my properties a little bit. I wouldn't like to raise it with sitting tenants though.
 
I'm somewhat bemused by all these landlords who are renting for 'under the market rate'. Isn't the market rate (by definition) the rate at which you are renting?
 
It depends on how you define the market rate. There is definitely inertia in most tenancies which means that after a year or two, the rent is likely to be less than would be charged to a new tenant (which is what posters seem to define as the market rate). However, if we were to define the market rate as being the average across a sector, then instead of saying that sitting tenants were paying less than market rate, it would be true to say that most new tenants pay over the market rate. A matter of perspective.
 
Seems to me that it could be a case of 'penny wise, pound foolish', if the landlord is willing to risk having the property lying vacant while looking for new tenants it could negate any upside in rent. As a tenant I wouldn't accept if I was told that my rent was being upped and would start looking elsewhere especially with the market today.
 
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