Increase rent or hold

D

Damo

Registered User
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I have an investment property and the current tennants have indicated that they want to rent for another year. Given a number of rises in interest rates over the past year I am considering raising the rental to cover this.

Does this reflect what others are doing?

Thanks,
D
 
I increased rents on my properties, somebody has to pay the mortgage interest increase
 
Depends on where the property is located.

If you have a rental property outside one of the major urban areas, you might be better holding rent at current levels in order to keep your tenants.

Even in Dublin, rents have dropped in some areas as supply has increased.
 
Damo said:
I have an investment property and the current tennants have indicated that they want to rent for another year. Given a number of rises in interest rates over the past year I am considering raising the rental to cover this.

Does this reflect what others are doing?

Thanks,
D
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The interest charged by the bank for your mortgage has nothing to do with the rent that your tenant or other tenants will be prepared to pay. It comes down to supply and demand in your area.

If you have a good tenant then I wouldn't rock the boat with them. I would only look for an increase if I had a good argument/basis for an increase, such as the rent is way below the average in the area or if you have done something to improve the property. The interest rate your bank is charging is your problem not your tenants.

Remember if your tenant leaves and your property is vacant for a period, then it will take a long time to recoup this loss even if you got a reasonable rent increase with someonbe else.
 
Don't be greedy. a regular 12 month rental income is probably better than a void for a month or so whilst seeking a new tenant. Also remember that the house may have to be redecorated/refurnished prior to new tenant taking up residence, all at yoru expense.
 
Have the same dilemma at the moment. Looked at Daft last night and there are a number of apartments for rent in same area at a far higher rent than ours. On the other hand we have a good tenant and I don't think he'd be able to afford much of an increase. He loves the apartment and the area, takes good care of the place and notifies me as soon as anything goes wrong. We're tending toward leaving it at the same rent for now. God knows what type we might get next time.. Besides, I like him!
 
There seems to be a temporary squeeze in the rental market at the moment caused by investors all trying to pile out of property at the same time (look at daftwatch.atspace.com graphs), but I've noticed signs of loosening over the past week or so. Rents during most of 2006 were static with good supply, that fell drastically as the prospect of that which dare not speak its name on AAM became obvious. I've noticed in the past week that many properties in my area that were put up for sale and haven't sold (most of them) are going back on the market as rentals. I would expect to see us return to early 2006 levels of rents and supply in the next couple of months.

Speaking as a tenant I can say that if I felt I had a landlord who took advantage of every opportunity to increase the rent I'd be out the door as soon as a new place became available to me. I haven't had a rent increase in 5 years and wouldn't accept one now.
 
liteweight said:
Have the same dilemma at the moment. Looked at Daft last night and there are a number of apartments for rent in same area at a far higher rent than ours. On the other hand we have a good tenant and I don't think he'd be able to afford much of an increase. He loves the apartment and the area, takes good care of the place and notifies me as soon as anything goes wrong. We're tending toward leaving it at the same rent for now. God knows what type we might get next time.. Besides, I like him!
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There's an awful lot to be said for having a tenant you like and are happy with. I'm in the same boat with my tenant. He (& family) keeps the place spotless, there's never any complaints from the neighbours and they love the area. I even reduced the rent (for a month or so) to keep him there. Swapped Xmas presents too! A good bird in the hand is worth a million birds in the bush.
 
I'd weigh in on the side of holding rent at current levels, or - at most - increasing by a CPI-only inflator. But as with a couple of other posters, I've held my rent at the same level to keep reliable tenants who keep the place well and who wouldn't be able to afford an increase. It does mean I'm charging a bit under the current market rate, but I'd budgetted for that anyway - and tenants who know they're being well treated will (1) stay, and (2) probably treat the place better.

If you have an interest only mortgage which is not being covered by the rent it could be a different story, but if, like a lot of us amateurs, you're making principle as well as interest payments and are still making a profit versus the interest element then I'd leave well alone.
 
Im in a similar situation. I have great tenants so in my case I'd
settle for present rent rather than rock the boat.
ardman
 
I would not increase the rent if i were you. If your tennant is happy, pays on time and keeps the place well then happy days !.
 
bacchus said:
Certainly, ...for info, the average rate of growth in rents between sep05 and sept06 has been 10% going by daft.ie
Full Report here
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Be careful about using this as the yardstick, as there are more and more houses not being sold (latter part of last year) these are starting to make their way back onto the rental market as investers need to derive some income from their asset which is hardly going to create the rental squeeze required to sustain 10% growths in rents
 
beattie said:
Be careful about using this as the yardstick, as there are more and more houses not being sold (latter part of last year) these are starting to make their way back onto the rental market as investers need to derive some income from their asset which is hardly going to create the rental squeeze required to sustain 10% growths in rents
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I agree, this data in this report is historic.
 
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