Every time one of my fellow landlords has the compulsion to increase their tenant’s rent, I always wonder whether it’s out of necessity or greed. My grumbling gut tells me it’s often the latter, and the irony is, it often results in a net loss!
Far be it from me to tell anyone else how to manage their finances or their burning desire to be a gluttonous wildebeest, but I will encourage all landlords to proceed with rent increases with extreme caution!
Besides from swimming in pools of money and knocking-back shots of Hennessy out of strippers’ navels, there are a couple other key tasks every landlord should be doing on a regular basis, which includes:
- Making routine Landlord inspections to ensure their tenants’ aren’t filthy, plague ridden neanderthals.
- Ensuring all landlord legal obligations are met and maintained.
- Begrudgingly, declaring and paying the tax man.
- Keeping track of finances, which includes keeping on top current and local rent rates.
Tracking current and local rent rates
I regularly scour Rightmove to keep on top of local rental prices, allowing me to analyse what every other cockeyed, greasy landlord has the audacity to demand.
After number crunching the stats on Rightmove earlier today, I discovered that I’m undercharging one of my tenant’s by 15%’ish compared to the going market rate.
In real terms, that means I’m charging my tenant £800pcm while identical properties in the same area are currently demanding and achieving in excess of £950pcm.
The tenant benefiting from such a handsome discounted rate (and a dashing landlord to boot) has been an occupant for 3 years, and has always paid £800 (which was the going rate at the start of the tenancy). So that means, there has been an eye-watering annual rent increase of 5% in the local area, which is way above the current rate of inflation.
Jesus, landlords/agents really are money-grabbing bastards, aren’t we? No wonder we’re synonymous with camel-turd and the spawn of Satan.
Why I’m happy charging my tenant 15% below the going rate!
Despite the considerable difference between what I’m charging and the current rates, I actually have no intentions of increasing the rent. Why, you ask? Is it because I’m a Saint? Fuck no! But rather…
- First and foremost, my tenant has been nothing but a delight! He’s proven to be a most reliable asset!
- I’m still turning a comfortable profit with the rate I’m charging him.
- If I increase rent, it *could* result in him serving notice (it’s currently a renter’s market) and then I’ll have to bear the load of all the BS that comes with finding new tenants, including marketing costs and potential void periods. Makes me vomit just thinking about it!
How much value do you put on the above?
I certainly put a lot.
Those of you that have been unfortunate enough to deal with a decaying steaming turd in the form of a tenant, whether they fell into arrears and/or treated your property like a back alley in the slums of Calcutta, will appreciate the value of reliable tenants.
So really, I’m simply putting value on the peace my tenant provides, and that essentially that does have a monetary value in my world. I’ve been in this ghastly game long enough to have dealt with enough douchebags to know how difficult it is to find tenants that won’t make me want to blow my brains out. All it takes is a mere two months worth of rent arrears with an unconscionable donkey tenant to see that extra £150 per month I could be earning to diminish into thin air. So I’ve hedged my bets.
But don’t get it twisted. Rest assured, as soon as me and my tenant part ways, I’ll be asking for the going rate from the next punter. You better believe that shit. In the famous words of Young Jeezy (don’t ask), “My hustle is non-stop.”
Before signing off and riding off into the sunset, I do want to clarify that I’m not encouraging a blanket-rule for all landlords to undercharge their tenants, because obviously that’s unlikely and it won’t make sense for every circumstance. For me, for the reasons mentioned, I couldn’t justify increasing my tenant’s rent to what the market is currently dictating.
My underlying point is, it’s critical to assess the overall value a tenant is providing before having any knee-jerk reaction to increasing your tenant’s rent. What do you think?
Right, we done!
Laters, you big, fat, gluttonous wildebeest! xo
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.