Increase the Rent?

BoozyBabe

Please mods let this stay here for a little while until I see what the boardsters general response is.

I did post this in the property section but didn't get much of a response.





I own a property that I currently rent out to a tenant.

Lets just say this property is in the border region.

It's in a quiet village (with all amenities in immediate reach), the village is 3 miles from the county town which has high employment.

It's a 3 bed terraced property, fully furnished, 1st let & in excellent condition.

I have 1 tenant, a non-national, renting the property alone.

The rent per month is €540 (excluding bills) I make a profit from this rent (i.e. it more than covers the mortgage)

The mortgage has since went up by €36 (I had originally thought €25, but just checked), so I'm not making as much profit as I was. (but making a profit as well as getting my mortgage paid for me, all the same)

The 1year contract is up shortly & I know the tenant will be renewing for another year.

The tenant is very good, pays on time, keeps the property in good condition & informs me of all details regarding the property.
I would be more than happy to renew the contract.

Would you:- put the rent up for the new contract to reflect (closely) the increase in mortgage, or as it's a single, well behaved tenant & you're still making a profit, would you leave the rent as it currently is?

I have no decision made either way (but perhaps gearing slightly towards keeping it as it is, as I'm an oul softy), so would be interested in hearing your comments.


(The rent is cheap for this property in this area, (I know of similar properties in the area going for a lot more) but this is because I didn't want to rob the teant.)

joe_chicken

I would pass the cost down, like you said already, you're already being generous with the amount it is

If they are reasonable people (as they sound like they are) they will understand.

And living in Ireland they should be used to ever increasing bills

justsomebloke

i would put it up, as interest rates will probably raise at least once during the next 12 months and so you will probably be even more out of pocket if you don't raise it now as you won't be able to change it for another year.

What are others in the area charging for similar properties

mountainyman

But if the person moves out you might lose more than what you gain from the increased rent.

Rents are falling not rising so I wouldn't advise it tbh.
For exampe I've a friend renting a redbrick 2 bedroom house in Booterstown for 1250 p/m. (about a 50 year mortgage)
Another friend is renting just off Ailesbury road (Crampton Semi D) for 2500 the house is worth about 1.2 million. (about a 40 year mortgage).

Anyway your mortgage is your lookout ain't it.

MM

Lux23

I think you are within your rights to raise the rent up 40 euro or so. Maybe you could do a bit of work on the house to ease the guilt a bit.

Plastic Scouser

I'm not sure the issue is whether you are within your rights to raise the rent - of course you are (as long as you give your tenant sufficient written notice of this).

From your pov as the landlady definitely bear in mind how long a property in the area usually stays vacant before you could get another tenant in (if yours decides they can't afford the increase).

You also have to decide how much the current tenant's attitude is worth to you i.e. the risk that if they move out, the new tenant will miss payments or wreck the place etc.

If you do decide to increase the rent maybe do it in stages, obviously giving the tenant plenty of notice.

franksm

Keeping good tenants should be one of your goals; imagine if the current ones took exception to the increase and left, and you had to go through the whole vetting process again, maybe still ending up with messers.

I'd absorb the costs until next year, or until the current tenants leave whichever comes first. If the former, give some friendly notice to them that the rent has to go up.

BoozyBabe

jsb wrote:

What are others in the area charging for similar properties

Last year just after I rented out the property a neighbour told me that her son was renting another one of the houses (about 6 doors down from mine, identical house) for €600 / month.

The rent of that house may even have went up since, I don't know.

Move 3 miles & you're in the town. Rent there for 1 bedroom apartments can be up to €700-800, houses can be anything from €800 to well over €1000

As for the amt of time it could be lying vacant:-
It would be snapped up instantly.
When I originally advertised, the day the paper was published, I had 7 viewings for the following morning, every single person wanted to take the house there & then because of it's location & condition & price.
The rental market is still as strong.
(Every so often I scan the same paper 1 or 2 days after it's been published, phone up some of the numbers & get told the property has already been let.

As for the type of tenant I could be left with if the current one moves out:-
TBH, I haven't been near the house in about 8 months (& only then because I was asked to) Then the property looked to have been kept well, one of my brothers has been there on a few occasions & had no complaints.
I doubt if a better tenant exists, perhaps just as good as my current tenant, but not better & good chance could be alot worse!!

The notice period will soon be approaching so I think it'd be best to arrange an appointment with the tenant to view the property, see if everything's satisfactory & then make my decision on renewing contract (don't think I'll have a problem there) & rental rates

The tenant is a really nice person & I couldn't say a bad word, for that reason I want to leave things as they are as €540 is quite a bit for 1 person to be out of pocket, but the other side of me says it's an investment property, I'm in it to make as much money as I can & now I'm not making as much as I would & as soon as there's another interest rate rise, I'll be making even less
BUT, I am still making a profit as well as owning a property which costs me nothing, so maybe I should be happy just with that.

Lindaloo

If the communication is as good between you as it appears to be, the Tenant will inform you if the rent is too much when you ask for the increase. You're not asking a massive amount, just enough to cover the cost of your own increased amount.

Put the increased rent to them, see how they react and let them either negotiate or tell you straight out they won't be able to handle it. If they can't handle it, leave the rent as is, good Tenants like this are very hard to find.

As a sweetener you could offer them a lease of 2 years at the increased rate, that way you have a Tenant for a further 2 years and they have their set rent which is a good deal for all.

Don't lose a good Tenant over a couple of quid, so many of our Landlords have gotten shot of Tenants in favour of higher rents, as it's been said, they got the higher rents but not immediately so it doesn't really add that much to their profits in the long run.

It's good to see a nice Landlord who has a bit of sense and isn't overcome by greed

WhiteWashMan

personally id leave it for one more year.
after that id look to see if mortgage was still covered, and i would at that point up the rent.

i don know that getting in a tennent that pays on time, and doesnt damage the place is not always easy to find.
plus, all you need is one month with an empty house, and you have alread lost anything you would have gained in a year with a 36 quid a month increase.
can you afford to have your house empty for 2-3 months?

but thats me. if you want more money, then up the rent.

LundiMardi

it's only 30 or 40 euro, you're already making a profit and will continue to do so when your mortgage goes up. I think it's a tad greedy to up the rent in this particular case, fair enough if you wouldn't be making a profit, but you will be regardless.

Green_Martian

I would proabaly not increase the Rent, as i have gathered your Mortgage is still being covered and its just a little less profit you are making........

After all it sounds like this tennant is looking after the property well for you, if you up the rent he/she may decide to leave and you may get some gobsh**t moving in who wont look after the property....

Thats just my opinion

BoozyBabe

Yea, I'd imagine you're right & I'll leave it as is, but question:-

If say mid contract the interests rates DO go up enough so that my mortgage is now not being covered by the rent, provided I give notice, can I up the rent mid contract?

Green_Martian

I would say you would need to check if you can up the rent during the contract..................

But if the rates do go up i personally would not see a problem after all you have said other houses in the area are charging more.........and your rent would still be cheaper.

Plus if the tennant is a good as you say they might understand

ronbyrne2005

are you paying tax on the rent? if your not then be careful as the tenant could contact revenue and you'd be n trouble.is your lease registered with the PRTB??

WhiteWashMan

BoozyBabe wrote:

Yea, I'd imagine you're right & I'll leave it as is, but question:-

If say mid contract the interests rates DO go up enough so that my mortgage is now not being covered by the rent, provided I give notice, can I up the rent mid contract?

no. which is why you renew the contract every year.

Chucky the tree

haha, love the way irish people always complain and whinge about how expensive Ireland is blah blah blah. But when someone comes along asking should they increase their pirce, most of them say "yea do, sure make as much profit as you can"

Hitchhiker's Guide to...

Definitely pass on the interest rate increase. You are not a charity. You rent out the house as a profit-making enterprise. It is as simple as that.

I hate having to pay higher rent, but i realise it is because i am not earning enough at the moment.

You invested your wealth, and have a right to claim what the market will take. Maybe explain the interest rate rise to your tenant though. Good tenants are worth their price in gold.

BoozyBabe

ronbyrne2005 wrote:

are you paying tax on the rent? if your not then be careful as the tenant could contact revenue and you'd be n trouble.is your lease registered with the PRTB??

Yes & Yes!

tba

You really need to keep this tennant, My advice increase it to say 550 Euro if at all.

Its hard to find good tennants, If you increase to price too much he will go some place cheaper, then you will be stuck with an empty property, or even worse a useless shower living there instead.

red dave

Deffinately pass the increase down in the new lease, it's €30 pm extra, €360 a year and there will deffinately be a couple more increases in the interest rates this year which in turn will see even more. I would increase it by €50. It would probably be best to discuss this with the tenant to make them aware of the increase and if they intend to stay and if they don't it gives you time to find a replacement?

BoozyBabe

Jeez, this is SO confusing right now!!!

It's about 50/50 with people telling me to increase & people telling me not to increase!

& the problem is:- I agree with every point made so far!!!

Siogfinsceal

the rent sounds like a bargain to me - 540 for a three bed? id up the rent explain its because your mortgage has increased and im sure they will understand

BoozyBabe

Siogfinsceal wrote:

540 for a three bed?

Yea, 2 double rooms & 1 single room

justsomebloke

report on the news this morning indicated that there is going to be continual interest rates hikes over the next 18 months (damn germans). So if you increase your rent now to roughly 580-590 from what you have said you will still be giving this bloke a bargain as others are renting similar houses at around 600 in your location.

Best bet is to tell him that you are thinking of putting up the rent and see if he is willing to pay the increase if he is isn't only then do you have to decide if you want either him or more money.

justsomebloke

BoozyBabe wrote:

Yea, 2 double rooms & 1 single room

and here is where people start asking "so BB where exactly is this property situated as i am currently looking for somewhere and am willing to spend 650 a month on rent";)

mountainyman

Siogfinsceal wrote:

the rent sounds like a bargain to me - 540 for a three bed?...

It is a real bargain you should probably try and get 650.

MM

Siogfinsceal

no, not interested myself I just think in that case you shoul ddefinately increase the rent as you could easily have three people living there renting a bedroom each at 2-300 euro a month so he is getting a major bargain!

Tobias Greeshman

Hmm, tough call really, I'd mention the increase to the tenant first of all and say that you're not increasing the rent and leaving it be, but may in the year that follows as interest rates are likely to raise.

They might be ok with you raising the rent, but then they might not, you said you're making a nice profit on €540p/m, so €30 from your profit isn't likely to damage you too much now is it. Also the tenant sounds like a homeowner/landlords/landlady's ideal tenant and it could take a bit of time to find a tenant that takes as good care of your home as the current tenant does.

hmmm

If you're increasing the rent because interest rates are going up, are you going to up the rent every 3 months from now on? If the tenant leaves now and the house is unoccupied for even one month you're down the difference. If the rent is considerably below the market rates for whereever it is you are, you have scope to increase the rent. If your property is at market rates, as a tenant I'd pack my bags without hesitation.

It's time to stop thinking about the rent being charged as having anything to do with your mortgage. The tenant is only interested in the market rate, your costs are irrelevent. Put yourself in the tenants shoes and make your decision as to whether or not the increase could be seen as justified - know your bottom line before negotiating i.e. if tenant pushes back and threatens to leave, will you drop the increase? At what point do you say "ok, leave".

Many commentators on this thread appeared to have missed where the property is located and seem to think it's in D6 or somewhere.

BoozyBabe

Point taken hmmm, but, regardless of where the property is, last year the rent for mine was €60 / month less than an identical house 6 doors down.

It has possibly went up since & rent in the general area is a lot higher than mine. So no, my property is not at market rates, it's considerably lower.

The only reason i'm questining this at all is that I'm still making a profit.

If in 3 months I'm not, & 3 months later the interest rate goes up again, & 3 months after that the same thing happens, you can bet I'm going to up the rent.

It's an investment, it's there to make money, not lose it.
I'm not in any way emotionally attached to the tenant & in general, if the tenant can't afford the rent, then tough, move out.

In this situation this is not my stance.
I like the tenant, they keep the place well, they pay €540 soley themselves & always on time.

As a provider of a service, my costs have gone up. In any other situation, when a service providers costs go up, so does the price of the end product & the consumer pays a higher cost for said service.

It's no different here.

I have always told the tenant he was free to share the housewith others to reduce the rent, but he doesn't want to. Again, this is not my problem, so whether or not he can afford it is also not my problem.

but, as you all say:- he's worth his weight in gold as he keeps the place well, so that may be enough for me to keep the rent as it is.

(In saying that, as I've said, it's a long time since I visited the property. It may not be in as good of condition as I'm thinking it is. A visit before new contracts will sort that question out though)

hmmm

BoozyBabe wrote:

As a provider of a service, my costs have gone up. In any other situation, when a service providers costs go up, so does the price of the end product & the consumer pays a higher cost for said service.

It's no different here.

It is different. You're renting a house, not selling pints of milk. As a tenant, I don't care what your costs are, I just care about the market rate. If your renting for below market rate, well and good (although every landlord on boards seems to think they are, which indicates to me that the market rate is lower than they think). If you increase your rent and no other landlord does the same, then it's time as a tenant I looked around at the alternatives. If every landlord raised their rent, it makes no difference to me as a tenant.

It's just supply and demand, not rocket science. Actually it's the elasticity of supply and demand i.e. how willing and able are tenants to move on if their rent increases.

I have always told the tenant he was free to share the housewith others to reduce the rent, but he doesn't want to. Again, this is not my problem, so whether or not he can afford it is also not my problem.

It's not your problem. What is your problem is figuring out whether if you increase the rent the tenant is likely to move on - and how much a good tenant and 100% occupancy is worth to you.

Savman

i'm a tenant myself, always pay on time etc. If my landlord "upped" the rent I'd tell 'em where he can stick his lease. If he wants to scarifice good tenants for €50 a month profit he can go ahead and start advertising.

This is probably gonna turn into a Property owners (Yes) Vs Private Tenants (No) thread

BoozyBabe

No, hopefully not as I don't want that at all.

I only asked the question to see what the general response would be.

I still haven't decided for certain which way I'm going to go as the responses here are about 50/50, all with good reasons.
I'm going to talk to another few people about it.

But there is defo no way that I'll allow it to go as far as to lose this tenant over the few quid,

But I'm also afraid that the interest rate will continue to go up, several times during the next contract period & as WWM said, during the term of the contract I can't change rents, I would really hate then for me to be out of pocket due to my generosity.

If I knew for certain that for the duration of the next contract that I was still only going to be out the €36/month then I wouldn't bother to change the rent (with what's been said here), but somehow I don't think it's going to stay that way.

I'd say in a few months it'll be more like €70-100 less, all profit gone, & as I'm currently paying rent at home myself, if it got to that stage, I'd be safer move into my own property & enjoy the benefits of having your own place, than not having my own place & not making a profit!

tba

Well simply offer him a three or six month contract instead, it will allow you to come back to the issue with a bit more knowledge. If he asks why its a shorter period tell him the truth.

Johnee

It sounds like your tenant is actually entitled to a four year lease under the Residential Tenancies Act 2004. If they've been there six months, they automatically get a four-year lease. The Act also says you can only review the rent once every 12 months and that you have to give 28 days notice in writing of your intention to reset it. The tenant can complain in this time to the PTRB if they think it's not a fair market rent.

Im amazed more people dont know about this legislation. It gives tenants a lot of rights and imposes a lot of obligations on landlords - to be honest, if people had any sense, it should make people on both sides think again. About both the need to buy a house in the current crazy market, and about buying a house to become a landlord.

BoozyBabe

Johnee wrote:

It sounds like your tenant is actually entitled to a four year lease under the Residential Tenancies Act 2004. If they've been there six months, they automatically get a four-year lease. .

True, unless I decide that either me or a member of my immediate family is now going to live there.

In that case I just have to give the months notice & the tenant has to leave.



As for the increase in rent, it will be 12 months since a price was agreed, but yes, it does make you think twice about only putting it up a small bit, incase a few months down the line it won't cover you, & you can't up the rent again.

Plastic Scouser

Johnee wrote:

Residential Tenancies Act 2004......

Im amazed more people dont know about this legislation. It gives tenants a lot of rights and imposes a lot of obligations on landlords - to be honest, if people had any sense, it should make people on both sides think again.

Thanks a million for posting this!! I had never heard of it before but as our landlord is messing us around it'll be a really handy thing for me to read.

Thanks again.

Johnee

No worries - our lecturer in college says she is very surprised by how many people she meets who rent property but have never heard of this. Check it out on www.oireachtas.ie


Glad you know your waya round it BB as it saves you a nasty surprise - although, as Im sure you know, remember if you want to kick the tenant out for a family member, they are entitled to another lease when the family member leaves. Or compensation if you refuse to allow them to do so - so the short term kick-out doesnt work.

Kernel

That tenant is having a laugh. He's making a fool of you Boozy, hammer him with as much of an increase as the market can bear.

Maximise profits. Dog eat dog.

DamoKen

BoozyBabe wrote:

It's an investment, it's there to make money, not lose it.

True if you buy the house outright and have no mortgage, in general though it's the property itself that's the investment, not the profit, which after covering your mortgage would be marginal if any at all. Investors don't buy properties to make money from rent, it's the increase in house prices and selling when the price is right that makes the profit, ask any housing investor and they will tell you they'd be more than happy to have a model tenant that covers the mortgage.

BoozyBabe wrote:

If in 3 months I'm not, & 3 months later the interest rate goes up again, & 3 months after that the same thing happens, you can bet I'm going to up the rent.

This I don't understand, surprised no one has pointed it out either. Why if you are worried about interest rises are you not on a fixed rate? I can only assume you are on a variable mortgage from the above. Would it not be a good idea to check out the current fixed rate with your mortgage provider, it will be somewhat higher than a variable rate true, but after doing this you can then agree a fair rental amount with your tenant without worrying about increases during the year.

Another thing to always consider, especially if a tenant is renting alone, is that it is bound to occur to them eventually that they could be paying their own mortgage rather than yours, rental increases so you can maintain a profit (small as it may be), will only reinforce this.

Plastic Scouser

I think if there's another house in the street renting for 600 a month you should feel ok about raising your rent a bit.

Why not have a chat with your tenant, tell them you're thinking of raising the rent to 600 - then if they say they can't afford it, let yourself be haggled down to 580 or whatever.

I don't think it's worth losing a good tenant over, and risking the house being empty even for just a month, but as a 40 euro increase isn't all that much your tenant might agree to it without any problem anyway.

(Sounds like a great deal for a 3 bed house, even at 600 to me, but then I'm paying D2 prices so what do I know?!)

bullrunner

BoozyBabe wrote:

It's an investment, it's there to make money, not lose it.

I dont see how you would be losing money on this?

tenant pays you rent..you pay your mortgage from this rent (cost you nothing)...overtime you own more+more of the house.

So long as the tenant pays more of your mortgage than is eaten up by interest repayments you are making money (and assuming property values are at least static).

Even if you needed to pay some cash yourself, you are getting more out of it than you are putting into it.

blu_sonic

why note ad on half the increase to the tenents rent and foot half yourself, you stated that your still making a profit after the increase so this way its a soft increase on both you and the tennant

Lump

Well, IMHO you're well within your rights to raise it in line with inflation, which I think is 2.5% in Ireland.... I could, and probably wrong about that, I was sure it was more. Anyway, that would give you an extra €13.50 a month. Seems fair to me.

John

iguana

Plastic Scouser wrote:

(Sounds like a great deal for a 3 bed house, even at 600 to me, but then I'm paying D2 prices so what do I know?!)

Yeah but that's the thing. This house isn't in Dublin and no matter how great a deal it seems to those of us used to Dublin rents
this has no relation whatsoever to the rental value of BB's house which is in the border region. One minute looking for rental
property in the border county of Cavan showed me this http://daft.ie/searchrental.daft?search=Search+%BB&s[cc_id]=c25&s[a_id][0]=&s[mnp]=&s[mxp]=600&s[bd_no]=3&s[pt_id]=2&s[move_in_date]=0&s[lease]=&s[furn]=0&s[search_type]=area&limit=10&search_type=rental&id=383439
three beds and baths for €550pm. This might also have no bearing on the rental value of BB's property. But it is a reminder
that just because it seems like a good deal to those of us who have forked out €900ish on a 1bed apt, that Dublin and most of the
rest of the country can't be compared.

To BoozyBabe, as many others have said the thing you must consider is not your rising costs but the local rental market and the
possibility of your tenant deciding to leave if you raise the rent. You should also explore the possibility of a fixed-rate mortgage.