Should I increase the rent?

mauraf

Hi

I currently have an apartment rented in the Dublin area...same tenants have been there for coming up to 2 years at this stage.
They seem to be minding the place and we have no major concerns re them not looking after the place.

We currently charge them 850e a month, for a large 2 bed apartment. Rents (according to daft.ie) are being advertised at 1200e per month for similar size apartments in the same complex.

There has been no rent increase since they moved in, and as mentioned, they appear to be looking after the place and dont cause us hassle - but any extra money that they can throw our direction is badly needed! There is still a nice mortgage on the property that we are not covering from the rental income.

Anyone give advice on what would be a 'fair' rent increase to ask them for? They, I am sure are aware they are getting the apartment for less than the market average - but I dont want to p*** them off either and want to be fair.

925 too much? I would love to ask for more but.....

Thanks

Maura

TimeToShine

You are entitled to raise it to whatever the current market price is. I highly doubt you'll pee them off, they almost definitely realize they're getting a bargain and probably see a rent haul as long overdue.

I think €1000 would be fair compromise considering that similar apartments in the area are going for €1200. It's a landlord's market in Dublin right now as your tenants probably realize so they'd be very foolish to leave.

Note you can only increase the rent once a year and once the current lease is up.

Little Miss Cutie

mauraf wrote: »

925 too much? I would love to ask for more but.....

I don't see any real harm in asking and being willing to negotiate with them.

At worst they say no and you are left with the option to give them notice or stick with what you have.

We have been in the same apt for 5 years at a low rent and expected the rent to increase but the landlord never asked. I think her logic was if she increased it and we left there might be a period of the apt being empty so this would cost a lot more than she would gain by the increase - hope I explained that ok.

handlemaster

Yes increase it. The rent is your income. Just explain to them the current market rent is 1200... see what they say..... they might just say thats ok we understand etc... or you might negotiate down from this. But let them know you know what it should be.

Potatoeman

Always do it in stages if you can, every year is better than a large jump.
The asking price may not be what its rented for too.

Tombo2001

I rented out a two bedroom house recently for 1200 without any difficulty.

If I was you, being honest, I'd ask for at least 1050. They have had a brilliant deal from you for the past twelve months. If they shop around at all they will know they are still getting a good deal at 1050.

I doubt if tenants would be shy in letting you know that rents had fallen, so I dont see why the same doesnt work in reverse.

kingtut

If my landlord/landlady put the rent up (regardless of the reason) then I would more than likely look for somewhere else immediately because when I moved in it was because I was satisfied with the rental price.

That's just me though ... but as you said yourself they are good tenants, look after the place well and don't cause any hassle. I would look at the worst case scenario (rent goes up, tenants move out and the new tenants treat the place like sh1t) ... if you are willing to take the risk then go ahead and up the rent and see what happens

Or .... could you possibly say to them "I am considering increasing the rent for X reason" and guage their reaction? i.e. do they appear pissed off / happy enough

TimeToShine

kingtut wrote: »

If my landlord/landlady put the rent up (regardless of the reason) then I would more than likely look for somewhere else immediately because when I moved in it was because I was satisfied with the rental price.

Try that in Dublin and you'll be homeless for a while to come.

kingtut

TimeToShine wrote: »

Try that in Dublin and you'll be homeless for a while to come.

That's not true at all.

I live and work in Dublin (apart from weekends) and there are plenty of places to live (I spent long enough searching / shopping around to know).

To clarify on my original post what I meant really is that I would start searching immediately to see what else I could find (because ultimately the rent goes up but my wages don't my 'spending' money is reduced).
If I was unable to find somewhere else for the same price (or just didn't like anywhere else) then I would consider staying at my existing place (albeit at a higher rental rate) although in my case it would only be as a last resort.

Hopefully that makes sense anyway

Tombo2001

kingtut wrote: »

I'm in Dublin and there are plenty of places to live (I spent long enough searching / shopping around).

To clarify on my original post what I meant really is that I would start searching immediately to see what else I could find (because ultimately the rent goes up but my wages don't my 'spending' money is reduced).
If I was unable to find somewhere else for the same price (or just didn't like anywhere else) then I would consider staying at my existing place (albeit at a higher rental rate) although in my case it would only be as a last resort.

Hopefully that makes sense anyway

Yes naturally you would. Everyone is interested in value for money. And in this case, when you started searching, you would quickly realise that you are on a winner with the place you have even at the higher rent level.

The only part I dont understand is "only as a last resort", as if its a hardship to pay a fair price for something.

Greenmachine

Asking price does not necessarily equate to market rent. I have seen some ludicrious overvaluations. Take this for example http://www.daft.ie/lettings/ormond-quay-dublin-1-dublin/1464271/ initially listed at €3200 p/m.

An extreme case for sure, and not typical, but does indicate that some people have no idea. It will all come down to how happy your tenants are with the place they are in. The place I am in the rent is tolerable and the area is nice. On the downside the place is really small and not as central as I would like. If my landlord asked for a big increase, I would not be long in looking elsewhere.

kingtut

Tombo2001 wrote: »

Yes naturally you would. Everyone is interested in value for money. And in this case, when you started searching, you would quickly realise that you are on a winner with the place you have even at the higher rent level.

but until I shop around I can't say that my current place is a 'winner'. If after shopping around (due to a potential rent increase) I find that it's still a bargain then I'd admit defeat so to speak and stay put.

Tombo2001 wrote: »

The only part I dont understand is "only as a last resort", as if its a hardship to pay a fair price for something.

It's not a hardship to pay a fair price for something, the hardship is paying X price for a few years and then having to pay X+ a few hundred more euro when as a tenant you get nothing for it.

kingtut

Greenmachine wrote: »

Asking price does not necessarily equate to market rent. I have seen some ludicrious overvaluations. Take this for example http://www.daft.ie/lettings/ormond-quay-dublin-1-dublin/1464271/ initially listed at €3200 p/m.

Bloody hell that is some drop! :eek:

Grolschevik

Greenmachine wrote: »

Asking price does not necessarily equate to market rent. I have seen some ludicrious overvaluations. Take this for example http://www.daft.ie/lettings/ormond-quay-dublin-1-dublin/1464271/ initially listed at €3200 p/m.

That has to have been an initial typo! Corrected within two days...

The Cool

I'm in a situation similar to your tenants OP, I pay the same rent as your tenants do and current local average for what we have is about 1100-1200 as well. Our LL would be more than entitled to up the rent as well; like you, she hasn't as she seems to be happy that we look after her house and mean that it's very low maintenance for her. We keep an eye on local rent prices so if she wanted to up the rent, as much as we'd be disappointed, we wouldn't move out either as there's really nowhere cheaper to move to, and we might as well save ourselves the cost of moving house.

Would 1000 a month cover the mortgage? If you were to charge that, you're still getting more but they'll also appreciate that you've met them halfway, and that it's still cheaper than other properties.

mauraf

Thanks for all the feedback everyone!

I think I will discuss with them the fact that I will be looking to up the rent in a couple of months - think 1050 - bargaining down to maybe 1000....

Just looked again on Daft - and the rentals for similar properties in the same area are actually between 1200 - 1300....so they will still be getting a 'bargain' in todays market.

They work locally to where they live - so that would I imagine mean they will be willing to stay even with the moderate increase...

HerrKuehn

When rents were dropping I managed to get my landlord down from 1250 to 900 in one go. I could have walked into another apartment in the complex for this price, so I used it as a bargaining chip. I dont live there anymore but I am sure he would have repaid the favour when rents increased.

Greenmachine

Grolschevik wrote: »

That has to have been an initial typo! Corrected within two days...

Still they are example where has changed on a property. Up and down, jumping all over the place, by hundreds of euro at a time. I would be concerned at the landlords mental stability if they had adjusted their prices too often and bidirectional.

Magicmatilda

Tell them that the market rate is 1200-1300 quoting your source (daft or whatever).

Then ask for 1,200. If they bargin don't go below 1,050. That way you get what you want and they get to feel they are getting a deal. In a year if the market is the same you can raise it again. But if I were you while the market was high I would be trying to turn a profit in case it drops again. That said I wouldn't be making people homeless either. Flexibility on both sides. Give them a few months notice aswell, I think 2 is reasonable.

leave the fact that your mortgage is not covered out of the situation as that is not their issue really.

Renting is a business and should be treated as such. I am a tenant and much prefer dealing with landlords who see it as a business transaction and understand the laws etc..that landlords who don't.

joeguevara

I have tenants in a 1 bed apt in Capel street. First year rent was 850. Second year they asked for a reduction. Grand 825. Third year average rents are 1050. Settled on 950 per month. Everyone happy. Well I still have to make up about 500 on the mortgage. Someone said that you would have to wait a year to make up a months lost rent. So moral is negotiate an increase but factor in the cost if they do decide to move out.

athtrasna

Magicmatilda wrote: »

Tell them that the market rate is 1200-1300 quoting your source (daft or whatever).

Then ask for 1,200. If they bargin don't go below 1,050. That way you get what you want and they get to feel they are getting a deal. In a year if the market is the same you can raise it again. But if I were you while the market was high I would be trying to turn a profit in case it drops again. That said I wouldn't be making people homeless either. Flexibility on both sides. Give them a few months notice aswell, I think 2 is reasonable.

leave the fact that your mortgage is not covered out of the situation as that is not their issue really.

Renting is a business and should be treated as such. I am a tenant and much prefer dealing with landlords who see it as a business transaction and understand the laws etc..that landlords who don't.

That would be an unreasonable hike in one move. The OP's plan to seek 1050 with the lowest acceptable rate being 1000 is a way to show the tenants that their behaviour and respect for the property is appreciated but at the same time the OP is running a business. It's a mutually beneficial rate. If they need to increase again next year so be it.

Michael D Not Higgins

athtrasna wrote: »

That would be an unreasonable hike in one move. The OP's plan to seek 1050 with the lowest acceptable rate being 1000 is a way to show the tenants that their behaviour and respect for the property is appreciated but at the same time the OP is running a business. It's a mutually beneficial rate. If they need to increase again next year so be it.

Rents came down that quickly a few years ago. How is it only called unreasonable in one direction? What's unreasonable is having tenants paying 30% below market rate and only expecting them to pay 15% below market rate.

There's a compromise here between the two positions. Say the market rate is 1200 but since they're good tenants, you're willing to compromise on the increase. This way you're empowering them in the process so it doesn't feel like they're getting strongarmed. It's likely they'll split the difference and come back with around 1000/month and you can negotiate on the final amount. Everyone's happy.

lima

In fairness it is not 'Market Rate'

It is 'Skewed Market Rate' due to lack of Repossessions, Government non-intervention, Nama withholding stock and selling in bulk to US companies, all of which is contributing to a critical lack of rental properties in Dublin.

Instead of saying 'trying to get market rate' it's really 'taking advantage of the skewed market rate'.

Michael D Not Higgins

lima wrote: »

In fairness it is not 'Market Rate'

It is 'Skewed Market Rate' due to lack of Repossessions, Government non-intervention, Nama withholding stock and selling in bulk to US companies, all of which is contributing to a critical lack of rental properties in Dublin.

Instead of saying 'trying to get market rate' it's really 'taking advantage of the skewed market rate'.

So were renters taking advantage of skewed market rate when the rents were falling?

lima

Michael D Not Higgins wrote: »

So were renters taking advantage of skewed market rate when the rents were falling?

Yes they were. Sounds like you knew the answer to that already, strange that you had to ask me!

Bepolite

lima wrote: »

In fairness it is not 'Market Rate'

It is 'Skewed Market Rate' due to lack of Repossessions, Government non-intervention, Nama withholding stock and selling in bulk to US companies, all of which is contributing to a critical lack of rental properties in Dublin.

Instead of saying 'trying to get market rate' it's really 'taking advantage of the skewed market rate'.

Repossessions would only push up rents. The government can't intervene as it's an interference with constitutionally protected property rights. NAMA I don't know enough about to comment on, but any organisation with large amounts on unoccupied property is never a good thing.

lima

Bepolite wrote: »

Repossessions would only push up rents. The government can't intervene as it's an interference with constitutionally protected property rights. NAMA I don't know enough about to comment on, but any organisation with large amounts on unoccupied property is never a good thing.

Repossessions would help because people who rent because they refuse to overpay for property and who are renting will be able to buy. As for the people who's properties are repossessed, they will likely have to move out of the city to somewhere they can afford to rent.

Can you provide details of the constitutional right to not pay your mortgage and remain in your home (in other words, stealing)?

Michael D Not Higgins

lima wrote: »

Can you provide details of the constitutional right to not pay your mortgage and remain in your home (in other words, stealing)?

How do PPR mortgages affect rental market rates? Where do all the people who had their homes repossessed live and how does that affect the market rate? How is it stealing if they still owe the debt?

Bepolite

lima wrote: »

Can you provide details of the constitutional right to not pay your mortgage and remain in your home (in other words, stealing)?

No because there isn't one and I didn't say there was. I assumed you meant non-governmental intervention on rents.

You may also want to familiarise yourself with the legal definitions of stealing. The answer to the current housing problems is not to make people homeless. There are a myriad of other solutions.

bennyineire

How about writing them a letter or giving them a call requesting a meeting with them in regards to a rent review. You could explain to them that you just want an informal chat about renegotiating the rent.
This way you are giving them fair warning to expect a conversation about the rent so they can then have a think about it. You could start the conversation by asking them what they think would be a fair rent and start from there.

The_Morrigan

Folks, can I just remind you that the topic at hand is a specific 'should I increase the rent?', this is not about repossessions, theft or homelessness.

Please stay on topic.

Thanks

lima

Michael D Not Higgins wrote: »

How do PPR mortgages affect rental market rates? Where do all the people who had their homes repossessed live and how does that affect the market rate? How is it stealing if they still owe the debt?

There are an enormous amount of people in 1 and 2br apartments who are refusing to pay their mortgage. They are stealing from the banks because they are withholding payments to them and that costs the banks money.

Once these people are removed, then their old places can be put on the rental market. Sure, those people will need to go rent somewhere, but at least it will get the market moving. Many of those people will rent further away or go live with parents as they will be committed to paying debts so will likely not be able to afford rent.

To stay on topic, I would suggest being very careful not to increase the rent to the current skewed market rate.

Bepolite

lima wrote: »

To stay on topic, I would suggest being very careful not to increase the rent to the current skewed market rate.

Why?

OP You've had some good suggestions here. Sit down and discuss it with your tenants. At the end of the day though this is a business and you should charge around the market rate minus an amount you feel its worth to keep good tenants.

If in the future rents go down hopefully the tenants will feel you're approachable and do the same thing with you and you'll be in a position to reduce the rent.

lima

Bepolite wrote: »

Why?

OP You've had some good suggestions here. Sit down and discuss it with your tenants. At the end of the day though this is a business and you should charge around the market rate minus an amount you feel its worth to keep good tenants.

If in the future rents go down hopefully the tenants will feel you're approachable and do the same thing with you and you'll be in a position to reduce the rent.

Because you will cause resentment in your customers. The current skewed market is extremely volatile and this may expose the landlord as a 'chancer' and as such if/when the rental market reaches normal market levels (or worse, lower) then they will try chancing him/her.

Personally, I rent (I can well afford to buy but I choose not to commit myself to the Irish economy at these extreme property price levels for personal reasons) and if my landlord put the price up by over 1k per year, I would move out of spite, even if I had to pay more rent. The world doesn't like chancers so I'm probably not the only one who'd do this.

mauraf

OP here - Getting some really great feedback here,All - thanks alot!

I dont want to be unfair to the tenants to be honest - in spite of the current rental rates being 1200-1300, there is no way my conscience would allow me to attempt to hike to that level from 850....they are good tenants, mind the place - and I would like to keep them there..

I would be very happy to settle for 1000 per month - still a good chunk under the market rate - still wouldnt cover my mortgage on the place - but thats my problem - not theirs.

I dont think they will be overly surprised I approach them re a rent increase - but I still plan on giving them a good deal - if its a major issue for them to support the hike - I may just leave be....dont want anyone homeless on my conscience!

Thanks again All - opened up alot of valid and interesting points to give me ideas!
Maura

Michael D Not Higgins

lima wrote: »

Because you will cause resentment in your customers. The current skewed market is extremely volatile and this may expose the landlord as a 'chancer' and as such if/when the rental market reaches normal market levels (or worse, lower) then they will try chancing him/her.

Personally, I rent (I can well afford to buy but I choose not to commit myself to the Irish economy at these extreme property price levels for personal reasons) and if my landlord put the price up by over 1k per year, I would move out of spite, even if I had to pay more rent. The world doesn't like chancers so I'm probably not the only one who'd do this.

The renters are more likely to get the full decrease to market rate, especially if they plead their case to the PRTB. The difference being they can walk to another place and get the market rate whereas in that situation it may be harder to fill the property. In the current market, the property could be empty for a few weeks (for minor repairs, showing the property, etc.) so let's say a month.

1200/month for 11 months amounts to 13.2k.
At 1000/month for 12 months it's 12k.
Clearly the landlord is better off pushing for higher than 1000/month, in fact 1100 is the break even point. This keeps the tenants in place and nets the same as getting new tenants for 1200/month (ignoring costs for reletting).

When you analyse it as a business decision, there's no hard feelings, no sob stories. The fact is that there are people willing to pay the so-called skewed market rate, so that's what the decision should be based off. Now, this landlord wants to be fair to their tenants, so a discount on market rate (or even their break even rate) would be around the 1000-1050 mark.

Also, 1k a year is just over 80 a month. Are you saying if your rent went from 1000/month to 1100/month you'd spite them and move to a market rate rental at 1200/month? That clearly makes no sense for anyone involved.

OP, try to get 1050/month, you make 2.4k more a year, they pay 1.8k less than market rate and everyone's happy.

Tar.Aldarion

mauraf wrote: »

OP here - Getting some really great feedback here,All - thanks alot!

I dont want to be unfair to the tenants to be honest - in spite of the current rental rates being 1200-1300, there is no way my conscience would allow me to attempt to hike to that level from 850....they are good tenants, mind the place - and I would like to keep them there..

I would be very happy to settle for 1000 per month - still a good chunk under the market rate - still wouldnt cover my mortgage on the place - but thats my problem - not theirs.

I dont think they will be overly surprised I approach them re a rent increase - but I still plan on giving them a good deal - if its a major issue for them to support the hike - I may just leave be....dont want anyone homeless on my conscience!

Thanks again All - opened up alot of valid and interesting points to give me ideas!
Maura

That is a good view to take, good luck. You can't just look at market rate if you have good tenants (and believe me there are a lot of bad tenants that just wreck a place and leave). A hike to market rent is a way to get people to just flat out leave, incremental is the way to go. Luckily my landlord thinks the same.

The Spider

We had good tenants and left them to it, but the rent was more than you have at the moment. When they moved out we pushed up the rent quite a bit, had no problem getting a tenant.

Bit of advice if they do decide to move out, and how to avoid a period with no tenants, stay onside with them, sounds like you get on and arrange viewing before they move, our tenants had no problem with this.

Arrange to have a painter in the weekend before the new tenants move in, works wonders.

Do this and it'll be seamless.

kingtut

The Spider wrote: »

We had good tenants and left them to it, but the rent was more than you have at the moment. When they moved out we pushed up the rent quite a bit, had no problem getting a tenant.

Good observation, I'd imagine it's easier to get a new tenant to pay whatever you like than trying to get an existing tenant to pay more.

TimeToShine

The Spider wrote: »

We had good tenants and left them to it, but the rent was more than you have at the moment. When they moved out we pushed up the rent quite a bit, had no problem getting a tenant.

Bit of advice if they do decide to move out, and how to avoid a period with no tenants, stay onside with them, sounds like you get on and arrange viewing before they move, our tenants had no problem with this.

Arrange to have a painter in the weekend before the new tenants move in, works wonders.

Do this and it'll be seamless.

All good advice but to be honest I'd be absolutely shocked if the current tenants left.

kingtut

TimeToShine wrote: »

All good advice but to be honest I'd be absolutely shocked if the current tenants left.

Probably depends on a lot of factors, are they close to their current work places, do they have cars, can they get a similar property in the area for their current price etc ...

If they were to move but end up spending what they might save on rent on petrol / transport costs etc then naturally it makes sense to stay put ... at the end of the day I don't think anyone wants less money in their back pocket

wd42

OP

We are tenants in our current house. Landlord tried to increase rent back in March by €200. We didn't agree to the increase or any increase. Organized a meeting with the bank within 2 days of the text from the LL about a new mortgage and receive the keys to our new house tomorrow :-)

I'll be ringing LL tomorrow to give notice.

Please note that we also have an apartment that we rent out to a young couple and not once did I consider raising the rent as the original rent was fair and they look after the place.

tbh you seem to be fair enough and not just looking for a quick buck but the current "market" is not realistic and upping the rent might come back and bite you on the ....

zef

A house facing mine was put up for rent in February for €1350. In April tenants moved I for 3 weeks and didn't leave it as they found it, they had to get a skip when they left. 3 bed semi d, D 15.
So in May they put it back up at €1300. It was only taken off daft this week. So they lost up to 5 months rent and refurb costs.
You sound like a decent and fair ll and your tenants sound the same. I think peace of mind is worth more than 1 or 2k per year.

Michael D Not Higgins

wd42 wrote: »

OP

We are tenants in our current house. Landlord tried to increase rent back in March by €200. We didn't agree to the increase or any increase. Organized a meeting with the bank within 2 days of the text from the LL about a new mortgage and receive the keys to our new house tomorrow :-)

Did you go through the PRTB process?

wd42

Michael D Not Higgins wrote: »

Did you go through the PRTB process?

Why would I go through a PRTB process?? Because I refused to pay a rent increase?? Under no circumstances would I have paid any more. I wasn't going to sit on the property either and went straight to the bank to organize a mortgage and LL can now charge the next tenants whatever he wants.

drumswan

wd42 wrote: »

I find the constant talk of renting as a "business" very disheartening, it's a very cold way of looking at someones home. With all the crap that has gone on in this country over the last few years it's sickening to see vultures trying to grab more money just for the sake of it.

Are you serious? Of course its a business, what else would it be?

OP, charge the market rent.

Michael D Not Higgins

wd42 wrote: »

Why would I go through a PRTB process?? Because I refused to pay a rent increase?? Under no circumstances would I have paid any more. I wasn't going to sit on the property either and went straight to the bank to organize a mortgage and LL can now charge the next tenants whatever he wants.

Because had the landlord known the law, the tenant can only dispute the increase through the PRTB. Had you just said no and kept paying the old rate (as it seems you have), they are within their rights to issue you notice of arrears for unpaid rent (14 days), then a notice of termination (28 days).

In other words you could have been out on the street within a couple of months of not paying the increase, long before your mortgage came through on the house.

shalalala

My landlord could get a lot more for where I am but his thinking is that he likes the tenants and he wants to keep us. If he raised the rent even a little I would be forced to find elsewhere. OP I would discuss it with them.

The problem is, they could have had pay decreases while the rents have gone up. Although this isn't specifically your problem, it could mean losing good tenants

ted1

OP , charge the market rate

CIARAN_BOYLE

In my opinion a settled tennant that you trust is probably worth somewhere between a month and a month and a half a year in rent.

So if market rent is 1200 a month (14,400) a year then you should be looking at 1800 a year less or 1050 a month

wd42

Michael D Not Higgins wrote: »

Because had the landlord known the law, the tenant can only dispute the increase through the PRTB. Had you just said no and kept paying the old rate (as it seems you have), they are within their rights to issue you notice of arrears for unpaid rent (14 days), then a notice of termination (28 days).

In other words you could have been out on the street within a couple of months of not paying the increase, long before your mortgage came through on the house.

Are you for real?? Who exactly would have come to the house and put us out on the "street", the Guards?? You're having a laugh!

A family with 3 children with not one missed rent payment put out on the street! If I'd wanted I could have dragged it on for years through the PRTB, local T.D.'s the courts etc..

Unfortunately not enough people renting will just say NO to a rent increase