Many landlords will be thinking of putting their prices up over the next few weeks as New Year, along with the start of the new tax year, is a popular time for increasing rental charges. Increased input costs have pushed landlords this year and inflation pressures are going to keep yields in check for some time to come. How should you go about raising rents and is now the right time to raise?
Christmas and New Year
Over the coming period we’re all likely to eat too much, drink too much and spend too much. Your tenants are just the same and their credit card bills could be very high come January. Professional tenants will probably find their salary increases in line with your rent increase and so January won’t be too much of a problem, but for tenants with large families it might not be the best timing for a rise in rent.
Low Rent is better than No Rent
You should not increase rent if you think it will threaten your tenants ability to keep paying and that they’re likely to leave because of a rent increase. The sake of an extra three or four percent on your rent isn’t worth risking a void period and having to worry about unoccupied property and unoccupied property insurance. If your tenants are in arrears, it’s probably a good indication that a rise in rent might hit them quite hard.
With a new level of rent you will need to issue a new contract, unless your old one provides for it. Consider writing into any new contracts a clause which reserves your right to increase rent below a certain amount year on year. If there’s nothing in your existing contract, you may have a hard time convincing tenants to pay up.
New Year is one of those times that can put a lot of financial pressures on tenants. Don’t push too hard for something you’re not going to get, just be wary of losing out on rent altogether. However, if your costs have been going up, you have a right to push prices up – just make sure it’s fair and reasonable.