Rents in London are nudging upwards again, at least according to the network of residential letting agents Move with Us, and my own agent has already written to me to advise that I could increase my tenants’ rent when their lease expires in September. I’ll do no such thing.
I’m not going to ask my tenants for more rent because I don’t want to do anything that would make them think about moving out. I just can’t face the hassle of finding new tenants in three months’ time, and I reckon that even if I did find new tenants at a slightly higher rent I’d be financially worse off than if I kept the ones I’ve already got.
If my tenants renew their lease for another year, I won’t have to pay a letting agent to find me new ones, so I’ll pocket an extra 10 percent of the rent.
Of course the agent is trying to squeeze more money out of me, even if the tenant says on. It has written to suggested that it draws up a new tenancy agreement – that will be free for me, it says, but no doubt it will charge the tenants a hefty fee - and it said that if they stay on I’ll have to pay a renewal fee of 10 per cent. This is ridiculous. Why should I pay the agent such a huge amount for doing nothing?
If they’d bothered to dig out the terms of business I signed when I engaged them, they would have spotted that I scrubbed out the cheeky renewal clause. Instead, I agreed with them a 10 per cent fee for the first year only, which I think is a fair deal.
There are lots of other costs I can save if the tenant stays. I won’t have to pay for check-in or check-out reports, updating the inventory or putting right any wear and tear.
And I won’t have a void, which could save me several hundred pounds. I’m pretty sure the property would let fairly quickly, but I’d need at least two to three days between tenancies to tart it up a bit, and every day a property is empty is a day’s lost rent.
But best of all, I’ll save hours of tedium sorting out all the paperwork that comes with a new tenancy and settling the new tenants into the property, which always takes a while.
Also, it wouldn’t be fair to increase the rent when my costs haven’t gone up and they aren’t likely to rise in the next 12 months. My mortgage interest rate has stayed the same and so have my other costs such as the landlords’ insurance premium and the service charge. Asking for an increase in such circumstances would be greedy.
I’m also conscious that there are signs some of the heat has gone out of the rental market. The rise in asking prices noted by Move with Us was just 0.26 per cent in the second half of April, which was the first increase in six months.
The same report said that the residential sales market was improving as mortgages are more readily available than they were this time last year, and there is likely to be a swing back to home ownership as more people take advantage of the government’s new Help to Buy scheme.
I’m no economist but even I can work out that this could mean fewer renters within a few months. Time to make nice with my tenants, I think, and maybe even surprise them with a small rent reduction.
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