There’s been a large amount of talk lately about rents staying at a record high. What performs this mean for landlords with lengthy-standing tenants? Would they place the rent as much as reflect the rise in the marketplace rent? If that’s the case, is that this wise?
To begin with it’s important to determine if the Landlord has any right to place in the rent. Rent increases can be created in four ways:
1. By utilizing a rent review clause within the lease. Such clauses, which offer for overview of the rent at certain fixed points through the term, are typical in commercial leases, but relatively rare in residential leases.
2. Using a new tenancy agreement incorporating the elevated rent. A brand new tenancy are only able to be set up when the original tenancy agreement has expired (unless of course the tenant concurs for an earlier variation – see 4 below).
3. By serving a proper notice of increase. Again, this only works when the original fixed term contract is finished and also the tenant has ongoing in occupation. In this situation, anything turns into a statutory periodic tenancy underneath the same terms because the original tenancy, when you are restored every time the rent arrives (be that monthly or weekly). You should make use of the correct type of rent increase spot the notices can be bought from legal stationers.
4. Anytime, by agreement using the tenant. The lease is really a contract between landlord and tenant and could be varied by agreement anytime. Presuming the tenant concurs, make certain the alternation in rent and then any other variations are fully documented on paper. Alternatively the owner can ask the tenant to sign a completely new lease using the new rent incorporated.
But is really a rent increase advisable? Well, if you possess the tenants from hell then setting up the rent might be one method to compensate a stressed landlord for those that hassle. Hopefully, they might go ahead and take hint and then leave.
More often than not that won’t function as the situation and that i claim that any Landlords contemplating a rent increase think lengthy and difficult prior to doing so. In 15 years’ experience like a landlord, I’ve discovered that maintaining a great working relationship with my tenants significantly outweighs the advantage of some extra rent every month. After I find tenants I trust, who’re searching following the property well, I’m very unwilling to do anything whatsoever that might undermine that trust. Growing the rent causes bitterness. Along with a exacerbated tenant is really a bad tenant.
Obviously the rent increase may backfire and finish up costing a landlord more over time. A tenant who’s requested to pay for more income might wish to demand something in exchange. That dripping gutter they’ve to date overlooked may all of a sudden become a problem and also the extra rent could soon be utilized in repairs.
Alternatively, the tenants should leave instead of accept the rent increase. A landlord then has all the irritation of finding new tenants, as well as the price of any resulting void period.
Landlords should keep in mind that the things they see as an origin of earnings, the tenants see like a home. Trust is an extremely valuable asset when letting property throw away it at the peril.