No matter how reliable and responsible your tenants, it’s likely that – at some point – you will want to (or need to) increase the rent. This is a conversation which needs to be managed carefully; if you get it wrong, the relationship with your tenant may never recover.
Here are our tips on how to manage the topic well:
1. Know your market.
Keep track of how similar rental properties are priced nearby, and be honest with yourself about what your property is worth. When tenants learn of a rent increase, their likely response is to go online to see what they can get for the same price, so be aware of seductive (and potentially underpriced) properties which might lure your tenants away.
2. Know your tenant.
Get to know what your tenants care about and build that knowledge into your pricing. You may think that a sunny garden places your property at the top of the pile, but they may place greater value on the short walk to school or handy parking. Whatever you do, make sure that a price increase seems fair and that it can be internally justified by both you and, more importantly, the people that will have to cover it.
3. Timing is everything.
Every property needs an upgrade eventually, be it new windows, kitchens or bathrooms. Ultimately, these changes are good for everyone but, in the short term, they bring both cost to you and inconvenience to your tenants.
One strategy is to explain to your tenant that you need to increase their rent but to carry out a specific improvement in return. See what’s happened? You’ve turned the situation from an unwelcome, one-sided demand into an agreement between two people who both stand to benefit.
If you can, why not say that the rent increase won’t come into effect until any work is completed – another perceived ‘win’ for your tenant?
4. Be logical.
Most tenants understand that property owners are operating as a business and that prices constantly change. It may, therefore, be useful to refer to the wider market and other properties in the area to demonstrate that your proposed increase isn’t simply an exercise in greed.
If you present rent increases as a necessary adjustment to your agreement rather than an arbitrary and unexplained change, you’ll be much more likely to keep your tenant onside and in place.
If you’re generally worried about keeping or replacing a tenant, you may also find these blogs useful: