Are most landlords under charging?

Are most landlords under charging?

11:55 AM, 6th November 2015, About 6 years ago 85

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Are most landlords are under charging

There is significant anecdotal evidence that most landlords outside London do not increase rents until there is a change of tenancy.

Property118 would like to investigate this.

With upward pressure on costs of compliance as well as the new tax changes it is likely that landlords will abandon this practice , but we would like to hear from landlords who have had the same tenants in a property for three or more years and not increased rents.

Please post your comments below.

This article will be shared in Google News and on Social Media in the hope that Press and other National and Media will pick up on the realities of renting.

Hopefully, we will gather overwhelming evidence that landlords have NOT generally increased rents during a tenancy but feel they will be forced to do so in future.



Comments

by Ann Diamond

12:58 PM, 9th November 2015, About 6 years ago

I have been renting out two or three properties for the past 30 years.
Having done the management myself and generally having good tenants I have kept the rents well below the local rate here in the south east.
I took into account that having owned my properties for a long time I would be in receipt of the full capital value if I sold.
This has now changed so that in fact I will be charged 28% on most of any gain even though I am not a higher rate taxpayer. Luckily I do not have mortgages on the properties.
I have resisted the urge to raise rents for long term tenants especially where they were looking after, and even improving, the properties and up until the last couple of year this has worked well both for me and them.
With recent legislation I can no longer offer tenants a property with rather basic facilities at a rent that they can afford. Most of my tenants have been in receipt of some sort of housing benefit.
So, I put the rents up, they can't pay and I have the battle of evicting them.
If there was social housing for them then it would not be a problem and the private rental market would find its own level.
When my properties next become empty I shall have to consider selling or using an agent and only taking employed tenants.

by money manager

13:20 PM, 9th November 2015, About 6 years ago

I can understand the purpose of this post and the goodwill engendered by maintaining rent levels for protracted periods.

It is though, at that point, that I find it difficul to understand that a "business" can rent out it's assets for 30% below market? That applies even if their is no borrowing to service as the return on equity (ROE) and return on capital employed (ROCE) both tank.

My business tends to have lets of aound a year so mid-tenancy uplifts are much rarer but we are buying apartments where the tenants have had the deal described by others but the landlord has ultimately found it unsustainable however good the tenant.

Not being cynical but isn't subvalue letting effectively a value transfer from the landlord to the tenant which further undermines the fair pricing mechanism for other LLs? What other business could sustain it?

by Seething Landlord

13:21 PM, 9th November 2015, About 6 years ago

We have 6 properties in North Somerset and have never increased rents during a tenancy, including 2 that have been running for 7 years and 5 years respectively. The rent on one of these is currently 10 to 15% below the market rate and we will reluctantly be starting to increase it in direct response to Clause 24, which has highlighted the need to maximise income.

Another reason is that if and when rent caps are introduced the current rent is likely to be the base figure used to calculate allowable increases so it will be important to start with rents at the correct level, particularly if the cap continues to apply when there is a change of tenant, which is the point at which we have previously aligned our rents with the local market.

by Mark Alexander

13:29 PM, 9th November 2015, About 6 years ago

Reply to the comment left by "money manager" at "09/11/2015 - 13:20":

I appreciate the points you are making but what I wanted to illustrate, by inviting comments, is that landlords tend not to increase rents mid tenancy for long term tenants. Accordingly, rental values and rent rises quoted by media have generally only applied to properties at the point of re-letting - UNTIL NOW.

Effectively, clause 24 of the Finance Bill has awoken a sleeping giant. Across the UK landlords are likely to increase rents by billions as a result of this clause, whereas they probably wouldn't previously have done so.

The comments left to date are testament to this.

In around 30 seconds of the 2015 Budget the Chancellor has added billions of cost to tenants in terms of tax levies ion landlords which will inevitably be passed on. The reduction in supply, as landlords begin to sell to owner occupiers, will make quality rental property even more scarce and this will also have an upward pressure on rents unless there is a downward pressure created by an increase in alternative supply.

It could be argued that landlords should have increased rents annually but the reality is that until now, generally they don't. This is going to change.
.

by D Kempson-Gray

14:07 PM, 9th November 2015, About 6 years ago

I haven't raised my tenant's rent for the last 3 years, although I know that it is now about £150 pm at least below market norm for my area, on the basis that he is a good tenant and I appreciate the way he respects the property. I have notified my agent that on the renewal of his AST I will be asking for £75pm rent rise (about 6%). The costs of meeting recent/new legislation is behind this decision.

by Luke P

14:46 PM, 9th November 2015, About 6 years ago

350+ properties in Lincolnshire and no 'in-situ' tenant (of more than or less than 3 years) has had a rent rise. We have no standard schedule for rent increases but this is all about to change!

In light of the tax announcements we will be having a big increase in the near future, followed by fixed 12-month increases!

by Dave S

16:11 PM, 9th November 2015, About 6 years ago

My Rents are increasing

With interest rates being so low over the last 7 years and good tenants staying I have only increased rents at change of tenancy and perhaps once every few years ( I would prefer to keep my properties let rather than extended void periods trying to get the highest rent)

However in light of the possible increase in interest rates , constant legislation and in particularly clause 24 I have reluctantly written to most of my tenants in my portfolio of 20 properties to inform them that rents are having to go up forthwith and they have had notices. This will have a direct effect on 31 adults and 9 children (some tenancies are joint with families). All my tenants are working and do not receive tax credits as far as I am aware.

I can put up with legislation (it sorts the cowboys out from the professionals, or should do !) interest rates are what they are and will change according to the economy but to tax a business even if it makes a loss cannot be right

No surprise then that with a shortage of property, increased population (due to immigration, longevity and more single people) and the government creaming off additional taxation (even on loses) that rents are going to increase substantially over the next few years

by Anthony Endsor

16:14 PM, 9th November 2015, About 6 years ago

I have 3 properties where the tenants have been in the properties for more than 4 years. Not a single one of them has ever had an increase in rent. Why, you may ask. Because I am happy with them and they are happy with my houses, so why change things. On one of them in fact, the rent has remained at a deal which I gave the tenant on entering the property. The property needed a LOT of work, so I let them have it £50 a month cheaper in return for doing the jobs and they have vastly improved the property since.
On another one, I have actually REDUCED the rent by £50 a month in order to keep the tenant, who was actually saying she would have to leave due to financial difficulties after her husband left her. I found this a much cheaper and easier option than having to find a new tenant.

by Paul Baker

17:06 PM, 9th November 2015, About 6 years ago

In keeping with the majority of others on here, I very rarely increase my rents if the same tenant is in situ. On my four properties, three of them have been in the property in excess of ten years and I encourage them to see it as their home and treat it as such. Perhaps every 3 or 4 years I have increased it slightly and even then it's usually only after carrying out refurbishments such as exterior decorating, new bathroom, carpets, new windows. That way the tenant feels they are getting something for the increase but equally, I know that I could rent it out swiftly if they didn't want to stay due to the increase.
In summary, my rents are considerably below market rates but I know my tenants will struggle to afford a significant increase. I treat them well, they treat my property well and we have good relations and I have no voids. That said, I would like to achieve market rate at some point but I rather feel that this will only happen as and when my existing tenants move out & I remarket the properties.

by John Gell

17:40 PM, 9th November 2015, About 6 years ago

I run a letting agency and, as such, have a professional obligation to our landlord clients to maintain rents at parity with market values. We therefore conduct an annual rent review, but this generally produces a "no change" outcome as the Inverness market remains fairly well balanced between supply and demand.

Ultimately it is that balance which determines rental values. I wonder if the presence in the market of non-avaricious landlords is supressing rental values. It will be interesting to see how fiscal changes and rising costs impact on that, given that tenants, quite rightly, are free to move on.

Interestingly, at a landlord conference in Edinburgh last week, a view was put forward that, while evidence shows rent increases lagging behind inflation, Scottish Governement proposals to give certain "hot spot" local authorities powers to limit rent increases to one each year and by the rate of inflation plus 1% could well result in an increase in rental growth by shifting landlords to a formulaic approach.


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