Excellent tenant wants a 20% rent reduction?

by Readers Question

10:27 AM, 17th November 2020
About 7 days ago

Excellent tenant wants a 20% rent reduction?

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Excellent tenant wants a 20% rent reduction?

I have an excellent tenant who pays £1500 every month. With 2 months left on the contract, I asked for his intention on renewal. He said he would renew, but only at £1200 per month.

I said I would do some research and let him know. Two letting agents say ‘no’ as houses are renting very quickly and demand is outstripping supply so if anything you should increase your rent.

However, the agents obviously want their fee plus I may have a void period. So say £2000 down, but could renew with existing tenants for £1400 showing a reduction, but only £1200 down on the year and no hassle over the deposit what would you recommend.

Many thanks

Peter


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Comments

TrevL

15:57 PM, 17th November 2020
About 7 days ago

Split the difference if you don't want to hassle, thats what the tenant is angling for. Go for £1350.

The agents make money from turnover of tenants, i.e. reference checks, inventories, ast prep etc., all have margin added. Agents don't care about the odd void even if detriment to the other parties.....

AMAZONIA STARBUCK

0:43 AM, 18th November 2020
About 6 days ago

Put your property on Openrent it's only a few quid, ask for £1650 then get new tenants at a higher rent or call his bluff with a solid few prospective tenants.
Why do landlords even deal with agents?
What exactly are they bringing to the party?
Ah, ....I remember a stress free well managed tenancy.

TheBiggerPicture

9:58 AM, 18th November 2020
About 6 days ago

Reply to the comment left by AMAZONIA STARBUCK at 18/11/2020 - 00:43What exactly are they bringing to the party?
Ah, ....I remember a stress free well managed tenancy.

Problem is, you have to deal with the agents, and more often than not, that is not stress free!!

Prakash Tanna

10:13 AM, 18th November 2020
About 6 days ago

Why not let him carry on with a periodic tenancy at the current rate? That way you might avoid agent fees and he will need to serve you notice if he wants to leave? There is no legal requirement to renew the tenancy and you are no less protected by not renewing, although the laws governing it are slightly different which I recommend you read up on to make sure it suits your needs.

The Property Man

10:14 AM, 18th November 2020
About 6 days ago

I wouldn't reduce the rent if am being honest. If the tenant agrees to stay maybe i would suggest that you tell them you would freeze the rent at the current level for the next couple of years and wont increase the rent giving the tenant a little more security.

If they disagree i would let them move out and advertise the property at an increased rent and in time this will cover what you have lost in the void period anyway.

I agreed to reduce the rent for a tenant who was also an excellent tenant, however as soon as i agreed 12 months later they was asking for a further reduction !!
Therefore if any tenants ask for a reduction to renew the contract i agree not to increase the rent for the next 2 years and most are happy with this.

Ever heard of the saying you give them an inch and they take a mile ??

Nigel

10:15 AM, 18th November 2020
About 6 days ago

A good letting agent would and should tell you as it is and not what is to their advantage. I can only speak for London and many agents are awash with available properties more than they can let given the reduced demand. Tenants know it is their market and seek value. Houses with gardens are not badly hit. If your tenant is reliable, paying his rent on time and looking after the property and wants to extend longer, you may want to take a view after checking what the market rents are in the area your property is in. The reduction your tenant is asking is extreme. I would in worst case scenario, reduce it to £1350 giving him a generous 10% reduction but only after testing the agents claim that you can get more. If an agent says it is worth £2000 but can't even get an interest at £1500, then he will be doing himself out of a business as his credibility will be gone.

Prakash Tanna

10:17 AM, 18th November 2020
About 6 days ago

Reply to the comment left by AMAZONIA STARBUCK at 18/11/2020 - 00:43
Not all agents, tenants or landlords are the same. There will always be a rotten apple in every group! A good decent agent takes the hassle out of management and day to day issues some tenants cause. I have been managing properties for near on 10 years now and never had any complaints from my landlords or tenants. I can think of one example where the landlord has not visited the property since the day he purchased it and handed over keys and is happily receiving a healthy monthly income without stress or hassle.

Gary Nock

10:23 AM, 18th November 2020
About 6 days ago

If the market is good in your area and houses are letting quickly then tell the tenant no. Freezing the rent for two years is a good idea but it can bite you in the bum if rents rise. And for those who wonder why landlords use agents its to comply with the around 170 regulations that landlords have to comply with. Not everybody has the time, knowledge and energy to advertise, do viewings, draw up tenancy agreements, carry out a detailed digital inventory that will stand DPS scrutiny, and protect a deposit in a fully compliant and legal manner. It only comes to light usually when there's a problem like evicting tenants and the original paperwork is wrong.

Chris Bradley

10:42 AM, 18th November 2020
About 6 days ago

I know that in Some areas demand is down, but in others demand is up. If you are in an increased or stable demand area, I would write to the tenant explaining that at the tenancy end date the tenancy will turn into a contractual Or periodic depending on your original agreement. I would also indictate that costs and compliance rules for landlords have increased, so you are not in a position to reduce the rent. You can point to legislation (it's somewhere can't remember where) that allows an annual rent increase, at a percentage related to cpi or rpi. So offer to waver the annual Increase if he signs another 12mth contract at the existing rent, or he can continue with the periodic with the increased rent payable--believe there is very specific forms For the rent increase. He has started a negotiation progress, maybe he's on furlough, so include in the letter the fact that you'd happily discuss further, maybe if he agrees to stay for further 12months you could offer a discount on the rent for one or two months only.

Freda Blogs

12:46 PM, 18th November 2020
About 6 days ago

Had you not written to the tenant asking about a renewal, chances are the tenancy would have gone from fixed term to periodic and the question of a rent reduction would probably not have arisen.
That said, in this current uncertain world with tenants losing their jobs and an inability to get possession, personally I would be sticking with the “devil I know” with an excellent tenant. I have a single let property with good tenants who are vacating shortly. The prospect of having to relet to new tenants in the current climate is giving me some anxiety, in case I am unlucky with the incoming tenants who I can't evict if they can't or don't pay.
Elsewhere, I have agreed temporary rent reductions for a period of months because of Covid. Perhaps this could work for you in this instance? It shows goodwill and you can revisit the rent reduction period at appropriate intervals. The concession is made in writing strictly on the basis that rent payments are made promptly on or before the required payment date, and that if any payments are more than 7 days late or missed (other than by prior agreement with you) you can elect to end the concession agreement and the tenant will be liable to pay the contractual rent from the date the missed payment fell due.
You cover all your bases this way: you get to look considerate and you don’t lose a good tenant, pay agent fees, risk a void or a bad tenant, and the rent can go back up when the time is right. Make sure the tenant agrees in writing.

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