8:56 AM, 29th January 2021, About 6 months ago 15
Does anyone have an established playbook for rapidly-falling rents? I run a 6-bed HMO for young working professionals in inner London (Zone Two). I’m on good terms with all tenants. The house grosses about £57k per year and nets about £30k after tax. I self-manage it, and unfortunately, I live two hours drive from it!
None of the tenants has asked me for a rent reduction, but room rents in London are down circa 12% and doubtless, they’re all keeping an eye on Spareroom.co.uk. Most are on one-months notice.
Should I pre-emptively offer a rent reduction to prevent them from looking elsewhere? If not, what other incentives might make sense?
Obviously, some tenants will want to avoid the faff of moving and taking a gamble on new housemates – but that’s true of finding new tenants too.
I’ve thought about:
1) Doing nothing until someone asks. Whatever I offer one tenant, I’ll have to offer to the others.
2) Voluntarily refunding an amount similar to their deposits, via a one-time rent holiday.
3) Voluntarily offer circa 7 % reduction in rent in return for a new six-month contract, on the understanding that if they break the agreement within six months they definitely will lose their deposit.
4) Temporary rent reduction for a six-month period, then raising them back to the usual level in summer, by which time the market might be more stable.
I realise that ultimately it’s down to whatever I’m willing to pay to avoid the hassle of re-marketing, but I’d be interested to know if anyone on here has an established playbook for rapidly-falling rents.
If you do, I imagine it’ll be a popular read in London right now!
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