I have great tenants, but I have left a painful conversation overdue, any tips?

I have great tenants, but I have left a painful conversation overdue, any tips?

9:18 AM, 8th November 2022, About A year ago 38

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Hello, I am small-scale landlord, with 3 long-held properties that give me a steady income. I treat my tenants well, and vice versa; they average 5-8 years, and I value their decency hugely.

I am not overleveraged, and although I do have mortgages I don’t have the bandwidth to chase every efficiency. I also don’t want to chase top dollar, as I know my current tenants are excellent.

But costs have gone up, and I do need to raise the rent.

I am not wanting to land a bombshell, they are really nice people who I want to retain as tenants.

Any suggestions on how to go about this?

Phone up to pre-empt? Drop it firmly in writing, then phone?

I guess I am not looking for the ‘you shouldn’t have let it run so long’ feedback. But any learnings on ways to soften the blow, or sweeten the pill?

Thanks!
Jose


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Comments

Laura Delow

12:35 PM, 10th November 2022, About A year ago

You can always carry out fresh references with her permission if she's not on Universal Credit/Housing Benefit without a guarantor, through the likes of Alan Boswell for RG/Legal Expenses cover at £215pa OR if she's in receipt of HB/UC, even if she has no guarantor, you can put in place RG/Legal Expenses cover (no credit checks or guarantor needed) through Rentsurance.co.uk (underwritten by Royal Sun Alliance) that has no excess & covers you for eviction & up to £2500pm rent for 6mths at a premium of only £30pm

NewYorkie

16:37 PM, 10th November 2022, About A year ago

Reply to the comment left by Laura Delow at 10/11/2022 - 12:35
Alan Boswell have said the condition won't apply if my tenant has not been in arrears and I am unaware of changes in her employment status. Reassuring, but I have asked them to confirm for the avoidance of doubt.

Jessie Jones

16:54 PM, 12th November 2022, About A year ago

Reply to the comment left by geester24 at 08/11/2022 - 10:34
Why do you need them to 'confirm'? When the bank puts my mortgage rates up, they don't chase me up looking for confirmation. If I didn't pay the increase then they would eventually seek repossession, irrespective of any 'confirmation' I may have made.
If you ant to be legally correct, then you will have used Form 4, which informs the tenant that if they wish to dispute the increase then they must do this before the date the first increase is due.
In my experience tenants occasionally 'confirm', usually do not reply but pay the increased rent, and very occasionally complain and threaten to leave, but never actually leave and never refuse to pay the increase.
If the houses that you let are in good condition, and you charge a reasonable rent, then good tenants will stay. Any that refuse to pay the increase probably aren't worth keeping anyway.

Jessie Jones

17:17 PM, 12th November 2022, About A year ago

Reply to the comment left by Jordan Evs at 09/11/2022 - 06:41
Sorry Jordon, but I'm with Richard here. It makes good commercial sense to give some discount to tenants who look after their home. However, landlords are facing a tripling of their finance costs, and mortgage companies have a legal requirement to 'stress test' the affordability of said mortgage over and above the current rates. Simply put; if the rental income does not adequately cover the cost of finance, repairs, tax and other operating costs, then the landlord may be forced to sell the property, and the tenant lose their home. Had they been charging full market value, they may be able to keep the property, with the tenant in it. Also, where a tenant has a track record of paying the full market rent, then there is some chance that the property could be sold to another property investor with the tenant remaining in place.
I am in exactly this position and have served a repossession notice on one tenant already simply because of the increase in mortgage rates. I may have to repeat this, depending on how mortgage rates change. Had I been charging full market rent across my entire portfolio then I might have been able to avoid this.

NewYorkie

17:43 PM, 12th November 2022, About A year ago

Reply to the comment left by Jessie Jones at 12/11/2022 - 17:17
I expect to see a big increase in landlord defaults and repossessions. But the idea that a lender would stress test an existing loan which isn't due to remortgage is unlikely. If they did, plenty of landlords wouldn't pass the stress test. I wouldn't with my remaining BTL, and if they tried to make me sell, I know I would have problems due to the ground rent situation. Maybe they would offer to buy it from me at market rate, given its the lenders who have caused the ground rent problem! Ha!

Jessie Jones

17:56 PM, 12th November 2022, About A year ago

Reply to the comment left by NewYorkie at 12/11/2022 - 17:43
Sorry, quite right to pull me up in that. I didn't mean current mortgages and I should have made it clear that I was referring to the point of re-mortgaging. Poor grammar on my part.

Contended Ted

0:00 AM, 6th December 2022, About A year ago

Have had to put rents up for the first time ever. Previously when a tenant changed we would go close to the market rent. One tenant has had the same rent since 2007 and they have kept the place spotless and despite financial struggles got close to paying most of the rent most of the time. Any increase will leave them unable to pay but with the new mortgage rate, I am forced to put the rent up. Market rate is £100 more. I am thinking of up to £50 maybe in two stages.

Heather G.

16:03 PM, 27th January 2023, About A year ago

Reply to the comment left by Laura Delow at 10/11/2022 - 12:35
I've just had a quote for £45pa for just legal expenses from discountinsurance.co.uk (Gallagher). There is a list of which referencing companies they accept on their website.

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