Should I increase the rent?

mauraf

Hi

I currently have an apartment rented in the Dublin area...same tenants have been there for coming up to 2 years at this stage.
They seem to be minding the place and we have no major concerns re them not looking after the place.

We currently charge them 850e a month, for a large 2 bed apartment. Rents (according to daft.ie) are being advertised at 1200e per month for similar size apartments in the same complex.

There has been no rent increase since they moved in, and as mentioned, they appear to be looking after the place and dont cause us hassle - but any extra money that they can throw our direction is badly needed! There is still a nice mortgage on the property that we are not covering from the rental income.

Anyone give advice on what would be a 'fair' rent increase to ask them for? They, I am sure are aware they are getting the apartment for less than the market average - but I dont want to p*** them off either and want to be fair.

925 too much? I would love to ask for more but.....

Thanks

Maura

TimeToShine

You are entitled to raise it to whatever the current market price is. I highly doubt you'll pee them off, they almost definitely realize they're getting a bargain and probably see a rent haul as long overdue.

I think €1000 would be fair compromise considering that similar apartments in the area are going for €1200. It's a landlord's market in Dublin right now as your tenants probably realize so they'd be very foolish to leave.

Note you can only increase the rent once a year and once the current lease is up.

Little Miss Cutie

mauraf wrote: »

925 too much? I would love to ask for more but.....

I don't see any real harm in asking and being willing to negotiate with them.

At worst they say no and you are left with the option to give them notice or stick with what you have.

We have been in the same apt for 5 years at a low rent and expected the rent to increase but the landlord never asked. I think her logic was if she increased it and we left there might be a period of the apt being empty so this would cost a lot more than she would gain by the increase - hope I explained that ok.

handlemaster

Yes increase it. The rent is your income. Just explain to them the current market rent is 1200... see what they say..... they might just say thats ok we understand etc... or you might negotiate down from this. But let them know you know what it should be.

Potatoeman

Always do it in stages if you can, every year is better than a large jump.
The asking price may not be what its rented for too.

Tombo2001

I rented out a two bedroom house recently for 1200 without any difficulty.

If I was you, being honest, I'd ask for at least 1050. They have had a brilliant deal from you for the past twelve months. If they shop around at all they will know they are still getting a good deal at 1050.

I doubt if tenants would be shy in letting you know that rents had fallen, so I dont see why the same doesnt work in reverse.

kingtut

If my landlord/landlady put the rent up (regardless of the reason) then I would more than likely look for somewhere else immediately because when I moved in it was because I was satisfied with the rental price.

That's just me though ... but as you said yourself they are good tenants, look after the place well and don't cause any hassle. I would look at the worst case scenario (rent goes up, tenants move out and the new tenants treat the place like sh1t) ... if you are willing to take the risk then go ahead and up the rent and see what happens

Or .... could you possibly say to them "I am considering increasing the rent for X reason" and guage their reaction? i.e. do they appear pissed off / happy enough

TimeToShine

kingtut wrote: »

If my landlord/landlady put the rent up (regardless of the reason) then I would more than likely look for somewhere else immediately because when I moved in it was because I was satisfied with the rental price.

Try that in Dublin and you'll be homeless for a while to come.

kingtut

TimeToShine wrote: »

Try that in Dublin and you'll be homeless for a while to come.

That's not true at all.

I live and work in Dublin (apart from weekends) and there are plenty of places to live (I spent long enough searching / shopping around to know).

To clarify on my original post what I meant really is that I would start searching immediately to see what else I could find (because ultimately the rent goes up but my wages don't my 'spending' money is reduced).
If I was unable to find somewhere else for the same price (or just didn't like anywhere else) then I would consider staying at my existing place (albeit at a higher rental rate) although in my case it would only be as a last resort.

Hopefully that makes sense anyway

Tombo2001

kingtut wrote: »

I'm in Dublin and there are plenty of places to live (I spent long enough searching / shopping around).

To clarify on my original post what I meant really is that I would start searching immediately to see what else I could find (because ultimately the rent goes up but my wages don't my 'spending' money is reduced).
If I was unable to find somewhere else for the same price (or just didn't like anywhere else) then I would consider staying at my existing place (albeit at a higher rental rate) although in my case it would only be as a last resort.

Hopefully that makes sense anyway

Yes naturally you would. Everyone is interested in value for money. And in this case, when you started searching, you would quickly realise that you are on a winner with the place you have even at the higher rent level.

The only part I dont understand is "only as a last resort", as if its a hardship to pay a fair price for something.

Greenmachine

Asking price does not necessarily equate to market rent. I have seen some ludicrious overvaluations. Take this for example http://www.daft.ie/lettings/ormond-quay-dublin-1-dublin/1464271/ initially listed at €3200 p/m.

An extreme case for sure, and not typical, but does indicate that some people have no idea. It will all come down to how happy your tenants are with the place they are in. The place I am in the rent is tolerable and the area is nice. On the downside the place is really small and not as central as I would like. If my landlord asked for a big increase, I would not be long in looking elsewhere.

kingtut

Tombo2001 wrote: »

Yes naturally you would. Everyone is interested in value for money. And in this case, when you started searching, you would quickly realise that you are on a winner with the place you have even at the higher rent level.

but until I shop around I can't say that my current place is a 'winner'. If after shopping around (due to a potential rent increase) I find that it's still a bargain then I'd admit defeat so to speak and stay put.

Tombo2001 wrote: »

The only part I dont understand is "only as a last resort", as if its a hardship to pay a fair price for something.

It's not a hardship to pay a fair price for something, the hardship is paying X price for a few years and then having to pay X+ a few hundred more euro when as a tenant you get nothing for it.

kingtut

Greenmachine wrote: »

Asking price does not necessarily equate to market rent. I have seen some ludicrious overvaluations. Take this for example http://www.daft.ie/lettings/ormond-quay-dublin-1-dublin/1464271/ initially listed at €3200 p/m.

Bloody hell that is some drop! :eek:

Grolschevik

Greenmachine wrote: »

Asking price does not necessarily equate to market rent. I have seen some ludicrious overvaluations. Take this for example http://www.daft.ie/lettings/ormond-quay-dublin-1-dublin/1464271/ initially listed at €3200 p/m.

That has to have been an initial typo! Corrected within two days...

The Cool

I'm in a situation similar to your tenants OP, I pay the same rent as your tenants do and current local average for what we have is about 1100-1200 as well. Our LL would be more than entitled to up the rent as well; like you, she hasn't as she seems to be happy that we look after her house and mean that it's very low maintenance for her. We keep an eye on local rent prices so if she wanted to up the rent, as much as we'd be disappointed, we wouldn't move out either as there's really nowhere cheaper to move to, and we might as well save ourselves the cost of moving house.

Would 1000 a month cover the mortgage? If you were to charge that, you're still getting more but they'll also appreciate that you've met them halfway, and that it's still cheaper than other properties.

mauraf

Thanks for all the feedback everyone!

I think I will discuss with them the fact that I will be looking to up the rent in a couple of months - think 1050 - bargaining down to maybe 1000....

Just looked again on Daft - and the rentals for similar properties in the same area are actually between 1200 - 1300....so they will still be getting a 'bargain' in todays market.

They work locally to where they live - so that would I imagine mean they will be willing to stay even with the moderate increase...

HerrKuehn

When rents were dropping I managed to get my landlord down from 1250 to 900 in one go. I could have walked into another apartment in the complex for this price, so I used it as a bargaining chip. I dont live there anymore but I am sure he would have repaid the favour when rents increased.

Greenmachine

Grolschevik wrote: »

That has to have been an initial typo! Corrected within two days...

Still they are example where has changed on a property. Up and down, jumping all over the place, by hundreds of euro at a time. I would be concerned at the landlords mental stability if they had adjusted their prices too often and bidirectional.

Magicmatilda

Tell them that the market rate is 1200-1300 quoting your source (daft or whatever).

Then ask for 1,200. If they bargin don't go below 1,050. That way you get what you want and they get to feel they are getting a deal. In a year if the market is the same you can raise it again. But if I were you while the market was high I would be trying to turn a profit in case it drops again. That said I wouldn't be making people homeless either. Flexibility on both sides. Give them a few months notice aswell, I think 2 is reasonable.

leave the fact that your mortgage is not covered out of the situation as that is not their issue really.

Renting is a business and should be treated as such. I am a tenant and much prefer dealing with landlords who see it as a business transaction and understand the laws etc..that landlords who don't.

joeguevara

I have tenants in a 1 bed apt in Capel street. First year rent was 850. Second year they asked for a reduction. Grand 825. Third year average rents are 1050. Settled on 950 per month. Everyone happy. Well I still have to make up about 500 on the mortgage. Someone said that you would have to wait a year to make up a months lost rent. So moral is negotiate an increase but factor in the cost if they do decide to move out.

athtrasna

Magicmatilda wrote: »

Tell them that the market rate is 1200-1300 quoting your source (daft or whatever).

Then ask for 1,200. If they bargin don't go below 1,050. That way you get what you want and they get to feel they are getting a deal. In a year if the market is the same you can raise it again. But if I were you while the market was high I would be trying to turn a profit in case it drops again. That said I wouldn't be making people homeless either. Flexibility on both sides. Give them a few months notice aswell, I think 2 is reasonable.

leave the fact that your mortgage is not covered out of the situation as that is not their issue really.

Renting is a business and should be treated as such. I am a tenant and much prefer dealing with landlords who see it as a business transaction and understand the laws etc..that landlords who don't.

That would be an unreasonable hike in one move. The OP's plan to seek 1050 with the lowest acceptable rate being 1000 is a way to show the tenants that their behaviour and respect for the property is appreciated but at the same time the OP is running a business. It's a mutually beneficial rate. If they need to increase again next year so be it.

Michael D Not Higgins

athtrasna wrote: »

That would be an unreasonable hike in one move. The OP's plan to seek 1050 with the lowest acceptable rate being 1000 is a way to show the tenants that their behaviour and respect for the property is appreciated but at the same time the OP is running a business. It's a mutually beneficial rate. If they need to increase again next year so be it.

Rents came down that quickly a few years ago. How is it only called unreasonable in one direction? What's unreasonable is having tenants paying 30% below market rate and only expecting them to pay 15% below market rate.

There's a compromise here between the two positions. Say the market rate is 1200 but since they're good tenants, you're willing to compromise on the increase. This way you're empowering them in the process so it doesn't feel like they're getting strongarmed. It's likely they'll split the difference and come back with around 1000/month and you can negotiate on the final amount. Everyone's happy.

lima

In fairness it is not 'Market Rate'

It is 'Skewed Market Rate' due to lack of Repossessions, Government non-intervention, Nama withholding stock and selling in bulk to US companies, all of which is contributing to a critical lack of rental properties in Dublin.

Instead of saying 'trying to get market rate' it's really 'taking advantage of the skewed market rate'.

Michael D Not Higgins

lima wrote: »

In fairness it is not 'Market Rate'

It is 'Skewed Market Rate' due to lack of Repossessions, Government non-intervention, Nama withholding stock and selling in bulk to US companies, all of which is contributing to a critical lack of rental properties in Dublin.

Instead of saying 'trying to get market rate' it's really 'taking advantage of the skewed market rate'.

So were renters taking advantage of skewed market rate when the rents were falling?

lima

Michael D Not Higgins wrote: »

So were renters taking advantage of skewed market rate when the rents were falling?

Yes they were. Sounds like you knew the answer to that already, strange that you had to ask me!

Bepolite

lima wrote: »

In fairness it is not 'Market Rate'

It is 'Skewed Market Rate' due to lack of Repossessions, Government non-intervention, Nama withholding stock and selling in bulk to US companies, all of which is contributing to a critical lack of rental properties in Dublin.

Instead of saying 'trying to get market rate' it's really 'taking advantage of the skewed market rate'.

Repossessions would only push up rents. The government can't intervene as it's an interference with constitutionally protected property rights. NAMA I don't know enough about to comment on, but any organisation with large amounts on unoccupied property is never a good thing.

lima

Bepolite wrote: »

Repossessions would only push up rents. The government can't intervene as it's an interference with constitutionally protected property rights. NAMA I don't know enough about to comment on, but any organisation with large amounts on unoccupied property is never a good thing.

Repossessions would help because people who rent because they refuse to overpay for property and who are renting will be able to buy. As for the people who's properties are repossessed, they will likely have to move out of the city to somewhere they can afford to rent.

Can you provide details of the constitutional right to not pay your mortgage and remain in your home (in other words, stealing)?

Michael D Not Higgins

lima wrote: »

Can you provide details of the constitutional right to not pay your mortgage and remain in your home (in other words, stealing)?

How do PPR mortgages affect rental market rates? Where do all the people who had their homes repossessed live and how does that affect the market rate? How is it stealing if they still owe the debt?

Bepolite

lima wrote: »

Can you provide details of the constitutional right to not pay your mortgage and remain in your home (in other words, stealing)?

No because there isn't one and I didn't say there was. I assumed you meant non-governmental intervention on rents.

You may also want to familiarise yourself with the legal definitions of stealing. The answer to the current housing problems is not to make people homeless. There are a myriad of other solutions.

bennyineire

How about writing them a letter or giving them a call requesting a meeting with them in regards to a rent review. You could explain to them that you just want an informal chat about renegotiating the rent.
This way you are giving them fair warning to expect a conversation about the rent so they can then have a think about it. You could start the conversation by asking them what they think would be a fair rent and start from there.

The_Morrigan

Folks, can I just remind you that the topic at hand is a specific 'should I increase the rent?', this is not about repossessions, theft or homelessness.

Please stay on topic.

Thanks