Landlord looking for 15% increase in rent

ElWalrus

I know this is going to become more and more common over the coming years, but just been given notice of a 15% increase in rent. Have been living there for 18 months, no issues, no price increases, pay all bills on time, good tenant, etc.

Was looking to renew the lease for 12 months just to give some security, landlord says ok but for 15% per month extra. While the rent was pretty reasonable originally, I think 15% is a pretty steep upfront increase. Thing is, theres not a whole lot of rental property in the area going at the moment, and I like where I live. This is being mediated through a property agency, so I've asked to see if 10% would be acceptable. Should I have tried 5% first? Any advice or suggestions welcome.

(PS - House is in Clare, about 15 miles from Limerick city.)

Paulw

The landlord is permitted to increase the rent, in line with market rates, and only once in 12 months.

So, from the sound of things, he may be right in asking for the increase. But, at the same time, there is definitely no harm in you asking for the increase to be lower.

Hopefully you can both come to an agreement.

darragh o meara

I would haggle for a bit off. It could well be the letting agency calling for the increase as they'll probably get a better cut for themselves.

Good tenants are hard to find so if he's interested in keeping ye in the house he certainly won't want the hassle of finding someone else for the sake of 5%..

ElWalrus

Just did a bit of looking and apparently the average rent (market rate I guess) for 2014 was 6% higher than what I was paying. Also, I should have been given 28 days notice of the price increase, but the lease is up at the end of this month (10 days). Just want to know how strong my bargaining position is?

Paulw

You must be given the full 28 day notice. So, in 10 days you pay your current rate. The new rate would only be agreed for the next month.

Maybe you should try cutting out the agent and agree an increase directly with the landlord, if you can.

darragh o meara

ElWalrus wrote: »

Just did a bit of looking and apparently the average rent (market rate I guess) for 2014 was 6% higher than what I was paying. Also, I should have been given 28 days notice of the price increase, but the lease is up at the end of this month (10 days). Just want to know how strong my bargaining position is?

You won't know until you try. Looking for a new tenant can cost a but especially if the house is empty a few weeks, no landlord wants that.. Chance your arm at 10% that way everyone wins.

The_Conductor

darragh o meara wrote: »

You won't know until you try. Looking for a new tenant can cost a but especially if the house is empty a few weeks, no landlord wants that.. Chance your arm at 10% that way everyone wins.

If its an area of high demand- with low availability- playing hardball isn't the best of ideas.It is not the case that the property would be vacant for a few weeks- if its in Dublin- it may not be vacant for even a few days.

A 10% increase- even if its still 5-6% below market value (which while you haven't given us a lot to work on- would seem to be the case)- would be a reasonable- but you have to accept the landlord will get someone to pay the going rate tomorrow- if he/she wants to maximise their rental income.

Personally- if it was a good tenant, who I hadn't any issues with- I'd accept the counter offer of a 10% increase- having someone who looked after the property and paid their rent on time- would easily be worth the 5% discount on open market rents.

minikin

Consider yourself lucky, our landlord is demanding a 26% increase and wouldn't entertain a counter-offer. We've been ideal private tenants for last few years, have replaced any small fittings ourselves. Never bothered landlord about a thing. L.L. has been so happy with us that they haven't increased rent since we moved in... now looking for an extra €3,000 for the year.

We have scrimped and saved to ensure that all essentials are paid, cancelled health insurance, cancelled pension, didn't replace really old car,cancelled sky TV, no holiday for last few years - literally living hand to mouth. This is going to push us off a cliff financially, but sure that's 'the market rate'... disgusting.

Paulw

Mod Note: Please keep it civil and on topic

A landlord is permitted to increase rent, in line with market rates. They are not permitted to increase rent above the market rate. Also, they can only do it once every 12 months.

minikin

Sorry for any offence felt Paul, completely unintended I can assure you!

The large font for 26% was for visual emphasis. Not an attempt to be 'uncivil'. Similarly the point at the end, I was, clumsily perhaps, trying to reinforce the point that being great tenants has meant nothing to landlord, it's all about the money... is this something that can be discussed here?

Of course the landlord is entitled to an increase, I am more than familiar with the Residential Tenancies Act 2004. We are also landlords - we moved out of our home to be closer to an opportunity to start a business. We've been very fair with our tenant from day one. Each year we've proposed a rental increase of 5% - this has been agreed because they can see it's manageable and fair. I state all this for perspective - I am not just some tenant on here raging about landlords.

In the interest of a sustainable tenancy would people not agree that it would be better in reasonable manageable increments, rather than dramatic spikes 'because there's a lot of demand out there'. A bird in the hand and all that... Is the hassle of finding and vetting new tenants (and the lost revenue while it happens) worth the constant chasing of 'the market rate'???

This is our family home, we've a child in the local school who has made friends. We've made great efforts to fit in with the community as I'm originally from nearby. Accommodation is not something optional, it is not a holiday to Singapore or a motorboat - I would suggest that it being essentially unregulated (where the upper limit is an advertised rate on Daft rather than an achieved recorded rate on the PRTB index) does not a stable society make.

Is it a landlords job to create a stable society? Of course not, but as members of that society we should also take some responsibility to ensure we do not undermine it. Otherwise we end up undermining the value of our own properties.
Primum non nocere.

The_Conductor

minikin wrote: »

Consider yourself lucky, our landlord is demanding a 26% increase and wouldn't entertain a counter-offer. We've been ideal private tenants for last few years, have replaced any small fittings ourselves. Never bothered landlord about a thing. L.L. has been so happy with us that they haven't increased rent since we moved in... now looking for an extra €3,000 for the year.

We have scrimped and saved to ensure that all essentials are paid, cancelled health insurance, cancelled pension, didn't replace really old car,cancelled sky TV, no holiday for last few years - literally living hand to mouth. This is going to push us off a cliff financially, but sure that's 'the market rate'... disgusting.

A 26% increase- when you haven't had an increase in a few years- could actually still be below market rates. While I'm sure that the landlord appreciates that you have been model tenants- at the same point in time- the landlord has been letting to you at significantly below market rates- if no increase occurred up to now.

If you're not happy with the 26%- you can always dispute it to the PRTB- however, if the landlord can show its in keeping with market rates (or indeed below them)- then I'm sorry- you were on a good thing with cut price rent- which has now caught up on you.

If a 26% represents a 3k increase that means you're paying 15k per year? Where is the property and what property type is it? If you give us a few details- the guys on here will quickly tell you what the going market rate for the area is.........

MouseTail

But you as a LL have been benefiting from rising rent costs, ensuring you get the 'market rate' 5% year on year increases is well above inflation or wage increases. Now that it has been asked of you, it is 'disgusting'.

Villa05

ElWalrus wrote:

(PS - House is in Clare, about 15 miles from Limerick city.)

Limerick city rent up 7% in the last 12 months, shortages in rental supply being experienced.
Some premium areas in 15 mile radius of limerick. Are you located in any of these areas eg Bunratty

15% is excessive, could bargain for 1/2 that.

minikin

Thanks for the offer conductor, I'm well aware what 'the going rate' is for the area. The point being missed is that this is 'the going rate' advertised for new tenancies, whereas we are sitting tenants with a part4 tenancy. This tenancy was originally advertised at a higher rate than the final agreed rent, this gives the lie to the claim that advertised rates = the market rate.
Furthermore we are a known quantity, we look after the house as if it were our own, if anything we've increased the value alongside ensuring that the owners, themselves also 'accidental landlords' did not lose their home to the banks.

Naturally estate agents are encouraging landlords to increase rental yields, this in turn feeds into 'achievable rental figures' when they're pitching properties for sale to investors.

I'm looking, as is the original poster it would seem, to open a discussion about the other values a great tenant brings to a landlord.

In business I deal with a lot of suppliers and customers. I will always stick with a great supplier, even if they're not the most economically advantageous to me, if they do what they say they will. A supplier (tenant) going above and beyond is worth their weight in gold as it means I get to fulfil my obligations (mortgage) to my customers (bank). If I chased the most economically advantageous supplier all the time, I'm putting pressure on them to agree to something that's not necessarily sustainable - as they may have to agree with onerous terms to get the contract (tenancy). This puts good suppliers out of business (homelessness/emigration) and undermines your own business model because you have unreliable suppliers. Exactly the sort of tenants that we hear about on jajoejuffyshow every week.

minikin

MouseTail wrote: »

But you as a LL have been benefiting from rising rent costs, ensuring you get the 'market rate' 5% year on year increases is well above inflation or wage increases. Now that it has been asked of you, it is 'disgusting'.

How is a sustainable increase, below rent inflation (check your consumer price index figures) increase disgusting? We have just offered a rent which is below 'the market rate' because they're a family on social welfare with three kids. We have also incurred repair costs that were a result of the tenants actions.

We're prtb registered, we pay tax on rental income. Nothing we have done is disgusting. To pay an extra 3k means that I somehow have to earn over 5k extra before tax.... Where is this supposed to come from all of a sudden? It's impossible to budget for such a dramatic increase, that's the disgusting part.

irishdude11

minikin wrote: »

How is a sustainable increase, below rent inflation (check your consumer price index figures) increase disgusting? We have just offered a rent which is below 'the market rate' because they're a family on social welfare with three kids. We have also incurred repair costs that were a result of the tenants actions.

We're prtb registered, we pay tax on rental income. Nothing we have done is disgusting. To pay an extra 3k means that I somehow have to earn over 5k extra before tax.... Where is this supposed to come from all of a sudden? It's impossible to budget for such a dramatic increase, that's the disgusting part.

So he's now bringing the rent in line with market rates and you're complaining that he didn't increase it by say 5% every year which would have cost you a lot more?

What do you he should do now that he finally wants adjust the income from his business...do you think he should keep letting it for below market rates?

minikin

Sorry irishdude, that's not accurate at all.

Example (rounded figures for simplicity)
Say €1,000 +5% p.a. Increase year 2 etc would mean €1,157 going into year 4.
A 26% increase on 1,000 is €1,260.

Total rent for 4 years with 5% increase = €51,721.50
Total rent for 4 years with 0%, 0% and 26% increase = €51,120.

So the 5% increase would not have cost 'a lot more' - just over 1% more.
It's all about cashflow, like in any business.

How would you react if the banks increased your monthly Mortgage payments by 26% with a "sure that's the market rate, like it or lump it, you can always hand the keys back..."

And it would have been done in a much more sustainable way. The landlord would have benefitted financially and it would have ensured that we could have remained. As it stands we now have to look at moving into an even more rural area, further away from my business. It also means that the extra employee I was considering is now less likely.

I'm not complaining about anything to do with previous years. We have always paid, in full and on time, any rent that was asked of us. We kept our side of the contract and more. It was the landlords decision not to increase, for whatever reason. I would have had no issue with a reasonable increase year on year, because it could have been budgeted for.

Grandpa Hassan

minikin wrote: »

How is a sustainable increase, below rent inflation (check your consumer price index figures) increase disgusting? We have just offered a rent which is below 'the market rate' because they're a family on social welfare with three kids. We have also incurred repair costs that were a result of the tenants actions.

We're prtb registered, we pay tax on rental income. Nothing we have done is disgusting. To pay an extra 3k means that I somehow have to earn over 5k extra before tax.... Where is this supposed to come from all of a sudden? It's impossible to budget for such a dramatic increase, that's the disgusting part.

Where did mousetail call your incremental increase disgusting?

I really fail to see the problem with the LL, having been effectively subsidizing your rent for a while, he has woken up to what is the market reality. You must have known that you were way below market and that the increase was only a matter of time.

minikin

By comparing our situation with our tenants they inferred that there was no difference, thereby our treatment of our tenant was equally disgusting. I explained why it was not.

Nobody has subsidised my rent, I've subsidised their mortgage, which would have gone bad as they lost their business and had to relocate for employment.

saggart26

If you can’t negotiate a better deal, either pay the rate or look elsewhere.
There’s probably a bunch of people queuing up who will pay the rate, why do you think you deserve it cheaper?
Increase the rent in your own place and absorb some or all of the rental increase. Why rent to a family who are on social welfare? Why not look for other tenants who will pay more? I get that you’re probably a great tenant but the point I’m making is, your landlord doesn’t care so you either play a similar game or not.

MouseTail

I'm really not getting your argument, a 5% increase yoy costs more. You have benefited more from lack of rent regulation than your own Landlord. You were well aware of rising rents as you ensured your own tenants kept pace, you could have budgeted for your own increase, but didn't. That is no ones fault but your own.
edited to add, I didn't call your own increase disgusting, I think neither you or your own LL are disgusting, just both benefitting from a lack of rent regulation (you slightly more so).

Duckjob

There is a reasonable possibility the LL has factored in some wriggle-room into his 15%, and has already decided that he would agree on 10% with you if he's happy with you as a tenant.

There's never any harm in trying haggling- In fact, coming to agreement after a bit of haggling is probably the best way as both sides come away feeling they achieved something and everyone is happy.

ElWalrus

Duckjob wrote: »

There is a reasonable possibility the LL has factored in some wriggle-room into his 15%, and has already decided that he would agree on 10% with you if he's happy with you as a tenant.

There's never any harm in trying haggling- In fact, coming to agreement after a bit of haggling is probably the best way as both sides come away feeling they achieved something and everyone is happy.

Just to give a bit more info, we rang the property agency before we entered the final month of the lease looking for the 12 month fixed rate. They said they would contact the landlord, then nothing, so I rang again this week to see how things were progressing, she said she still hadn't been able to contact the landlord. Then rang back yesterday with the offer of a 12 month fixed lease for the 15% extra.

My own take is that the property agency (acutely aware of the current rental market and lack of supply currently) probably suggested the increase to the landlord. They probably surmised that we were anxious to hold to it, and pitched it to the landlord in a 'sure what do you have to lose' fashion, so I'm hoping their open to the renegotiated rate. They both get an increase, and I don't have such a drastic increase in one swoop. Obviously, I'd prefer not to have to pay more, but at least I wouldn't feel as stiffed if they gave a little ground on this.

Panda_Turtle

minikin wrote: »

How is a sustainable increase, below rent inflation (check your consumer price index figures) increase disgusting? We have just offered a rent which is below 'the market rate' because they're a family on social welfare with three kids. We have also incurred repair costs that were a result of the tenants actions.

We're prtb registered, we pay tax on rental income. Nothing we have done is disgusting. To pay an extra 3k means that I somehow have to earn over 5k extra before tax.... Where is this supposed to come from all of a sudden? It's impossible to budget for such a dramatic increase, that's the disgusting part.

Sounds like a steep increase alright, judging by your figures of 26% increase amounting to €3000 per annum it's a jump from around €950 to €1200 per month?

If you can't beat them, join them? As a landlord your letting out for below 'market rate', why aren`t you maximising this?

Your right tho, it's all a bit disgusting - alas this is the greedy, cutthroat world we live in.

You might have to find a smaller place or a different area.

Paulw

Mod Note: Can we keep to the topic at hand, and no political discussion ... the politics forum is elsewhere.

ElWalrus

Just to give an update. Landlord has agreed to 10% increase. This was all handled through the property agency, so couldn't gauge his reaction, but didn't appear to be much fuss. The property agency seemed happy enough though. (why wouldn't they I guess, for all I know it was their idea in the first place :pac:)

It just goes to show, doesn't hurt to ask.