Increasing rent for my tenants. How much is reasonable?

fran38

As the title says, im thinking of increasing rent for my two tenants from 280 pm to something like 340 pm. Both have been there for more than a year. In fact one of them is there for over two years with one increase in that time (20e). Amenities excluding ESB is included in the rent.
What i want your opinion on is, is 340 ok ? too much etc.
Im living in the house as well, in Co Clare near Ind Ests, airport, motorway. Looking on Daft, im charging below the going rate for comparable house shares.
Opinions please.

wench

21% is a bit rich.

check_six

So you'd like to raise the rent by 20+%? In the middle of a covid 19 rent freeze? Hmm...

Effects

fran38 wrote: »

Amenities excluding ESB is included in the rent.

What amenities?

fran38

wench wrote: »

21% is a bit rich.

OK fair enough. Im renting 10 years maybe but i still regard myself a little green re: rules and laws governing rentals

yamaha4life

fran38 wrote: »

Looking on Daft, im charging below the going rate for comparable house shares.
Opinions please.

Is this the main reason you are raising the rent? If so i hope your tenants are in a position to afford the increase.

fran38

check_six wrote: »

So you'd like to raise the rent by 20+%? In the middle of a covid 19 rent freeze? Hmm...

Is there still a freeze in force? Hadn't looked into it in detail

fran38

Effects wrote: »

What amenities?

Internet, refuse, cleaning lady, sky tv,

fran38

So, whats a reasonable increase? My reasons for an increase include the fact that my TRS is coming to an end.

MrMusician18

fran38 wrote: »

As the title says, im thinking of increasing rent for my two tenants from 280 pm to something like 340 pm. Both have been there for more than a year. In fact one of them is there for over two years with one increase in that time (20e). Amenities excluding ESB is included in the rent.
What i want your opinion on is, is 340 ok ? too much etc.
Im living in the house as well, in Co Clare near Ind Ests, airport, motorway. Looking on Daft, im charging below the going rate for comparable house shares.
Opinions please.

You'll likely lose your tenant over such a large rise imo. If you are an owner occupier your rooms are typically considered less desirable and usually attract a discount over the market rate.

The only way to know if you are getting full value is to increase to the point where someone leaves then you know your max rent. But then you'll be left with empty rooms. In order to get the maximum you will have to be prepared to have vacancies.

If it were me, given the relatively low initial rent, anything exceeding 10% in your situation would have me considering my options. That's not to say a new person wouldn't pay the revised larger amount.

circular flexing

check_six wrote: »

So you'd like to raise the rent by 20+%? In the middle of a covid 19 rent freeze? Hmm...

Is it rent-a-room? (looks from previous posts that it is) If so I don't think rent freeze applies.

fran38

circular flexing wrote: »

Is it rent-a-room? (looks from previous posts that it is) If so I don't think rent freeze applies.

Yep, rent-a-room. Tenants would be considered licencees i think.

Yyhhuuu

It's not rent but a licence fee if you're living in the property the "tenant" is a contractual licensee

ab4248

If you have good, long term tenants I'd be slow to rock the boat.

fran38

Yyhhuuu wrote: »

It's not rent but a licence fee if you're living in the property the "tenant" is a contractual licensee

How does a 'licence fee' differ from rent. What does it actually mean?

They’re licensees, not tenants, when it comes to their rights.

If you can get €340 from someone else for the rooms then that’s what they’re worth. Percentage increase is irrelevant. It could be a 50% or a 100% increase and it makes no difference. If someone else will pay €375 or €400, that’s what the room should be bringing in for you.

They’re not your family, friends or dependants. They pay you what you decide they need to pay for you to give them a place to stay in your home. You get to decide how much that will be and what they get in return.

They get to leave if they don’t want to pay it. You get to have an empty room if nobody else will pay it either. But it’s your right to decide how much, not theirs.

Either way, increase it. Do that every year, always and only ever drop it if you can’t fill a vacancy. Why should you lose out on an extra €1440 a year, or more, to house two strangers?

ab4248

ab4248 wrote: »

If you have good, long term tenants I'd be slow to rock the boat.

If they’re happy where they are and can’t find another suitable room to rent for less, they should also be slow to rock the boat.

fran38

JayZeus wrote: »

They’re licensees, not tenants, when it comes to their rights.

If you can get €340 from someone else for the rooms then that’s what they’re worth. Percentage increase is irrelevant. It could be a 50% or a 100% increase and it makes no difference. If someone else will pay €375 or €400, that’s what the room should be bringing in for you.

They’re not your family, friends or dependants. They pay you what you decide they need to pay for you to give them a place to stay in your home. You get to decide how much that will be and what they get in return.

They get to leave if they don’t want to pay it. You get to have an empty room if nobody else will pay it either. But it’s your right to decide how much, not theirs.

Either way, increase it. Do that every year, always and only ever drop it if you can’t fill a vacancy. Why should you lose out on an extra €1440 a year, or more, to house two strangers?

You wouldnt be looking for a room to rent would you??

fran38

fran38 wrote: »

You wouldnt be looking for a room to rent would you??

Ah Fran, sure you’d only increase my rent and all!

JustAThought

fran38 wrote: »

Yep, rent-a-room. Tenants would be considered licencees i think.

Tv, Sky, Heat and Cleaner all included along with a eent of e240!! My God - what an amazing deal. Are you their fairy godmother? Where can I apply? Deal of a lifetime.

MrMusician18

JustAThought wrote: »

Tv, Sky, Heat and Cleaner all included along with a eent of e240!! My God - what an amazing deal. Are you their fairy godmother? Where can I apply? Deal of a lifetime.

It's in Clare.

MrMusician18

JayZeus wrote: »

They’re licensees, not tenants, when it comes to their rights.

If you can get €340 from someone else for the rooms then that’s what they’re worth. Percentage increase is irrelevant. It could be a 50% or a 100% increase and it makes no difference. If someone else will pay €375 or €400, that’s what the room should be bringing in for you.

They’re not your family, friends or dependants. They pay you what you decide they need to pay for you to give them a place to stay in your home. You get to decide how much that will be and what they get in return.

They get to leave if they don’t want to pay it. You get to have an empty room if nobody else will pay it either. But it’s your right to decide how much, not theirs.

Either way, increase it. Do that every year, always and only ever drop it if you can’t fill a vacancy. Why should you lose out on an extra €1440 a year, or more, to house two strangers?

In theory that's correct but in practice that's not really great advice to someone who wants to maximise their yield. If he increases the rent to €400 he is almost certainly going to have two vacancies on his hands. Given that he wants to use the increases to cover the increased expense associated with losing a tax break having u fillable vacancies because of a rent set way above the market will not put him in the position of where he wants to be.

So while yes he in theory can set a rent at whatever he likes, in practice he will only obtain a market rent and that's the obvious answer for him. The problem for him is that seemingly he has fallen behind the market with his rate so needs a relatively big increase to catch up. Like it or not, big increase will increase the likelihood of vacancies, so the LL here had to weigh up the cost of vacant rooms and advertising cost vs the max potential rent. In truth, the LL needs to keep on top of his rates and adjust them appropriately annually in order to minimize vacancy and maximise yield.

So if he wants to keep the rooms filled with the current occupants, I imagine +10% would probably be the largest increase that won't move them on, and he will be looking at 10% year on year increases until he gets to where he is happy. If he's happy for them to leave and have a few weeks or potentially months with vacancies then he may as well go above 360 and see where the market is really at and fall back until he gets it occupied.

fran38

JustAThought wrote: »

Tv, Sky, Heat and Cleaner all included along with a eent of e240!! My God - what an amazing deal. Are you their fairy godmother? Where can I apply? Deal of a lifetime.

280e pm. im not messing

dennyk

Are you sure they are licensees? What is the actual nature of the accommodation they're renting; is it an ordinary room inside of your house, or a self-contained apartment, flat, or external building on your property? You say:

Amenities excluding ESB is included in the rent.

Do you just mean that you ask for a contribution of a certain portion of your own power bill from your tenant in addition to the fixed rent, or are they in some sort of self-contained accommodation that has its own meter? In the latter case, there's a very good chance they would be tenants, not licensees, and you'd have to follow all of the applicable laws governing tenancies. If that's the case, I'd advise you to read up on the rules and make certain you follow them to the letter in all cases to avoid a costly headache.

If they are in fact just renting an ordinary bedroom in your own house, then they'd almost certainly be licensees, and most of the laws regarding tenancies wouldn't apply; you'd be free to raise the rent at any time to whatever amount you want. As others have advised, a 20% increase might be enough to encourage them to look elsewhere, so you'd probably want to avoid raising it to the maximum "market rate" that you're seeing if you want to keep your current licensees. As you're sharing living accommodations with them, how well you all get along and how well they behave themselves are factors that you'd want to consider as well; it's all well and good trying to maximise your income, but if it comes at a cost of losing housemates that you got on well with and ending up with someone who causes you more stress or problems (or a long search to find someone else who's decent and compatible, during which you aren't taking in any rent at all), that might not be worth it in the end.

combat14

300-310

Graham

fran38 wrote: »

Looking on Daft, im charging below the going rate for comparable house shares.
Opinions please.

What is the rate for comparable house shares?

fran38

Graham wrote: »

What is the rate for comparable house shares?

Anything from 360 to 450. There was one for 220. All per month. Differing standards, decor etc.

handlemaster

Put to the max you can get. Lesson number one tenants will never thank you for subsidising their accommodation expenses.

Also you will get alot of replies on here criticising you for wanting to increase ot what you can legally get. What you wont get here is people saying they will make up the difference of your loss. Ignore the keyboard warriors and up the rent.

combat14

handlemaster wrote: »

Put to the max you can get. Lesson number one tenants will never thank you for subsidising their accommodation expenses.

Also you will get alot of replies on here criticising you for wanting to increase ot what you can legally get. What you wont get here is people saying they will make up the difference of your loss. Ignore the keyboard warriors and up the rent.

gadzooks half the country be homeless if everyone took that attitude lol

Vikings

Would a combined €100pm cover your loss from TRS? (And then some?)

If so there's your reasoning for the increase, tell them you've to increase by 50 per month to cover the costs coming your way.

If they don't want to pay it and decide to leave you can advertise for new tenants at what you believe the current market rate is.

Just decide whether you want to go through that hassle with the possibility of going 2/3 months with no rent should you.not find suitable tenants immediately.

The Student

fran38 wrote: »

Anything from 360 to 450. There was one for 220. All per month. Differing standards, decor etc.

This is a business trans pure and simple. Get what you can in rent. Do you honestly think if the shoe was on the other foot they would pay you more if they could get similar for less.

I would almost guarantee it if the tenants could get a lower cost similar accommodation as yours they would take it.

You need to treat this as a business and secure the highest income the market will provide. The licencees are adults, if they can't afford it then its their tough.