Updating post from Reddit.
I have a three bed rental house in North Birmingham and it was rented out since Oct 2023 for £1500 a month. The tenants have stayed in the house for almost two years now without rent change, and are willing to continue staying for at least a year.
My existing mortgage will end its fixed term my October this year. Currently the mortgage was taken when the base rate was about 0.5%, but if I switch to a new deal the base rate would be around 4% so obviously a hike. I'm considering increasing the rent from October. I've communicated this to the tenants and they are open to negotiate the rise.
The question is, what sort of rental increase is appropriate considering the market and upcoming hike in interest rate? Any advice is appreciated.
I don't know why people make a big deal of this. Hike to market rate. If you like your tenants then give them a small discount, I'd personally offer market rate -10% at most.
I would agree with this as a landlord better to have hassle free tenants than problem ones....not their fault that your mortgage rate has gone up as you enjoyed the fruits will low rates....
Look on Rightmove over a period of time and see what comparable properties are asking.
Ideally, small rises each year soften the blow by not giving a large rise every two years. You may need to phase the increase over a couple of years if it is a lot. The problem is that property rental rates are increasing quickly, so it may affect this.
Considerations are that if they are good tenants, dont price them out.
What are your current margins and how much would your margin be reduced under the new rates?
Zoopla has a rental rate you can use as a guide. It isn’t about your costs imo, it’s about the market rate.
Margins, what are you making now What are you making after the mortgage rate rise.
Can you phase the increase over a couple of years rather than a lump shock to the tenants.
Or would you rather an empty property, no money income for it and perhaps a struggle to find new tenants who may not be good tenants