Are most landlords under charging?

I rent out some HMOs to graduate sharers, and only increase rents during a tenancy if it's become a particularly long one and the rent is clearly out of line with what the other tenants are paying. I do this to keep my tenants happy and inclined to stay, which reduces the pain of having to keep finding new tenants if you keep increasing the rent.

Of course this undercharging of rents is never reported in the media: all they do is focus on the statistics based on the very small proportion of rental properties that are currently being advertised as available. The statistics about "average rents" are clearly out of line with what landlords are actually charging, because of the "drag" effect caused by many landlords not raising rents during a tenancy.

We have eight properties and have been letting since 2006. We've never increased rent during a tenancy either, mainly of course because few tenants stay much longer than a year or so, so it simply doesn't arise. We do have three ongoing tenancies of five years, still at the same rent. When properties vacate, we have a look at comparable property ads to see where to pitch the new rent. Sometimes we increase it ten or twenty pounds and get lucky, sometimes no-one replies to the ad until we drop it back down. Sometimes we've had to drop the rent even lower than the previous rent. Basically rents in our areas have not changed much since 2006. As long as the rents are sufficient to cover our outgoings and a small margin to live on, we've no great urge to increase them and not only risk losing good tenants who are not giving us any worries, but also no wish to add any further financial burden to our tenant's household budgets if it's not strictly necessary. Due to impending major surgery, I have recently engaged an agent to manage our properties, and they have proposed reviewing the rents. I have indicated that I'm not keen to do this except at tenancy changes. Even so, I can understand that they will probably put pressure on me to do this eventually, as my rents dictate their income, and their workload too must have increased exponentially in recent years due to all the regulatory changes one after the other. It would be unfair to expect them to work for a percentage of rents that are significantly below market rate.

Most of our rents have not been increased in the past 6/7 years.

We always consider rises at end of tenancies but generally never raise them.

This month, for the first time ever, we have raised 8 of our rents during tenancies. We never wanted to do this and it's a decision that was taken after a lot of careful thought.

Although we have deliberately kept our rents below the market average for our area we have indicated that rises will take place annually from now on.

If any of these tenancies end before next November we will then advertise at full market asking prices.

This change of direction for us is entirely courtesy of Clause 24.

We have also decided to place two of our weaker performing properties up for sale.

Curious to know, DC, why you have historically set rents below market level, and what has prompted change to annual increase.

What will guide the rate of increase?

Curious to know,DC, why you have historically set rents below market rate, and what has prompted change to annual increases.

What will guide the amount of increase?

Reply to the comment left by "John Gell" at "09/11/2015 - 20:07":

Having previously tried to get top rents and then eventually dropping the asking price we soon realised that choosing below market asking prices ensured virtually no void periods between tenants.

This time around we have decided to keep just below the market level, one to dissuade the existing tenants from seeking properties elsewhere and two, as a form of reward to our tenants, most of which have been in situ for up to 3 years.

Clause 24 has prompted our plan to raise rents on a frequent basis but until next November comes around we haven't decided what the increase will be.

Reply to the comment left by "John Gell" at "09/11/2015 - 17:40":

Would the Scottish proposals also include a similar cap on increases in council tax?

Reply to the comment left by "money manager" at "09/11/2015 - 20:24":

Funnily enough, I have not heard anything from SMP's suggesting that John!
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I have a property portfolio of 3 along with looking after the day to day running of my managing directors larger portfolio of 5.

Neither of us have ever increased rent until someone new moves in. We have just lost two tenants who have lived in one of my MD's two bed properties for the last six years. They paid £650 p/m from start to finish. They spent the last six years saving and have just bought a house of their own, I don't think this would have been as easy if we had increased rents. Current market rental value for this property is £875

If my MD increased his rents to market value he would currently be earning an extra £1045 p/m, £12,540 per annum.

Both of us will be increasing to at least full market value as a result of clause 24. Those who can't afford to pay will have to be replaced.

I have only raised rents on change of tenancies .