What’s the best approach for raising rent for a reliable tenant?

All our AST’s have provision for regular reviews of the rent and all increases are by mutual agreement
If you have a happy long term tenant then do your utmost to reach a compromise that suits both parties

To date, I've found that going and discussing the situation has worked well.
Tenants are nearly always aware of the current rent costs in the area, so will be aware if they are on a 'good deal'.
They will not be aware of your overheads or the changes in your costs, like what mortgage rate changes have meant to you. I give these in broad strokes. I normally then ask them to think abut what they feel they can afford. When |I follow up a week or so later the negotiations are normally positive with everyone happy.

Looking forward, you really should review rents on an annual basis. Before Mr Putin went nuts I'd normally review every year, but increment every 2 years. Keeping an eye on the local rates to make sure I was not dropping behind the curve.

Reply to the comment left by Tim Rogers at 31/07/2024 - 10:01
What’s Mr Putin got to do with this ?

Did this recently for a family in just their first year. The place is immaculate but I wanted to raise the rent from £725 to £800 to help offset a big interest increase. I got my £800 and their goodwill by agreeing not to raise it again for 5yrs. In part this was helped by grabbing a 10yr fixed rate mortgage at 3.74%.

I had exactly the same thing around a year ago. I was charging £800 to tenants who had been renting my property for around 4 years without an increase. Rental prices had increased substantially in the area and the property was now worth around £1100pcm on the open market. I made an appointment to see them and explained broadly the level of cost increase I had had which was many hundreds of pounds. I then explained I would need to increase the rent by £75, and gave them a form showing the new rent amount required. Their reaction was a sigh of relief, they understood my increase was modest compared to current rent levels. They were worried I was meeting them to ask them to leave so I could sell up, the increase was a big relief to them and readily accepted. My advice would be to arrange to meet your tenants and discuss your proposal. If there sensible you won't have a problem.

Use this as an opportunity to communicate how successive governments have and will continue to drive rents up by increasing landlords costs. Split the difference at £900 and explain that you have.

Reply to the comment left by Chris Mills at 31/07/2024 - 14:18
That was very foolish. In 5 years time, the market rent could be 60% more than your rent. What are you going to do then?

Reply to the comment left by DPT at 31/07/2024 - 19:04
My exact thoughts as well. Mortgage interest isn't the only cost of being an LL.

I have five rental properties all with long-term reliable tenants.

They move in paying rent at market rates, then enjoy two or three years without a rent increase. After that I write to them every January and tell them the rent increase from April - I also tell them that if they pay April’s rent before 5 April they can have that month’s rent at the old rate. It just makes calculating my tax return easier.

I think a good tenant is worth keeping, and my tenants pay between 80% and 90% of market rents once they have a good track record.

Reply to the comment left by Dylan Morris at 31/07/2024 - 10:19
I assume your aware that his actions are what triggered the increase in inflation and therefore the BOE response of interest rate rises. None of that is under HMG control, since the BOE operate independently.

I assume you agree that the major cost increase for landlords has been the increase in mortgage rates from 1.24% to 6.25%m ( on average). BOE projections from 2019 had interest rates rising slowly to 4% by 2037, even during Covid that projection was still on course. Mr Putins actions have blow all that apart.

I used to review rents every year and increment every 2 years prior to 2023, now I have to increment every year, I can't afford not to. The sole cause of that is Mr Putin's actions.

I hope that explains what Mr Putin has to do with things.