Landlord advice needed
Discussion
I'd appreciate the thoughts of other landlords, and quite possibly tenants on this.
We rented a house out in July 2020, fully managed through a local letting agent. The same tenant has been there ever since, and we've done some work like a new garden fence, and kitchen floor in that time.
We didn't increase the rent until January 2025, when we put it up by £200/month (17%, or about 4% per year since he'd been there), which was less than the agent was recommending and below what they claimed was market rate. A year later we've proposed a 5% (£75) increase, taking the total to £1425 when the agent claims they could get £1600/month for it.
The tenant has come back to the agent saying
"I note your comments regarding 'today's market' however taking a wider perspective I note that:
- Inflation has not exceeded 4% in any month in 2025 and dropped to below 4% in each of the last 3 months.
- The BoE base rate has been reduced four times during 2025 reducing base rate by a full 1% over 2025 with the corresponding reduction in mortgages.
-The House Price Index (specific to the South East region) for October 2025 showed an annual change of just 0.7%
In other words the justification for a rent increase appears poor. I am still irritated that the previous rent increase occurred mid-term resulting in a new tenancy agreement. Now, just 12 months later, a further rent increase and another tenancy agreement. It leaves a very bad taste and one cannot help but feel the precarity of renting and less that charitable towards the landlord. The confidence of not being in this position in January 2027 is low."
I do get his point, it was a pretty big increase last year, and he has been a decent tenant (the agent inspect the property every 6 months and he's kept in good condition), but then again I'm not a charity. It looks like inflation and the uk house price index have gone up about 28% since he moved in, and the proposed increase would be a 24% increase on his initial rent.
I'm tempted to say ok lets call it £40/month (3% increase on 2025 and 21% increase since he moved in). That would leave us £200ish below what the agent reckons is market rate. I'd then be happy to increase next year based roughly on inflation and keep it a bit below market rate.
For context this is the house we used to live in and rented out when I moved abroad for work. We're not professional landlords but this is a significant investment. We don't have a mortgage on it. Our long term plan would be to move back in to it at some point but probably only for long enough to sell it and buy somewhere new.
We rented a house out in July 2020, fully managed through a local letting agent. The same tenant has been there ever since, and we've done some work like a new garden fence, and kitchen floor in that time.
We didn't increase the rent until January 2025, when we put it up by £200/month (17%, or about 4% per year since he'd been there), which was less than the agent was recommending and below what they claimed was market rate. A year later we've proposed a 5% (£75) increase, taking the total to £1425 when the agent claims they could get £1600/month for it.
The tenant has come back to the agent saying
"I note your comments regarding 'today's market' however taking a wider perspective I note that:
- Inflation has not exceeded 4% in any month in 2025 and dropped to below 4% in each of the last 3 months.
- The BoE base rate has been reduced four times during 2025 reducing base rate by a full 1% over 2025 with the corresponding reduction in mortgages.
-The House Price Index (specific to the South East region) for October 2025 showed an annual change of just 0.7%
In other words the justification for a rent increase appears poor. I am still irritated that the previous rent increase occurred mid-term resulting in a new tenancy agreement. Now, just 12 months later, a further rent increase and another tenancy agreement. It leaves a very bad taste and one cannot help but feel the precarity of renting and less that charitable towards the landlord. The confidence of not being in this position in January 2027 is low."
I do get his point, it was a pretty big increase last year, and he has been a decent tenant (the agent inspect the property every 6 months and he's kept in good condition), but then again I'm not a charity. It looks like inflation and the uk house price index have gone up about 28% since he moved in, and the proposed increase would be a 24% increase on his initial rent.
I'm tempted to say ok lets call it £40/month (3% increase on 2025 and 21% increase since he moved in). That would leave us £200ish below what the agent reckons is market rate. I'd then be happy to increase next year based roughly on inflation and keep it a bit below market rate.
For context this is the house we used to live in and rented out when I moved abroad for work. We're not professional landlords but this is a significant investment. We don't have a mortgage on it. Our long term plan would be to move back in to it at some point but probably only for long enough to sell it and buy somewhere new.
It all depends how you value this tenant and how realistic the market rate is. You can test that yourself through Rightmove. You are allowed to increase to market rate the tenants arguments re inflation and base rate don’t really relate to market rate. We don’t go into a supermarket and argue that nothing should increase by more than inflation if there’s a shortage of bananas the price would increase its simple economics.
My own opinion - I have 4 BTls at the moment and 3 are let below market rent. They were let out at market rent when the tenancies started but they have all been exceptionally good tenants so I havent done any periodic rent reviews. To me that's worth far more than maximising the rent at the risk of upset tenants/void periods/other headaches. based on the original purchase price they still return a hefty yield, there has been a fair amount of capital appreciation so from a purely investing point of view I'm happy.
In short - good tenants are worth their weight in gold so i would try to be as flexible as possible.
In short - good tenants are worth their weight in gold so i would try to be as flexible as possible.
I think the agents estimation is reasonable. Rightmove shows 47 three bed houses within 5 miles, only one of them is below £1600, with most over £1800
I guess it's more a question of how much is a decent tenant worth? I was already happy to keep it below market rate as he seems decent, but while I don't want to take the piss, I also don't really want him to take the piss.
I guess it's more a question of how much is a decent tenant worth? I was already happy to keep it below market rate as he seems decent, but while I don't want to take the piss, I also don't really want him to take the piss.
RizzoTheRat said:
I guess it's more a question of how much is a decent tenant worth? I was already happy to keep it below market rate as he seems decent, but while I don't want to take the piss, I also don't really want him to take the piss.
As someone said above - a decent tenant is massively valuable. I helped a friend out recently who had his house trashed by a tenant that owed 15 months of rent... it was impossible to get them out and it took two court hearings, bailiffs etc etc The law was on the side of the tenant. The whole thing was a nightmare.I've rented out a couple of houses in the past and perhaps I'm a bit more laissez faire about these things - but I'd rather have a good tenant than grub around for a few hundred a month more, money that wouldn't materially change my life.
kiethton said:
I'd push back, you're the one in an under supplied market.
If compromising I'd not be dropping the rent proposed, but would offer a 24m contract at that level giving him certainty of cost for a longer period
Aren't there changes due that make the contract a rolling one regardless?If compromising I'd not be dropping the rent proposed, but would offer a 24m contract at that level giving him certainty of cost for a longer period
kiethton said:
If compromising I'd not be dropping the rent proposed, but would offer a 24m contract at that level giving him certainty of cost for a longer period
Trouble with that I currently have 1.5 years to run on my current employment contract. If I don't get a renewal I'd be moving back to the UK next summer and wanting the house back.We could say we'll agree not to put it up again next year, but as a tenant how much would you trust that if it was only on a 1 year contract?
I've got one house I rent out, and its had the same tenants for nearly 20 years now.
It's at below market rates as I want to keep them as tenants – they pay on time, don't upset the neighbours and are generally uncomplaining and tolerant of any issues (like when the boiler stopped working).
My sister-in-law also had a house she rented out. After a year of renting, her tenants stopped paying rent and refused to leave. Took over a year to get them out, which cost her around £10,000 in lost rent, plus a few grand for legal work. That makes my "losing" £100 a month on below market rate rent seem pretty good value.
You've got potentially 18 months of renting out. So the difference on income from your proposed £75pm increase over the period is £1350.
If your tenant leaves, even a month's lost rental swallows that up. And things could get a lot more expensive for you if he refuses to play nicely.
It's at below market rates as I want to keep them as tenants – they pay on time, don't upset the neighbours and are generally uncomplaining and tolerant of any issues (like when the boiler stopped working).
My sister-in-law also had a house she rented out. After a year of renting, her tenants stopped paying rent and refused to leave. Took over a year to get them out, which cost her around £10,000 in lost rent, plus a few grand for legal work. That makes my "losing" £100 a month on below market rate rent seem pretty good value.
You've got potentially 18 months of renting out. So the difference on income from your proposed £75pm increase over the period is £1350.
If your tenant leaves, even a month's lost rental swallows that up. And things could get a lot more expensive for you if he refuses to play nicely.
LimmerickLad said:
kiethton said:
I'd push back, you're the one in an under supplied market.
If compromising I'd not be dropping the rent proposed, but would offer a 24m contract at that level giving him certainty of cost for a longer period
Aren't there changes due that make the contract a rolling one regardless?If compromising I'd not be dropping the rent proposed, but would offer a 24m contract at that level giving him certainty of cost for a longer period
RizzoTheRat said:
I think the agents estimation is reasonable. Rightmove shows 47 three bed houses within 5 miles, only one of them is below £1600, with most over £1800
I guess it's more a question of how much is a decent tenant worth? I was already happy to keep it below market rate as he seems decent, but while I don't want to take the piss, I also don't really want him to take the piss.
It’s also hard to catch up to market rate you leave it along for a few years and all of a sudden you’re 15 or 20% below the others it might be worth small increases every year. I guess it's more a question of how much is a decent tenant worth? I was already happy to keep it below market rate as he seems decent, but while I don't want to take the piss, I also don't really want him to take the piss.
boyse7en said:
I've got one house I rent out, and its had the same tenants for nearly 20 years now.
It's at below market rates as I want to keep them as tenants they pay on time, don't upset the neighbours and are generally uncomplaining and tolerant of any issues (like when the boiler stopped working).
My sister-in-law also had a house she rented out. After a year of renting, her tenants stopped paying rent and refused to leave. Took over a year to get them out, which cost her around £10,000 in lost rent, plus a few grand for legal work. That makes my "losing" £100 a month on below market rate rent seem pretty good value.
You've got potentially 18 months of renting out. So the difference on income from your proposed £75pm increase over the period is £1350.
If your tenant leaves, even a month's lost rental swallows that up. And things could get a lot more expensive for you if he refuses to play nicely.
My view exactly and with a similar experience to your SiL to amplify the point.It's at below market rates as I want to keep them as tenants they pay on time, don't upset the neighbours and are generally uncomplaining and tolerant of any issues (like when the boiler stopped working).
My sister-in-law also had a house she rented out. After a year of renting, her tenants stopped paying rent and refused to leave. Took over a year to get them out, which cost her around £10,000 in lost rent, plus a few grand for legal work. That makes my "losing" £100 a month on below market rate rent seem pretty good value.
You've got potentially 18 months of renting out. So the difference on income from your proposed £75pm increase over the period is £1350.
If your tenant leaves, even a month's lost rental swallows that up. And things could get a lot more expensive for you if he refuses to play nicely.
Increased rent shouln't have needed a new tenancy agreement, surely - Is there any reason you don't just want a rolling agreement with 3 months notice?
We've been in this position too - if you let rent drop significantly below market rates, it can be a bugger to get it back up without losing your tenant (or, at least, their goodwill)
If you do compromise on the increase this year, be clear about your intentions re aligning rent with market going forward. That helps your tenant plan and removes the element of surprise.
We've been in this position too - if you let rent drop significantly below market rates, it can be a bugger to get it back up without losing your tenant (or, at least, their goodwill)
If you do compromise on the increase this year, be clear about your intentions re aligning rent with market going forward. That helps your tenant plan and removes the element of surprise.
BoRED S2upid said:
It s also hard to catch up to market rate you leave it along for a few years and all of a sudden you re 15 or 20% below the others it might be worth small increases every year.
This is also my thinking, and why the previous increase was quite big. But then again I've also heard plenty of horror stories like boyse7en's. I knew some a while ago who rented out a place in Manchester, when the tenants moved out they stole the fire place!I don't really want to back down completely and say ok we won't put it up this year, because if we cave completely he could try to fight any future potential increases.
Re Limericlad's point above on changes in contracts, does anyone have a link or further details on that? Can we only do a 1 year or a rolling contract? If that's the case then that might be a good reason to do a verbal/e-mail agreement that we won't increase it next year.
RizzoTheRat said:
This is also my thinking, and why the previous increase was quite big. But then again I've also heard plenty of horror stories like boyse7en's. I knew some a while ago who rented out a place in Manchester, when the tenants moved out they stole the fire place!
I don't really want to back down completely and say ok we won't put it up this year, because if we cave completely he could try to fight any future potential increases.
Re Limericlad's point above on changes in contracts, does anyone have a link or further details on that? Can we only do a 1 year or a rolling contract? If that's the case then that might be a good reason to do a verbal/e-mail agreement that we won't increase it next year.
https://mhclgmedia.blog.gov.uk/2025/11/19/explainer-everything-you-need-to-know-about-the-new-renters-rights-act/I don't really want to back down completely and say ok we won't put it up this year, because if we cave completely he could try to fight any future potential increases.
Re Limericlad's point above on changes in contracts, does anyone have a link or further details on that? Can we only do a 1 year or a rolling contract? If that's the case then that might be a good reason to do a verbal/e-mail agreement that we won't increase it next year.
https://www.savills.co.uk/blog/article/382650/resi...
Edited by LimmerickLad on Wednesday 7th January 14:36
silentbrown said:
Is there any reason you don't just want a rolling agreement with 3 months notice?
That was the agents recommendation, don't have the paperwork handy to check but I think their argument was a year's contract is more stability for a tenant than knowing they can be kicked out with a few months notice. Not that it would have made much difference as his current contract expires at the end of January and they're only just chasing him now after he apparently missed the e-mail they sent him in November. He actually pays in 6 months instalments, as he'd been made redundant when he first took it on so offered to pay 6 months in advance as a show of good intent.I think we initially had a 1 year then went to a rolling contract, and then started a new 1 year with the rent increase in Jan 2025.
LimmerickLad said:
https://mhclgmedia.blog.gov.uk/2025/11/19/explaine...
https://www.savills.co.uk/blog/article/382650/resi...
Thanks. So it looks like rolling contrast will be the only way after May 2026? Luckily it seems moving back in to the house is one of the ways to end a contract so we shouldn't have a problem there.https://www.savills.co.uk/blog/article/382650/resi...
Edited by LimmerickLad on Wednesday 7th January 14:36
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