Negotiating rent increases - tips for landlords

  • By Josh Hall
  • 31 August 2011
Negotiating rent increases - tips for landlords

Following a period of market uncertainty, residential landlords are riding high again.

Increased demand for rental property, driven in part by a continued lack of mortgage availability, has meant that rents in many parts of the country are being pushed ever higher. This places landlords in an enviable position.

But, while higher rents are good news for landlords, the process of negotiating rent increases can be a difficult one. You should be prepared to haggle, and you should make sure that you are properly prepared before beginning. Here are some tips to help you through the process.

1. Do your research

It is important that you do your research before beginning the negotiation process. As average rents are rising, tenants are (quite rightly) becoming increasingly savvy. They are more likely than ever to have done their homework before the tenancy is up for renewal, and it is vital that you do too.

While rents have risen in many parts of the country, the degree to which they have increased varies quite significantly by area. Have a look around to see what sort of changes have been noted in similar properties in your area. You can do this quickly and easily on sites like Findaproperty.

2. Be reasonable

The importance of a reasonable, personable approach really cannot be overstated. Remember that the process (and the outcome) could have a significant impact on the tenant’s financial situation, and that all such negotiations should be carried out in a sensitive manner.

Rent negotiations are amongst the most common causes of conflict between tenant and landlord. By approaching them in a sensitive way you can help to prevent disagreement and maintain a good relationship.

3. Be prepared to haggle

You should not necessarily expect your tenant to accept a rent increase without condition. Increased scrutiny of rent rises has meant that landlords must now be prepared to haggle, and to consider what they will be asked for in return for an increase.

If work needs to be done on the property, you should be prepared to do it as a condition of a rent increase. Of course, you are not normally obliged to do so (unless work is required to make the property habitable), but many tenants will be more willing to accept an increase if you are willing to fix some niggling problems.

4. Understand the appeals process

In the event that you cannot come to an agreement with a tenant who holds an assured tenancy, the tenant might choose to appeal to a Rent Assessment Committee (RAC). This is an independent body that adjudicates on rent disputes. The RAC is meant to provide a simple means by which disagreements can be resolved without the necessity for lengthy court processes.

The RAC makes their decision by taking submissions from both parties, and conducting a hearing. You can attend the hearing yourself, or you can send someone else. The committee will make a judgement, which can only be challenged in the High Court.

Although RACs are not particularly commonly used, it is important that you are aware of them. You should also understand that the type of tenancy agreement you have will determine some of the rights that the tenant enjoys. More information on tenancy agreements is available from DirectGov.

5. Do a cost-benefit analysis

In today’s landlord-friendly lettings market, intransigence in negotiation can be tempting. You might feel as if you have no need to negotiate, because you could find another tenant who would be willing to pay a higher rate.

If you are having difficulty coming to an agreement with your tenant, don’t be hasty. Remember that there can be significant costs associated with finding a new tenant, even if you choose not to use an agent. In many cases it may be more sensible to negotiate and accept a lower rent than to go through the process of finding new tenants and risking void periods.

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