One thing most landlords understand that seems to by-pass tenants is that this is a business. And as such, there are some financial ramifications that come into play. Yes, you may have beautiful notions of being the world’s ‘coolest’ landlord by keeping your rent rates low and never increasing them in fear of infuriating your tenants. We have all heard those bitter words ‘greedy, bloodsucking landlord’ muttered under the breath of one annoyed tenant or another.
Admittedly, it doesn’t feel too good being referred to as ‘the thing that is wrong with this world’.
But, at the end of the day, this is a business and unless you are making some kind of profit off it, then you might as well join a convent and start a charitable homeless shelter.
Interest rates go up; utility bills increase; maintenance costs rise and the Government periodically decides to introduce new taxes and levies with which you simply must contend. And then there is the small matter of inflation. In these instances, you simply must review your rent upwards if you are to remain in business. But how do you do so without driving out all of your tenants? How do you know when to raise rents for HMO Tenants?
If you have a clause for it in the tenancy agreement
This is by far one of the most straightforward ways to increase your rents if you own an HMO. Although most landlords do not particularly appreciate having rigid restrictions on their tenancy agreements such as ‘rent will go up by 5% at the end of 6 months’, sometimes, this is a good thing. In this case, you really do not have to worry about it because both parties know that it is coming.
When new tenants move in
This works perfectly if you have a relatively high tenant turnover. In this case, you can just wait until someone moves out, do a bit of renovating and increase the rent accordingly. If your HMO is like the ‘fast moving goods’ market, then in under two years, you should probably have a completely new ‘crop’ of tenants and favourable rent increments.
Base it on the prevailing rental market
The rental market fluctuates quite a bit. Sometimes it goes up and sometimes it, unfortunately, goes down. You need to be able to gauge and predict how the rental market is going to behave. If by any reason whatsoever, you know that the local rental rates are going to go up in the next year or two, then you should start by giving your current renters ample notice of your intention to increase the rent.
You may have to wait out those who are under contract, but any new tenants would have to sign a newly revised agreement. As for the long-term tenants, ample notice, maybe 6 months to a year is good enough for them to decide whether or not they will contend with the new rates or move. However, you would have to formal go through section 13 of the Housing Act 1988.
It might be a little tricky and it needs to be handled with some diplomacy, but by following the proper legal procedures, you should be able to increase your HMO rents and put an end to your martyr status.