There is a lot of noise right now about increases in rents. Wokingham recently made it into Rightmove’s Top 10 rental hotspots in the UK with a 14.7% rise in average asking prices (Q4 2020 Vs Q42021).
It’s easy to see what that means for a property being let for the first time – but what does it mean if your property is already under tenancy? There can be a tendency amongst letting agents to treat their existing portfolio quite differently from new business. Whereas a new client deals with the manager and the rental price is established based on recently let comparable transactions, the price on renewal is often determined by a property manager whose interests are more likely to be served by tenancies that tick over year on year. As a result, rents are increased in £25 increments and in line with RPI which has been sat below 3% for the majority of the last decade, against a background of fear of a void period if an agreement isn’t reached. This is a problem which is compounded every year the tenant stays. It is not infrequent that a property is even remarketed at such a price– complacency has taken hold as the landlord’s expectations are set at a lower level and if they are overseas, the likelihood is they are not tuned into UK property trends. But the reality is that in January 2022 RPI was 7.8%. Translated directly into an increase on £1250pcm that would be an extra £1170pa and even a portion of that would undoubtedly be welcome to landlords in the face of interest rate increases and potential changes in EPC regulation.
There is most definitely value in a good tenant who stays long-term and looks after your investment which needs to be weighed against the rent, but even the best tenants are having to pay higher prices in this imbalanced market and are inclined to stay put because of the lack of choice available. With void periods at an all-time low, this is also less of a disincentive to negotiate. If the rent hasn’t been increased for some years, especially in sectors of the market with the highest demand, properties can see an uplift of as much as £300 per month!
At Hat and Home, the rent at renewal is considered in light of the latest market data and if your property is up for re-let we ensure it is listed for the best price achievable, not just the rate your last tenant paid.
For further advice, please contact Liz on 07547 672849 or liz.gamlen@hatandhome.co.uk.