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Advice on Tenants Not Wanting To Accept A Rent Increase

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Hi all,

Looking for a bit of advice. Myself and husband have 3 rental properties which have all been with agencies for a few years. One property we decided to let and manage ourselves last year as prospective tenants from agency offered to deal direct and agency was being difficult so that was that.

Looking back I think we were too nice - we gave them all the profit (agency charging 1200 so we could get net 1100, these tenants offered us 1100 direct so they got the 100 saving), didn't charge any admin or inventory fees so paid for credit checks, contracts and inventory forms ourselves as they were very keen.

Over the past year they've been great tenants- no problems, rent always on time, place immaculate. Tenancy expires April 23rd so we wrote to them recently asking if they wanted to renew and saying we would be increasing the rent pegged to inflation at 3% so going from 1100pcm to 1133pcm. We did our due diligence before doing this and had 2 local agents tell us the market rate for our property would be 1100-1300 depending on condition (ours was on for 1200 last year) so we thought we were being very fair!

Tenants have emailed back saying they do want to stay on in the house but a) they've never been faced with a rental increase before (which I'm not sure I believe) and that b) they would like us to reconsider the rent review because they've both taken pay cuts and recently had a baby (which we knew about). Lastly they tell us that 'we have had a quick look at the market; 1100 seems the general pcm rent being asked of 3 bed properties in the area, and I would presume for most landlords that would include an agency fee, so this does not seem unreasonable' which to me just seems plain cheeky!

Now part of me thinks they're really trying it on and if we don't increase this year next year the baby will need a nursery and they wouldn't be able to afford it then and this could go on and on...

The other part of me thinks they are really good tenants otherwise and would it harm us to not increase the rent? No, it wouldn't harm us but we would be taking a financial hit just to keep them sweet.

I think we are willing to meet them half way at 1.5% provided we can guarantee an increase every 12 months to cover our cost. Would it be unreasonable for us to say we will swallow the rental increase provided that the new contract has a new clause stating a rent review will take place every anniversary of the contract that will be in line with inflation say between 3-7%

Thanks in advance....

15/02/2010 00:00

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