Do you increase your rental charges on an annual basis?

Discussion in 'Buy-to-Let Property Investment' started by FWL, Jul 26, 2018.

  1. FWL

    FWL Member

    There was an interesting article recently regarding the need to increase rents by a minimum of inflation. I would be interested to learn how many landlords increase their rent on an annual basis and whether they actually take inflation into account. If you fail to increase rent by at least inflation then in effect the real spending power of your income is falling each year.
  2. realdeals

    realdeals Active Member

    Historically I have always moved my rent higher in line with the local market but I think I should also take into account inflation like you suggest. I may have missed a few years of inflation related rises, which I dont think I can get back, but from now on I will re-write tenancy contracts with annual rent rises a minimum of inflation. Thanks!
  3. FWL

    FWL Member

    Many landlords will miss the simplicity of this until they see it in writing - if your income does not keep up with inflation then your spending power is falling in real terms. Interesting!
  4. Longterminvestor

    Longterminvestor Administrator

    If your income is not keeping up in real terms then you will need to put in more and more of your own capital to stand still. Not viable in the longer term if you want to make good returns.
  5. Adrian Elford

    Adrian Elford New Member

    One should make it clear in the contract from the beginning. Either link to an index or stipulate a percentage, otherwise, yes, you will be experiencing a real world loss of income.

    Anyway, in answer to the actual question.
    No, not always, for several reasons including:

    • Maybe in the original contract that the rent is fixed for X number of years
    • At renewal - the tennant insists they can't pay more and sometimes it is better to keep them in rather than look for new tennants
    • The actual local area may have seen slighly negative rental growth or stagnation, perhaps due to a load of rental properties being released around it
  6. realdeals

    realdeals Active Member

    I suppose in a perfect world you would increase your rent year on year but like you say:-

    • You need to adapt to the changing market
    • If a tenant has short term cashflow issues is it worth evicting them and the cost and loss of income that brings

    Better to keep a sensible head on with this kind of situation :)

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