Calculating rent increase - fair?

[schooleydoo]

I am confusing myself the more I try and make sense of this, so am hoping somebody here can help. Amazingly, Google is crap and full of conflicting advice.

2 years ago my rent was set at £675 per month. They wanted to charge £700, but the letting agent advised them to charge less, and stipulate that we must pay the costs of redecorating (badly needed!).

2 years down the line, surprise, they have increased the rent to £725 a month. That's a 7.5% increase. I thought that was excessive considering we do all the work on the house ourselves and they have spent £0 in the 2 years we have been there.

So I had a look around at similar properties and it seemed that actually £725 is about right. However, we are still damn good tenants and I think deserve a break because of that.

So that 7.5% increase... apparently rent is calculated on RPI, which from May 2010 to May 2011 is at 5.2%. So that's the figure I plan on offering to pay. (£708). Except that 5.2% is inflation for a single year. I need it for 2 years. Do I also need to add inflation from 2009 to 2010?

Am I getting this right?

[Rogerborg]

RPI has been about 5% for 2 years, so your £675 rent should now be £675 x 1.05 x 1.05 = £744.

Sorry, those are the numbers.

And sorry again for the obvious question, but have you considered buying? You may look at it now and think you can't afford it, but the amount you pay on a mortgage isn't going to keep rising, and you'd be buying equity rather than pissing an ever increasing amount of money away for no return.

Do the sums, at 5% rent increases:

2011 £725
2012 £761
2013 £799
2014 £839
2015 £881

At what point does having taken out a fixed mortgage start to pay off?
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[Hetzer]

[multijoy]

Funnily enough, one of our client firms wrote a bit about that sort of thing earlier today!

Linkified so as not to be too spam-like

Also, I agree with Hetzer - don't let them wriggle out of repairs unless they're letting it to you at cost.

If they play silly buggers, invoice them for the cost of the decorating and the value you've added to the property.
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[schooleydoo]

[Frost]

Rent increases as a percentage is one way of looking at things, but the truth is a property is only worth what someone is willing to pay for it. So what should be done is a survey of similar rented property in the area and pricing according to that. A 5% increase would be fair in a prosperous town, but try that one in the valleys of south wales and you're going to have a lot of homeless people very quickly!

[WildGoose]

I was in your position about 4 years ago, though fortunately the circumstances allowed me to stick two fingers up at the landlord and get a mortgage, which actually ended up cheaper than the rent would have been after his proposed increase.

You could actually get a mortgage at 95% loan to value ratio at the time. You are lucky to get 75% now as a first time buyer.

I didn't even pay him the full months rent for when I left, but pro rata the actual amount of days I had stayed there (17 if I recall) that month. to the penny, in cash. Tenancy agreement long expired, so there were sod all he could do. Never gave him a desposit either, so there was nothing for him to steal.

[sebastianw]

[The Shaggy D.A.]

Why is it going up, when interest rates for mortgages are lower now than 2 years ago? It's not costing the landlord more now than it was 2 years ago, so it's just a money making exercise - offer him £700.
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[cagiva gezzer]

I tried renting in St-A last year (ended up buying in WGC for £100/month less!).

It was a nightmare. Properties would be up for £750/month (2 bed maisonette), we'd phone up to agree to this and we'd be played off against other parties interested. We'd then be asked to pay £800 & sign up for a 12 months contract.

Landlords have the market by the balls, especially in this area, so suck it up and tray and claim back as much financially from them as possible for repairs / maintenance!
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[JonB]

[The Shaggy D.A.]

How much did you spend on your wedding again?
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Chances are quite high you are not in my Monkeysphere, and I don't care about you. Don't take it personally.
Currently : Royal Enfield 350 Meteor
Previously : CB100N > CB250RS > XJ900F > GT550 > GPZ750R/1000RX > AJS M16 > R100RT > Bullet 500 > CB500 > LS650P > Bullet Electra X & YBR125 > Bullet 350 "Superstar" & YBR125 Custom > Royal Enfield Classic 500 Despatch Limited Edition (28 of 200) & CB Two-Fifty Nighthawk > ER5

[JonB]

[Rogerborg]

[P.addy]

[Robby]