We can’t stress enough how important it is to always bill tenants the current market rate (or very close to it just to stay competitive).
Remember you can only increase rent once in any 12 month period. A new lease is not needed to increase the rent.
- There is no good way to tell tenants they’re getting a rent increase, so just do it in a simple two line letter. Give 1 calender month notice (since they pay by calendar month).
“Please be advised that beginning 1st [Month] 20[Year] your new rent will be €[Amount] in line with increases in the market.”
“Please arrange to amend any standing orders using the attached form or contact us for help on (01) [Phone number].”
- Always picture how you would rationalise an increase to a PRTB adjudicator.
- Attach 3 to 4 printouts from property websites of similar properties that you are using as your comparisons. Make sure they’re reasonable.
- Both, hand deliver and email the letter to the tenants. Deliver the notice a few days early to be safe.
- Once you’ve reasonably established the current market rate (and justify it with comparisons), don’t negotiate down. Why should a landlord take a reduced income when the market says otherwise. Tenants will never pay above market rate, why should a landlord accept a reduced rate. Sometimes accept a nominal reduction (maybe €25) as a negotiating tactic.
- Please note the following: It is unprofessional to expect a tenant to feel that they owe a landlord anything for giving them a reduced rent. Tenants do not see a reduced rent as a gesture of good will, they soon see it as their right. Billing below the market rate does not get a landlord kudos, tenants begin to expect special treatment. You will not gain loyalty from a tenant because of a reduced rent. The Irish market is severely stacked against landlords so don’t expect any favours. A fool and his money are soon parted.
- Take the opportunity to inspect the apartment and do any repairs or upgrades that the landlord is rightfully responsible for, even if the tenant hasn’t reported them. This will help your case if it goes before the PRTB and is in the landlords best interest. Also write to the tenant to carry out any repairs they are responsible for in accordance with the lease.
- Watch that the increased rent comes in on time. If the tenant does not pay the increase on the due date, begin the usual PRTB process immediately (send the initial informal email when it is one day late. We give 24 hours to pay). This is where a management company comes in handy.
- If the tenant threatens to move out, stay professional and friendly. Blame the market since it is the market that decides rents. When they go to search for a new place they will see for themselves what the market rate is.
- If they do choose to move on, just remember that your new tenant will be paying the new higher rate. Remember to take a deposit equal to one and a half month’s rent. See our other posts.
- Don’t be afraid of change!