Are you an HMO landlord in Chelmsford and finding yourself in a challenging position right now?
The cost of living is on the rise, inflation is skyrocketing, and running your property portfolio is becoming more costly all the time.
So, it isn’t too surprising that you and many other HMO landlords may be struggling to cover all your operational outlays. A further layer of complication arises from the fact that some HMO property owners agreed to discounted rents for tenancies during the COVID pandemic, leaving even more of a financial shortfall now.
The property market in Chelmsford is currently in recovery, and with asking rents higher than they were before the global pandemic, many HMO landlords are now considering whether to approach tenants with a rent increase.
This creates a significant dilemma – should you charge more to cover your outgoings, but potentially alienate good tenants during the process?
Here, we look at how to approach such a sensitive situation with your HMO tenants. We’ll examine whether increasing rents is a good choice, and ways of ensuring your investment stays viable while coming to an agreement which will work for all parties.
Should I Raise the Rent on My HMO Property?
Before you plunge into deciding whether to increase rents for your HMO property in Chelmsford, think first about the various factors that warrant that increase.
It goes without saying that your tenants are probably going to demand some justification for the increase, and it will help you find the right balance between keeping your good tenants and raising prices. Of course, there isn’t a single approach that you should take to calculate the best solution for you and your situation, but there are several factors to consider.
What Factors Should I Consider When Deciding Whether to Raise HMO Rents?
Here’s what to keep in mind when deciding if raising HMO rental prices is right for you:
- Your property’s market value.
- Rising inflation combined with the increased cost of maintaining and managing the property.
- Increases in interest rates if they have impacted mortgage repayments.
- Renovations or improvements in amenities you’ve made to the property after the agreement of the tenancies.
- Increases in the cost of services and bills that you include in rental prices.
- The expense involved in meeting the latest compliance requirements.
- The expense of finding new tenants if your existing ones decide not to accept your new terms.
- The relationship you have with your HMO tenants. If you trust and like them, don’t underestimate their value – it may be challenging to replace them.
By weighing up the above factors, you should be able to determine whether increasing the rent is a good idea, and if so, by what amount.
It’s possible you may decide it’s appropriate to ask your HMO tenants for rent that is in line with your property’s full current market value.
On the other hand, finding a compromise with tenants is often a better idea. If you can meet your tenants partway, you can be confident of having reliable tenants and avoid the expense and hassle of tenancy turnover.
Thinking long term is always important. The HMO housing market in Chelmsford is fickle and, should you decide to raise your rents significantly now you may find your tenants decide not to renew their leases if the situation changes to a less favourable one for HMO landlords.
Cost-Effective HMO Property Management
If you need guidance when it comes to rent increases for your HMO property in Chelmsford, don’t hesitate to get in touch with our expert HMO property management team here at Chelmsford. We can give you the help and advice you need and can take over management of your property for you, simplifying the process of dealing with all the complexities of owning and running an HMO. Get in touch with us today on 01245 835859 or send an email to firstname.lastname@example.org.