The words ‘rent increases’ is putting both landlords and tenants on edge, however, here are a few factors to know that can make things a bit simpler.
Rent increase and the risk
Rental costs will often cover some, if not all of the mortgage for many landlords. Should the rent dwindle away, the landlord then has the added responsibility of having to cover the cost of the mortgage and it eats into their income and savings.
Therefore, those landlords who receive a steady income from buy-to-let property investments, they are unlikely to want to rock the boat. This is because any increase in rent could result in a tenant deciding that they want to move out.
Even when landlords follow the correct procedures, it almost always comes with a risk.
Moving costs and increased rental cost
For landlords, there is one thing that can make things easier for them and that is the fact that any small increase in rent is likely to be significantly lower than the cost of moving.
The average cost of a move is around £1,200 and this price includes all fees such as deposits, estate agent fees and removal costs. So an increase of even £30 per month would only cost £360 per year extra. Therefore, this would mean that the tenant could remain in the property for around 3-4 years before they spent the same amount as they would have paid to move.
The London rental market
Costs in London are higher across the board and this is no different for moving costs. On average, the cost of moving in London is around £2,043 and this again is made up of the deposit as many landlords request 6 weeks rent upfront.
To add to these costs, there are also administration costs as well as costs for credit checks and tenancy agreements, all of which are non-refundable.
As there is so much competition, reservation fees are also being charged which is another cost that has to be taken into consideration.
Non-refundable fees are the norm
Tenants have to ensure that they take all fees into consideration when putting together a budget and they must also remember that the majority of it is non-refundable. Around 30% of Londoners will pay around £300 in fees while 15% will pay over £400. These charges are now becoming a permanent feature, this could mean that landlords are reassured by the fact that any increase they make will be seen as less of a problem.