Saturday, March 13, 2010

Lease renewal

Not only have property prices risen over the last 12 months, but so have rents.

One of my leases ran out at the end of February. The tenant gave notice that she intended to move out claiming that the new rent I was asking for was too high. I agreed that she could remain in occupation for an additional month on condition that my agent was allowed to show prospective tenants through the flat on reasonable notice during that month.

Two weeks later, she is asking my agent if I am still willing to renew. Apparently, my asking rent was probably a bit on the low side and she could not find a similar apartment at a cheaper rent. Needless to say I said yes. I avoid a break in occupancy and I keep a tenant who has been in occupation for three years during which she has paid the rent on time and has only called requesting repairs twice (both of which she was quite entitled to do).

The 14% increase in rent is nice. To put that in context, it will pay the school fees for one of my children for this year. The no vacancy factor is also nice as it avoids both a break in cash flow and having to do some cosmetic repainting. The only minor irritant is that if she had agreed to my proposed rent in the first place I would not have engaged the agent. As things stand, I have to pay the agent his commission. Fortunately, he has agreed to only charging one third of his usual rate for this one.

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