Should I reduce the rent?

T

twofor1

Registered User
Messages
1,631
Has any Landlord been asked to reduce rent during a one year lease? (5months in this case) Tenants are having difficulties with the current downturn.

If so how did you deal with this request? Or how would you deal with it if asked? Is there any good reason why I should reduce the rent?

There are plenty of similar houses advertised in the area, but nothing cheaper, though they claim some of these would accept less. They have paid on time and have not given me any problems.

Any opinions appreciated.
 
If they're good tenants, keep them. There's a surplus of rental accommodation at the moment, and you might face having to drop the rent to that level anyway, and end up getting muppets in.
 
A lot of tenants chance this to see if you will move. No loss to them if you say no.
If their financial situation is dire, it would be wise to see some proof of this. That being the case, it's up to you to decide if it's genuine or not.
Being a landlord is a business at the end of the day.
Would you rather your tenant to have to make cutbacks, or you?

So seek proof of their situation, and decide at that point what is right for you.
Also, could this just be the start of it - you could be facing late payments and a host of other things down the line, if their situation is deteriorating.
Business is business at the end of the day.
If their financial situation had improved, would you have jacked up the rent after 5 months?

As a compromise, if they are geniunely in trouble, you could always ask them to paint the place and do odd jobs in return for lowering the rent.
If they refuse, you know what to do....
 
new neighbors of us recently got the rent reduced by 11% by their landlord... D15 area... they are just 4months into the house... most of the suburbs see decline in rents... so if you can get new tenants, dont decrease... if not better to have them on a reduced rent... atleast you are guaranteed regular rent...
 
cancan said:
A lot of tenants chance this to see if you will move. No loss to them if you say no.
If their financial situation is dire, it would be wise to see some proof of this. That being the case, it's up to you to decide if it's genuine or not.
Being a landlord is a business at the end of the day.
Would you rather your tenant to have to make cutbacks, or you?[/quote]

Are these general observations about not reducing rent, or specifically because there is 7 months still to run on the lease both parties willing agreed to? Hopefully the latter, because everything you have said could be quite easily turned on its head otherwise - the landlords mortgage is not the tenants problem, equally the profitability of the landlords 'business' is of no conern to the tenants.
Click to expand...
 
The tenant is a few months into an agreement they signed. They are liable to pay what they signed up to in full till the lease runs out. If they leave they are obliged to pay rent till the contract runs out or find someone else, nevermind loose their deposit.

Having said that, you will probably want to act in a way that maximises the amount of money in your pocket at the end of the day, and if their case is genuine it may be in your interest to cooperate. I too rent out a house in 15 and have droped rent by circa 10%. Having said that, I've had a pick of em at that level
 
twofor1 said:
Has any Landlord been asked to reduce rent during a one year lease? (5months in this case) Tenants are having difficulties with the current downturn.

If so how did you deal with this request? Or how would you deal with it if asked? Is there any good reason why I should reduce the rent?
Click to expand...
I've had tenants ask for a reduction before they moved in which I agreed to. Due to the current economic situation I am expecting more requests including for sitting tenants to which I will probably agree. It's tough out there and I'd rather have my rent on time, plus good tenants staying, than lose them and face the prospect of trying to pick good one's again plus having a vacant period. I personally would not ask a tenant for proof of their straightened circumstances as I think it's fairly obvious in Ireland right now anyway.
 
Last edited:
Haven't been asked.

Have you done any research yourself into the rent of similar properties in the same area. That should tell you if you should reduce the rent or not. If it was a genuine request and the research backs it up, I'd reduce the rent. Better to have a tenant than spend a few months looking for a new one. Compare the costs of reducing the rent vs a few months rent.
 
Thanks for the replies.

My tenants have asked for a reduction, or when their current month ends in two weeks, could they leave, would I give them back their deposit, and they would then rent similar in an adjoining estate cheaper.

They are already paying less than the cheapest advertised, I do believe though in the current climate some of these would reduce their asking price below what I currently get.

If I agreed to them leaving, I will loose at best several months rent, and probably have to accept a lesser rent in order to get new tenants in the new year.

If I tell them I will not return their deposit, then there would be no financial gain for them in moving, so they would probably stay. Although I am entitled to do this I’m sure it would be seen as unreasonable with their current difficulties. It is far better for all to keep relations good.

I am satisfied it is a genuine case and I understand they need to save wherever they can. I need rent to pay the mortgage, there is no obligation on me to do so but I think my best chance in these difficult times is to reduce the rent as requested, and hope they stay and pay.
 
Two things.
If their situation is genuinely dire, are you not just going to put off the inevitable for a few months, and create more headaches for yourself?
I don't see a fractional reduction in rent is going to do much.

Also, I still feel that asking them to do some work for you in the house, in liu of reduced rent is fair. Thus, they get something they want and you get something you want, which is good for both parties.

I just think you are setting a precident that may come back to bite you further down the line.

Perhaps restarting a 12 month lease at the lower rate is fair, if that is the direction you wish to take.
 
cancan said:
...
Also, I still feel that asking them to do some work for you in the house, in liu of reduced rent is fair. Thus, they get something they want and you get something you want, which is good for both parties....
Click to expand...

I don't think thats a great idea unless you are sure of the standard of the work they will do. Some bad DIY or painting will be more trouble than its worth.

Its a fair point to consider this maybe the start of a slippery slope. But then on the flipside perhaps its the start of a rental slide in general and then what do landlords do.
 
aircobra19 said:
I don't think thats a great idea unless you are sure of the standard of the work they will do. Some bad DIY or painting will be more trouble than its worth.
Click to expand...

It's only an example. Maybe the tenant is an accountant and can do your books for free. Barter something instead.
Prima Nocta maybe :)
 
There are plenty of reasons for the request and one of them could be that their friends have recently done it so they are taking a punt aswell. What you need to weigh up is the liklihood of getting in another tenant at the current rent and whether the current tenants are going to be in a worse situation again in the next 4 months, it might be worth considering putting it on daft again to see what interest is out there.
 
Just how much cheaper do your tenants reckon they'd get a place for in the adjoining estate though? If they break the lease they are liable to lose the deposit at least so (assuming 1 month's deposit) they'd want to be paying well over 100 less a month next door before they even break even by moving at this stage. Moving is a hassle and they won't do it unless they have to, so leave them as they are and tell them the rent may be reviewed when the lease is due for renewal. They may be in financial trouble but they did sign a lease. If you are in trouble you can't go ask your bank for a mortgage reduction. The time for rent reviews is at renewal time, not mid-year. They won't leave just for spite at the end of the lease period if you are prepared to lower the rent at that time.
 
I would be inclined to negotiate a decrease with a new 12 month lease. This is assuming the decrease is modest and that the tenants are worth keeping. There is definetly downward pressure on rents atm and even one month vacant is likely to amount to more than the decrease they would accept.
If as you say there are plenty of other houses in the area at similar prices then it stands to reason that one or more will accept a lower price.

What rent are you charging and have they indicated how much of a decrease they are hoping for?
 
According to today’s Daft.ie Rental Report; rents have fallen by 11.7% from their peak in June 2007 and the rate at which rents are falling is gathering pace. The supply of rental properties has grown from 5,000 in January 2007 to over 18,000 in November 2008. Tenants should be aware that they are in a stronger position to haggle, when it comes to agreeing a rent .



http://www.daft.ie/report/Daft-Rental-Report-Q3-2008.pdf
 
Someone in the office was just telling me that rent in their properties area (for similar properties) has fallen in the past few months a couple of hundred euro. I hadn't heard about it. But it seems to be a general trend. I just wonder how landlords deal with it.
 
You must log in or register to reply here.
Back
Top