The Rent Review Specialist
Landlord Proposals
01/03/2014
Years ago, an institutional landlord, a well-known insurance company, whom I found myself acting against on numerous occasions, used to include £500 pa margin in its proposals for rent review which struck me as ambitious but in most cases nevertheless insurmountable. Thinking I'd like try the same approach, I experimented by recommending a nominal margin for a proposal on behalf of a landlord-client. My client's reaction was perhaps only to be expected. In his view, tenants would expect the margin to be considerably more and would want a substantial reduction. A small margin would allow me little room for manoeuvre.
The size of the margin I told him was of no consequence to me. The client was happy with my recommended rent, it was my task to achieve it. Despite trepidation, the client allowed me to go ahead. To cut a story, I achieved the rent I was after.
Unlike that insurance company, whose £500 margin seemed to be the norm, I tailor my recommendations to suit the circumstances so if you're a tenant and on the receiving end of a proposal from my landlord-client there's no certainty the margin would be the same in each case.
The point, however, is whether possible to negotiate based a small margin. The answer to that, I suggests, depends upon one's attitude at the onset.
For example, let's assume the passing rent is £28,000 and market rent £30,000 a year. A proposal including 10% margin would be £33,000 pa but there's a risk that if the difference between the proposal and the passing £28,000 is not that much then that could invite the feeling that the landlord isn't expecting any increase. In bartering psychology, therefore, it would be better to inflate the proposal to £35,000 on the assumption that the tenant would offer at least £30,000 to start with.
My only experience of unrepresented landlords is when acting for their tenant, and vice versa my experience of unrepresented tenants is when acting for the landlord. Generally, unrepresented landlords like to barter and expect their tenants to do likewise but actually there is no reason for a tenant to barter if that would result in agreeing more than necessary. Bartering is not the same as negotiation, or at least not the same where the terms and conditions of the lease are taken into account as would happen when the tenant is represented. Consequently, bartering can come unstuck when faced with a refusal to play the game.
In my experience, unrepresented parties tend to focus on the rent to the exclusion of all else. But that can be to their disadvantage because the terms and conditions of the tenancy have a bearing on the rent and there may well be something in the 'small print' to one party's advantage.
The size of the margin I told him was of no consequence to me. The client was happy with my recommended rent, it was my task to achieve it. Despite trepidation, the client allowed me to go ahead. To cut a story, I achieved the rent I was after.
Unlike that insurance company, whose £500 margin seemed to be the norm, I tailor my recommendations to suit the circumstances so if you're a tenant and on the receiving end of a proposal from my landlord-client there's no certainty the margin would be the same in each case.
The point, however, is whether possible to negotiate based a small margin. The answer to that, I suggests, depends upon one's attitude at the onset.
For example, let's assume the passing rent is £28,000 and market rent £30,000 a year. A proposal including 10% margin would be £33,000 pa but there's a risk that if the difference between the proposal and the passing £28,000 is not that much then that could invite the feeling that the landlord isn't expecting any increase. In bartering psychology, therefore, it would be better to inflate the proposal to £35,000 on the assumption that the tenant would offer at least £30,000 to start with.
My only experience of unrepresented landlords is when acting for their tenant, and vice versa my experience of unrepresented tenants is when acting for the landlord. Generally, unrepresented landlords like to barter and expect their tenants to do likewise but actually there is no reason for a tenant to barter if that would result in agreeing more than necessary. Bartering is not the same as negotiation, or at least not the same where the terms and conditions of the lease are taken into account as would happen when the tenant is represented. Consequently, bartering can come unstuck when faced with a refusal to play the game.
In my experience, unrepresented parties tend to focus on the rent to the exclusion of all else. But that can be to their disadvantage because the terms and conditions of the tenancy have a bearing on the rent and there may well be something in the 'small print' to one party's advantage.