I'm lost!

[Accidentalll]

I am an accidental landlord and I'm in unfamiliar territory without a clue.

3 years ago in May I bought a house with one of my friends as we were both wanting to get on the property market. We took out a 100% mortgage and then the prices fell through the floor.

It was no problem really as we could both afford to pay the mortgage (and still can) but my friend then joined the army and moved to Germany and I moved in with my other half.

We decided to rent the property out and enlisted the help of a letting agent to do all the work.

They got some lovely tenants in for us and that was that, the tenants found it more helpful to call my dad to come and deal with any problems they have with the property and an all communications have been pretty much direct.

Then about a month ago the letting agents contacted me to say that the tenants had requested a rent reduction from £600 to £500 due to the hard economical times and what they perceive as a reduction of rents in the area.

This is fuelled by a house further down the road being up for rent at £500. This house is completely unfurnished, smaller and not as pleasant as ours.

I spoke to someone at the letting agents that I am friends with and they suggested that we meet them half way and accept £550 a month but get rid of the letting agents to make up the shortfall.

I rang up the tenants and spoke to them about this and they seemed happy with that.

Then last week the letting agents took me off their books, waived the months rent fee for cancelling the agreement and set me up as a landlord on the dps and sent the deposit over. Basically took themselves off the books.

Now I have received a message from the tenants saying that they are willing to sign a 12 month contract but again stating that they only want to pay £500 a month.

This amount does leave a shortfall between what we were collecting before and after the letting agents dropped out of the equation. There is a good rental market and shortage of nice houses in the area and I have been assured by letting agents that they could definitely get someone in paying more than the £500 a month.

The tenants however are good tenants and I would like to avoid the cost of having to advertise the property again after just coming off the lettign agents books..

As experienced landlords I was hoping some of you may have some ideas on how to tackle the problem or negotiate successfully.

I also haven't got the hip pack as the tenants moved in previous to the legislation coming into place so it wasn't required so will have to pay for that if the tenants change.

Sorry for going on and giving my life story in my first post but I am totally clueless and everyone keeps talking to me like I'm an experienced landlord who has full knowledge of all the rules and regs and mysterious workings...

[Lawcruncher]

The first step is to say to the tenants: "I thought we had a deal." If that does not work you have to weigh things up. How far do you think you can push them before they go? Are you going to call their bluff and say: "OK, when you find somewhere the same or better at £500 a month give me notice"? How easy would it be to relet at £550 a month or better? Do you want to lose a "lovely" tenant? Is it worth a lot of hassle when you take into account reletting costs and a possible void period?

[fletchj]

As advised this is a straightforward negotiation - you have to decide what you will accept and what you would like and negotiate. If you push too hard and they leave you are likely to have a minimum void of a month or 2 so that could cost you 1000 or so plus any tenant finding cost. (Which is 20 months of 50 quid less per month!)

On the other hand the fact that the tenants are willing to sign a 12 month contract says to me that they don't really want to go through the hassle of moving - which will cost them money and stress.

On the basis of what you have said ONLY my guess is that if you say you aren't prepared to go below 550 they will probably agree but this is a judgement call you will have to make based on the specific individuals involved.

[Accidentalll]

Thank you Lawcruncher, I think I am going to say that I think my offer was good and that state my case for there not being many nice houses in the area, and tell them to have a think about it. I also have to tell them to cancel the standing order to the letting agents at the same time though so don't want to let them decide their own fee to set up to our account!

[chappers2341]

Are they still within the fixed term of their tenancy and if so how long does it have to run.

Personally if you feel that you can obtain better rent than they are offering I would call their bluff and if they want to leave, then find some new tenants.(subject to the relevant notices being given)

[Accidentalll]

Hi Chappers

No the fixed term finished about 18 months ago. My right hand tells me to take your course because they are being awkward but my left hand is telling me to be calm and reasonable! :rolleyes:

[chappers2341]

You need to treat this as the business transaction it is. if you can genuinely get £600pcm then why should you let them didctate to you how much they will pay, give them their notice and find yourself some new tenants and let them go find their £500pcm and everyones happy.
You then have an extra £1200 pounds a year in your pocket, start thinking what you could do with that and you may lokk differently at the whole situation.