“I’m sorry, we need to talk about the rent”
Was my opening line to the tenant.
And I meant it.
Having owned the property for several years, even I was shocked by the 25% increase in the rental market in the last year. Which equates to a three-digit sum. But then, this is London – where prices can and do skyrocket overnight.
But businesses are not built overnight and good customer relationships take years to build.
Which was why I was apologising for my call, and why – contrary to widely-held belief – I was not about to plunge into the recesses of my tenants’ sofa and grab out every last surviving penny.
“I don’t know if you’ve noticed the local property market, but rents have risen quite a lot…” I tailed off, anxious as to how I could possibly explain the ridiculous increase.
“No, I haven’t been looking Sam, this is our home and, you know, we just live here”.
I felt a stab to the heart. Of course they do, I chastised myself – just because my world is property obsessed, it doesn’t mean my tenant’s world is.
Which wrong-footed me immediately. And I found myself garbling nervously:
And it may seem odd, that I as the landlord was nervous, but I didn’t want to lose my good tenants and I didn’t want to lose out on a rent increase. Which is a difficult juggling act – kind of like trying to eat a triple-decker chocolate bar with NO calories.
So having discussed comparable property rents (and knowing full well the first thing the tenants would do when they get off the phone to me would be to scour Zoopla) I told them: “But you know, I want to look after you, and so I will always charge you a bit less than the market rent because you are special to me”. Which are not just words – I mean it – and do it; I have always kept their rent below the market value.
And then, I left it with them. I said: “Listen, I know I have called you with quite crazy news about the local property rents and so why don’t you take a few days to have a think and have a chat with your husband and let’s talk then to see how we can work together. Does that sounds like a plan?”
So the plan was agreed along with a follow-up call 3 days later.
Which has just happened.
And I knew full well this was not a call that my tenants would like. Not at any time of the year. But especially not so close to Christmas and having two children. Hell, even I felt bad about making the call. But, I am not running a housing charity and property investments are investments.
“So, I’m just calling about the rent situation and I’m wondering if you’ve had a chance to think about this and have a look at what I said” was my opening line.
I admit, I was putting the ball in their court, which was what I wanted to do.
“Yes, we’ve had a look and we understand that we need to pay more rent, but you know Sam, this is so much extra money for us…”
Which I knew and I understood – and I had planned for. Before making the call, I had already decided the lowest figure I would accept to keep them as tenants.
“We have a proposition for you” my tenant said.
“OK then, tell me your proposition” I replied.
“Well, the thing is Sam, having looked at the market, what we would like to say to you is that we love living here, but this property has now had us living here for 6 years and so it’s not as new as some of the other properties on the market….”
Which was true and another good point as to why I was willing to keep their rent lower than the rest of the market. When tenants leave, there are always upgrades to be made – especially when tenants have been living in a property for several years.
“And so what we’d like to propose is a rent increase of…” which equated to 18%.
My boyfriend, who’d been in the other room when I’d been on the phone, tells me that I said yes too quickly and accused me of being a “softie”.
He could be right.
But then he doesn’t manage the property portfolio and he doesn’t know what it’s like to genuinely want to keep good customers.
Because ultimately, your customers can make you or break you. And I don’t want the latter.
I prefer the fact that despite this massive rent increase, my tenants have thanked me. They are grateful to me for listening and wanting them to remain my tenants. And, I too, am grateful to them. Because relationships are a two-way thing.
Price increases are never welcome, but how you handle these increases will determine who you get to call your customers – and for how long.