Increasing rent can be a pain-point for landlords and requires thoughtful consideration of the current market, your relationship with your tenants and the long-term repercussions of the action. These are some of our thoughts on rent increases and how to approach them.
Know Your Rights and Responsibilities
Before making any adjustments to rent, landlords must understand their obligations by law.
In New South Wales, under the Residential Tenancies Act 2010 and Residential Tenancies Act Regulation 2010, a landlord can only increase rent if written notice of 60 days is given and in the event that rent is increased tenants may lodge an objection if they believe that the rent is above market.
Having good tenants and no vacancy makes much more sense economically than pushing for the highest rent possible and losing a good tenant. All business relationships thrive when there is an understanding between the parties involved and we believe this applies in a big way to the leasing world. If the Landlord is not asking for the highest rent possible and the tenant feels appreciated for their on-time rent payments and taking good care everyone benefits from a long-term tenancy, reliable rent payments and a well cared for property.
Assess the Market
Increasing the rent of your property needs to be an informed and educated decision. To set a fair rental figure, consider the state of the current market. Are vacancy rates high? How does your current rent compare to similar properties in the area? If there is a difference, do the features and amenities your property provides justify this discrepancy?
Rental prices are predominately influenced by the pricing of similar properties on the market. Making small, regular adjustments to your rent will help you maintain your rental return and avoid the need for large sudden increases that may encourage tenants to move on.
Discuss the state of the market with your property manager and get their advice before deciding. No-one understands the market better than the people who are working in it every day.
Foster a Lasting Relationship with Your Tenants
Increasing rental rates proves a delicate balancing act between keeping your financial interests in mind, whilst also delivering just prices to your tenants.
Ask yourself the following questions when considering an increase: how long has it been since the last rent rise? Am I willing to risk losing loyal tenants for a higher weekly return or should I perhaps wait a bit longer? What might be the financial impact if the tenants vacate the property due to the rent increase? What might the financial impact if I do not increase the rent?
Communication is Key
Clear correspondence is the most effective way of avoiding conflict with your tenants. By providing ample notice about rental rate increases, your tenants are assured the time necessary to budget for these adjustments.
Prepare to address any feedback from your tenants and offer sensible reasons to justify the increase you are asking for if required. For example, higher outgoings such as interest rates and any improvements to the property that will improve tenants’ quality of life. Discuss this in a fair and direct manner that explains your situation and in addition to this remember that the property you own was purchased as an investment and it is not unfair that you would want it to show a return.
Regardless of the details of the situation, having a property manager communicate on your behalf will help remove unnecessary emotion. If your property manager has a good relationship with your tenants this will be advantageous from a negotiation perspective as well. An experienced property manager will be very familiar with the process involved in a rental increase and the ability to explain a somewhat sensitive situation and move towards an outcome that suits both parties.
About Laing & Simmons Double Bay Property Management
Laing + Simmons Double Bay Property Management is part of a high-profile franchise group yet remains independently owned by Principals Suzie Reid and Bart Doff.
The office is acknowledged as the market leader in prestige Eastern suburbs leasing, a reputation which has been forged in over 25 years leasing and managing a large portfolio of the best properties available in the Eastern Suburbs rental market.
Contact us today to see how we can help manage your investment property, or to find a rental property to suit your needs.