Recently a few Landlords have revealed to us their bad experiences with rent increases due to their previous Property Managers lack of attention.
Getting the procedure, timing and price right is imperative when it comes to increasing the rent on an investment property. However in some cases it can go very wrong.
One client advised me that they had a rent increase agreed with the Tenant and appropriate notice given however it was not until months later that he realised that the Tenant was still paying rent at the lesser amount and this was due to the former agent not updating their property management program and accounting process. That Tenant since moved out and they lost the income due to the error.
The most common complaint we hear is that the Tenants have been in an investment property ‘X’ number of years and not once has a rent increase been discussed with the Landlord. Now of course it is not every year that rents will go up, it is however important to be aware of the market around your investment property and to raise this subject with the Property Manager if you feel they have not assessed this already for you.
A few things to keep in mind with rental increases;
- If the tenancy is a fixed-term agreement, the landlord or agent cannot increase the rent before the end date, unless the lease states otherwise.
- In any case, the landlord or agent must not increase the rent more than once in any six-month period.
- The landlord or agent must give the tenant at least 60 days notice of any rent increase, in writing using the correct documents.
- Tenants can request an assessment be carried out by Consumer Affairs if the tenant feels the increase is excessive
More information can be found at http://www.consumer.vic.gov.au/housing-and-accommodation/renting/during-a-lease-or-residency/rent-and-other-payments/rent-increases
Keeping rental inline with current market conditions is crucial. If your property is priced well below market it could take years and many rent increases to catch up to the current market price and you face the risk of upsetting your existing Tenants by frequent six monthly increases.
An annual rent assessment at the same time as during a routine inspection is the best way to ensure your property is being maintained and your rent is in line with current market conditions.
If you have any questions or have anything to share please feel free to contact us.