If you have been charging your tenants the same amount of rent for years, it may be time for an increase.
Your decision to raise the rent will come down to the following factors:
The date of your last increase
Rental property availability is low in many urban and regional areas across Australia, which is pushing prices upwards. If you haven’t increased your rent in some time, a change can probably be justified to be in keeping with market rates.
A change in tenants
It makes sense to review how much your property is leased for when you are between tenants. You may decide to spend a couple of weeks replacing old carpet, adding fresh paint and upgrading the home by adding new kitchen cabinets or built-in wardrobes, which will make the place more appealing and allow you to charge more for it.
The terms of your contact
Rules vary from state to state but generally you can’t just lift the rent at any time. You need to give notice to your tenants and you can’t usually raise the amount they pay until the end of the contracted period.
If you have a good property manager, he or she will include terms about rental price increases in the rental agreement. This way, you can plan ahead for a rent rise.
The value of your tenants
Long term tenants who treat your home well may be more valuable than an extra $50 in rent per week from people you don’t know or who aren’t reliable.
If you do decide to increase the rent and you have good tenants, be prepared to negotiate. For example, they may agree to a price rise if you allow them to have a pet or install an air conditioning unit.
Talk to your property manager about the state of the local market and whether it is worth the risk of losing good tenants because they can’t afford an increase in price. If there aren’t a lot of renters in your area, it may be a smart move to hold on to the tenants you have.
How much can you increase rent by?
The laws about rental price increases and frequency change from state to state. For example, in Victoria, rent can only be increased once per year. What’s more, for a rent increase during a fixed-term rental agreement, the amount or way a rent increase will be calculated must now be included in the rental agreement.
Your property manager is the best source of information and support when it comes to rental price increases. They will be able to explain to you what’s possible, what’s recommended and what aligns with your goals as an investor. You can also ask your property manager to negotiate and communicate a price change with the tenants on your behalf.
Need more advice on increasing your investment property’s rent? Contact our rental team today on (07) 5501 4000.
