Rental increase with existing tenant

[Keys]

Question: Is the property under rented for it's current condition?

Answer = yes. Increase the rent
Answer = no. Don't increase the rent.

If the answer is yes, then, after the improvements happen, raise the rent again.
If the answer is no, then raise the rent after the improvements happen.

There is provision in the RTA for a rent raise sooner than 180 days if the improvements have been substantial.

[RevT]

Question: Is the property under rented for it's current condition?

Answer = yes. Increase the rent
Answer = no. Don't increase the rent.

If the answer is yes, then, after the improvements happen, raise the rent again.

Yes it is under rented for its current condition = so can increase rent to X.

But, if tidy up work is done then rent can be increased to Y.

Do you send out a rent increase letter to X, knowing you will have it there for a minimum 6 months.

Or do you send the increase letter for Y stating the tidy up work will be done?

Or do you complete the work first then send the letter asking for Y? (but lose a few weeks of increased rent, which come to think is possibly not a bad option if the TT is potentially to be involved)

We don't want to make any promises to the tenant about what will and wont be done in case they use it against us later.

There is provision in the RTA for a rent raise sooner than 180 days if the improvements have been substantial.

I guess the key word that everyone will have their own opinion on is 'substantial?'

[Wayne]

If it is, say, $20/wk under rented now and you will take 2 months to upgrade I'd leave the increase until after you have upgraded.

If the upgrade is going to increase the rent by, say, $60/wk then I would start the upgrade and when substantial inprovements have been made (to show that you really are doing it) send the increase letter on the basis of the finished product.

I believe sending the increase letter based on an upgrade that hasn't even started is putting the cart a little before the horse.

[Keys]

Yes it is under rented for its current condition = so can increase rent to X.

Do this.

But, if tidy up work is done then rent can be increased to Y.

Do this

Do you send out a rent increase letter to X

Yes

Or do you send the increase letter for Y

120 days into the renovations. Not before. Then, allowing for the time frame of 60 days for the increase it will be effective at 180 days.

Edited to add. Unless the renovations are substantial, then you can increase sooner. But, why worry about the time frame? The increase will happen anyway. If it's a $20 per week increase after renovations, it's only $520 for a six month period.

[DazRaz]

I've been told by the Tenancy Helpline that we can't give them their 90 days and put them on a new tenancy agreement just to get a bond - it would be seen as 'retaliatory'!

Sounds like the Tenancy Helpline is suggesting you just give a 90 day notice and not offer a new agreement. Would be fun to say "Sorry, I can sign you up for the new rent and bond. The Tenancy Helpline have advised me not to so I have to get new tenants in".

[Keys]

I terminate all sitting tenants when I take over a tenancy and start them on my tenancy agreement. Every time the bond is an issue as no one seems to ask for four weeks bond, or, if they do, they don't increase the bond with rent increases. Just got one yesterday from a largish Christchurch firm. The tenancy is 7 years old and the bond was set at two weeks rent at the in-going rent rate. It is now shy of four weeks rent by $1000. A large risk for our new client.

[Wiz]

Is there a mechanism you can you use to increase the bond in line with rent increases to sitting tenants Keys? Or does it only apply when taking a new tenant/ terminating a sitting tenant and then starting them on your own TA? I raise rents 5% a year, and over a couple of years this can easily account for a couple of hundred difference between 4 weeks at the current rent and the bond originally paid.

[Keys]

Bond equals $1600 or four weeks rent, whichever is the greater.

That is in my tenancy agreement. Obviously the dollar value is not the same between tenancies but you catch the drift.

When the rent increase letter goes out. Notification to increase the bond amount goes out as well.

[Perry]

Communication with the tenant, has and still is very pleasant and civil.
We just have different perspectives on 'market rent'.

Just how much meaningful dialogue have you had with the tenant?

All the advice given so far seems to have been what I'd call 'legalistic.'
Given the nature of your question, that's understandable.

But have you laid it all out with the tenant, over a cuppa, in a neutral
environment? A time when the inadequate TA can be mentioned; that
there is no bond and you want one; that you are keen for the present
tenant to remain; that the place needs a tidy-up; that the rent is below
current market rent (no figure mentioned) and so on?

You don't want an unhappy tenant, but you'll probably be unhappy if
you have no tenant at all.

Some tenants respond well to a cordial chat. I've had a few that did
not. One went to the TT over a tenancy termination and lost and was
very disappointed. Yet we were able to settle other outstanding mat-
ters in between Hearings, which tended to indicate that we might've
been able to resolve the issue, had a cordial chat been possible or
attempted, beforehand.

Takes all sorts, as the expression goes.