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  • Rent increase letter challenged by tenants

    Hi all,

    Any suggestions how you would respond to this would be appreciated :-) :

    Recently I sent the tenants of one of my Auckland houses a rent increase letter advising the rent would increase in 60 days time to the market rent (Dept Building website market rents) level for a 'above average ' house in this specific Auckland suburb. The increase is $30pw and does not begin for 60 days (by which time median rents in the area will have most likely inched up more) . Their TA states that a rent increase is allowed after 180 days - so its legal.

    These tenants have been in the house for 5 months - on a 1 year fixed term TA.
    The house was rented to them below the market rent at the time.

    The tenants (4 adults- all with full time jobs, 1 teenager ) have responded that they cannot afford the increase ... and will need to leave and find another house.

    Am I correct, in thinking that:
    ( a.) if they move out they have to continue paying their rent until I find new tenants - as their fixed term is 1 year.
    (b. ) if they choose to stay then after the legal rent increase notice period is up they pay the increase.

    A week ago, I had the property full insulated at their request and of course,- to meet the new standards - it cost $2.8k, - met a few of their other minor but unnecessary property requests too initially.

    How would you more experienced property investors - deal with this situation?

    Cheers - V

  • #2
    Treat your tenants nicely, why would you increase the rent that quick? Don't be greedy. Yes you spent a bit of money to insulate the home, but this is going to be a requirement.

    Comment


    • #3
      Originally posted by aay View Post
      Treat your tenants nicely, why would you increase the rent that quick? Don't be greedy. Yes you spent a bit of money to insulate the home, but this is going to be a requirement.
      ^^ Totally agree with aay's comments. If you have good tenants and they pay on time, leave the rent alone, absorb the cost of the insulation yourself. As above... Don't be greedy.

      Comment


      • #4
        Assuming the tenancy agreement allows a rent increase during the fixed term ....

        advise the tenants of their rights and responsibilities regarding terminating the fixed term early and the rent increase. For example they can apply to the Tenancy Tribunal to terminate early on the grounds of hardship, but would likely have to pay until a new tenancy is established, and can also apply to have the rent increase set aside at the same time. From what you said, success on either sounds unlikely.

        Disagree with aay and Aston. You are a business, not a charity.

        The tenants are sounding too picky for words. Make sure you know how much notice to give them that the tenancy is not being renewed at the end of the fixed term. They might settle down but if not you are probably heading into more annoyances.

        Comment


        • #5
          Thanks for replies

          Aay and Aston - sorry - but I do not agree that increasing rent to market level is being greedy. Are we supposed to keep rents below market rent? We pay market rates for our expenses such as accountants fees, insurance, plumbers, electricians, insulation, lawn mowing contractors, interest rates etc etc.
          In my opinion, not to do expect market rent for an above average quality property is being dumb. Rental property is my business not my charity. I have other charities I choose to support.

          Artemis - yes the TA does allow for an increase during the fixed term. I will follow your advice and advise the tenants of their responsibilities and rights and take it from there.... :-) Thanks.

          Cheers V

          Comment


          • #6
            I would not advise them of their rights unless you specifically know what their rights are. That can be a minefield. I would advise them of their responsibilities and give them the tenancy help line phone number. 0800836262

            www.3888444.co.nz
            Facebook Page

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            • #7
              Originally posted by Keys View Post
              I would not advise them of their rights unless you specifically know what their rights are. That can be a minefield. I would advise them of their responsibilities and give them the tenancy help line phone number. 0800836262
              I agree with you!

              Comment


              • #8
                No, it's not greedy to adjust the rent so that it's a market rates. Four adults - $7.50 each per week. Less than two coffees.

                But yes, as per Keys - advise them of YOUR rights and THEIR responsibilities.

                And yeah, I would not be renewing their lease after the 12 months either. Demanding and wanting to have their cake and eat it, too.
                My blog. From personal experience.
                http://statehousinginnz.wordpress.com/

                Comment


                • #9
                  Originally posted by vegemiteman View Post

                  Are we supposed to keep rents below market rent?
                  I do. Rent is too high and I do my bit to keep the average down.

                  Comment


                  • #10
                    Why did you not charge market rents 5 months ago?

                    Personaly, just because you can do something doesn't mean you have to/should. I don't think it unreasonable NOT to increase rents for the first 12 months of a fixed term tenancy but that's just me.

                    Are they good tenants? Do they pay their rent on time and look after the place? Were their "demands" for things to be fixed reasonable? I too see landlording as a business but my philosophy is that it is a business based on providing a service and like all good businesses you need to keep your customers happy to prosper. I'd rather charge slightly less than "market rates" and have happy long term tenants who look after my properties than keep putting up my rents to the point the tenants say enough is enough and tell me to F%#K off and constantly deal with the hassle of tenant turn over through being too greedy.

                    As for insulation, well that is not an unreasonable demand on their behalf.

                    Craig
                    Last edited by Courham; 18-06-2017, 09:55 PM.

                    Comment


                    • #11
                      $130pm increase is quite a bit midway through a fixed term tenancy

                      nobody like 'bait'n'switch'

                      the TT won't be sympathetic to your 'legal' position

                      offer to knock it back to $20pw, or even better $10pw
                      have you defeated them?
                      your demons

                      Comment


                      • #12
                        Assuming you can get market rent and your TA allows the increase then let them leave. They have to pay till you get it released so no loss of rents and get it rented at market rates. You're neither a charity nor Social welfare department.

                        Comment


                        • #13
                          Originally posted by eri View Post
                          $130pm increase is quite a bit midway through a fixed term tenancy

                          nobody like 'bait'n'switch'

                          the TT won't be sympathetic to your 'legal' position

                          offer to knock it back to $20pw, or even better $10pw


                          Hey Eri - bait n switch - lol

                          The $30 pw increase brings it up to the current market rent according to Dept Building, Housing, tenancy market rents data base. By the time the increase is implemented the market rents for this area will likely be even higher too.

                          Comment


                          • #14
                            Do you think they will actually move out? Sounds like they are testing your resolve. When I was flatting and easily mobile we would always be negotiating with our landlords for property upgrades, rent discounts, resistance to increases, if its market rent you are charging they would be unwise to actually move.

                            Or they actually want to get out of the fixed term tenancy so looking for a way make it happen

                            Comment


                            • #15
                              It's $780 to you by the end of the year. Not worth worrying over but sure fight it if you want unhappy people living in your very expensive asset.

                              Next year charge full market rent or make it clear that rents will go up once insulation is in up front.
                              Free online Property Investment Course from iFindProperty, a residential investment property agency.

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