Letter Re: Rent increase

[bellybutton]

Just wondering if anyone as any samples or websites with samples of letters to increase rent. I'm just not quite sure how to word it. Thanks for any help.
Found the one below and then the reply from tennent, very well done but don't want this happening to me. ha ha

Dear Tenant
We have reviewed your rent and consider that your rent should increase from $372 per week to $400 per week. Accordingly please increase your three automatic payments for rent to equate to $400 per week from and including Thursday 19 July 2007.

Dear Landlord
We have reviewed your property and consider it to still be cold and draughty. The carpet is worn to threads, the kitchen is a shambles and the bathroom is still too small. Accordingly please resolve these issues by and including Thursday 19 July 2007 before receiving our additional $28 each week.
Yours faithfully.....

[Keys]

Residential or commercial?

Probably residential.

Just follow the format laid out in the RTA.

[bellybutton]

Is residential, cheers I'll look that up now.

[whitt]

This is the exact reason I do the following with increases:

-Keep them small if required eg $5-10. Most people will not leave for a small increase vs a large one
-Do nothing and move rate when tenants change

[spurner]

This is the letter I send out each year (can only find an old one right now), it is actually for a FTT renewal but also usually incorporates a rent increase.

16 December 2006

Johnny and
Adelaide Road
Newtown
Wellington

Dear Tenants

Re: LEASE RENEWAL

The lease on your flat is due to expire on 26 January 2007.

Xxx Property Trust would like to take this opportunity to offer you a renewal of the lease for a further year to 25 January 2008.

Your rent has not increased since you moved into the flat about one and a half years ago, yet rents in Newtown have risen considerably during that time.

The median rent for a 2 bedroom flat in Newtown is currently $277 per week (rental statistics enclosed), and I have recently rented other 2 bedroom flats in Newtown for $300pw. While I feel that your rent needs to increase to a more realistic level towards the market rental, I also realise that I need to take account of the excellent manner in which you keep the flat and indeed the prompt way that you have always paid your rent.

As a result of these two matters I feel that a reduced increase to $270 per week would reflect a more realistic level of rent but also take into consideration the value I place in the continued tenancy of your flat. This increase will take effect on 26 January 2007. I will not require an increase in payment of your bond.

Enclosed please find new leases for the period from 26 January 2007 to 25 January 2008. You all need to sign and return both copies of the lease to me in the enclosed envelope. Please check all details on the lease such as spelling of names, telephone numbers, etc and if any of these are incorrect then indicate the corrections on the signed document you are returning, including new or updated telephone numbers. I shall then counter-sign the agreements and return your copy to you for your records.

Please note that we will be commencing advertising in mid January to let flats for all leases not renewed at that time. If you would like to discuss any aspect of this lease please phone me on 021 xxx xxx.

Yours sincerely




Me
Xxx Property Trust

[whitt]

great letter and a nice way to show tenant a bit of give and take.
well done

[WGN ex-property manager]

This is the exact reason I do the following with increases:

-Keep them small if required eg $5-10. Most people will not leave for a small increase vs a large one
-Do nothing and move rate when tenants change

So you end up with an under-rented property, with tenants motivated to stay because they can't get anywhere else as nice for the money, so you have to wait ages to re-tenant and get market rate.

Market rate is market rate. Rent nice places, charge what they're worth.

[whitt]

OK i Will qualify my statement from previously.

-Small regular increases are better than large ones.
-If I don't increase it will be because of several factors e.g. Time of year/ property cycle, current rent demand in local suburb, how much undervalued rent is, quality of tenant. It is a careful analysis of these factors which determine if a increase is justified or required.

As a side-note when advertising to let the property I tend to err on the side of caution and slightly under rent than try to get the top dollar.

The bonus of this is I get surplus applicants and can choose the best. Plus it is empty less. Nothing feels better than heaps of applicants to choose from.
If one weeks rent at top dollar is $260 PW and property is empty for 2 weeks I have lost $520. If I drop rent initially logic suggests more applicants and possibly less vacancy time. Then in 6 months I can do a small rent increase to bring it closer to market rates. If needed in another 3/4/5/6 months I can do yet another small rent increase.

[Keys]

As a side-note when advertising to let the property I tend to err on the side of caution and slightly under rent than try to get the top dollar.

Who advertises for top dollar around here? It would seem nobody does!

I advertise high and tone it down depending upon the response.

[WGN ex-property manager]

Fair enough - it's always good to hear how others do things.

Here at RentWellington we always do fixed term tenancies, and always line them up to finish at the end of January (peak rental season as the Students are soaking up the entire bottom end of the market).

We write to the tenants a good 6-7 weeks before the end of fixed term, informing than of any rental increase should they wish to stay for another (fixed term ) year. This way we start the stay/go conversation early. Mostly when tenants choose to go we have plenty of notice, so we can run a marketing campaign for the property chasing top dollar, with a fallback of chasing 5% below market rate in the last 2 weeks before the property becomes vacant. Vacanies are rare, and most rents are right up there at the moment.

Case in point : A place of mine rented at $580pw had tenants who chose to go last January. They felt the existing $580 was too much, never mind an increase. Rented with 1 week vacant (due to moving in moving out timing, we actually had it signed up before it was vacant) for $630 (up to $640 once I fit a heat pump). I'm happy, new tenants love it (hey - they're even mowing the lawn, unlike the last lot :-)

[WGN ex-property manager]

Who advertises for top dollar around here? It would seem nobody does!

I advertise high and tone it down depending upon the response.

You can either lead the market or follow it

In the next bubble there will be property educators with "I did it so you can too" stories of people buying a dozen cashflow positive properties in 2010-2012. Those stories won't be filled with people who followed the dbh market rent average. they will be filled with people who defined it for 2013.

[whitt]

That is why knowing the cycle helps. If there is upwards rent pressure and demand is good then increasing rents is good.

DBH figures are only good as an indication and you need to know where your property lies within this band. The figures can be old too.

[WGN ex-property manager]

Here in Wellington if I can't beat upper quartile dbh numbers their either I'm doing something wrong or the property needs a makeover.

[bellybutton]

This is the exact reason I do the following with increases:

-Keep them small if required eg $5-10. Most people will not leave for a small increase vs a large one
-Do nothing and move rate when tenants change

only gonna pop it up $10.00, this will be there first rent increase since moving into property about twenty months ago, since then rates have gone up here, our insurance increased slightly and had to replace hot water cyclinder, so i feel this small rise should not cause them to leave.

[bellybutton]

This is the letter I send out each year (can only find an old one right now), it is actually for a FTT renewal but also usually incorporates a rent increase.

Thank you, its a professional well worded letter, you don't mind a bit of plagiarism on my part do ya?