Rent increase

[cecile]

Hi all,

(newbie here, apologies if the question is silly or has been posted before)

Is it common for the property manager to increase rent without consultation?
I texted one of the property managers in March and he advised that he would let me know once his inspector gets back to him, then no word... I assume he's left.
So I contacted the other property manager in July and she advised that they had increased rent by 5% in May, due to kick in in July.
Which was a bit of a surprise, as there was no consultation whatsoever.

Is this common, or are they taking liberties?

Also, the water situation.
Should the landlord (not me unfortunately, I'm just acting on behalf) pay for the water bill (deducted out of the rent) in month 1, and have it refunded by the tenant in month 2? (this is the fixed portion) How do you handle yours?

Cheers

[BigDreamer]

Hi Cecile,

Regarding the water question - Landlords are responsible for paying for the fixed water charges. The Landlord can choose to pay for the volumetric water charges or they could pass this over to the tenants.

Regarding the property manager increasing rent without consultation - I would not have expected this to happen and keen to hear if this is the norm or not as I property manage all my investments.

[artemis]

If you pay the bucks to the PM you should expect them to get you the best return they can. That's their job. I suppose if an owner has specifically asked to be consulted then that should happen.

I would be more concerned if the PM did not regularly review rent against market rates.

[Bob Kane]

You're upset the PM increased the rent?
<there's something wrong with your point of view>

[cecile]

Hehe maybe I was after a 10% increase... tbh I'm not sure. The person I'm acting on behalf of is based overseas and does not increase her rents that often. My issue is really the lack of dialogue, they didn't ask what I wanted to do.

Re. Water, paying for the fixed charges is ok, but is it normal that we pay both fixed and variable, and tenants refund the variable portion the following month? (Whoops I didn't properly formulate my question).

[Keys]

What's in the PM authority regarding rents?

[BigDreamer]

Re. Water, paying for the fixed charges is ok, but is it normal that we pay both fixed and variable, and tenants refund the variable portion the following month? (Whoops I didn't properly formulate my question).

Yes, that is absolutely normal. I would never trust my tenants to pay for the variable water components directly to watercare anyway. I would always pay the full water charge myself and ask the tenants to pay me the variable water component to my company's bank account usually a week after due date (I try to give them at least a full 3 weeks to pay).

[cecile]

The agreement days that they have to "Review the rent regularly"... No further details.

So when the tenant refunds you the volumetric portion, does it mean that you pay their GST on it? Or that you pro rata and include it? Suppose it's not that much unless you have a swimming pool or they're bath lovers.

[BigDreamer]

Cecile - if the property is based in Auckland and you get a watercare invoice then the volumetric charges already include GST so you would not need to add GST on top.

[Wayne]

Also, the water situation.
Should the landlord (not me unfortunately, I'm just acting on behalf) pay for the water bill (deducted out of the rent) in month 1, and have it refunded by the tenant in month 2? (this is the fixed portion) How do you handle yours?

I pay the bill when it is due (automatic payment so I don't forget).
I pass the bill to the PM when I get it and they get the tenant to pay their share.
So yes I pay one month then get the money back later.

[Salamander]

From a property managers perspective we would expect to be monitoring the rent, and, in the current climate, increasing it at each six month review. We would not discuss it with the owner prior to setting the rent unless they specifically asked to be involved. We do advise them immediately of the increase and the date it will become effective. That level of communication should be a given. In general it is our job to know what the market rent is and try and push that a little at each review.

That is not to say we do not have discussions with owners regarding rent from time to time as part of our normal communication, for example if an owner purchases a new property with an existing tenant who is not paying enough,( we would discuss our strategy for increasing it to ensure it does not become vacant at a time of lower demand. We might also suggest to an owner specific improvements they could make to a property to increase the rent.

As far as water goes we have invoices for metered water redirected to us so we can invoice the tenant and pay the water provider on behalf of the owner. In most cases these come in very early in the month so the tenant is sent an invoice immediately to be paid within 7 days. If they have not paid with that time they get a text, then email reminder in order to have the payment before the invoice is due to be paid.

This means that in nearly all cases the expense and the tenant’s payment appear on the owner statement in the same month. It would only slip into the second month if the water bill comes later in the month or we have done a special reading when a tenancy ends in the middle of a water billing cycle.

(When I get better at this I will pop the quotes in the right places )

[Wayne]

As far as water goes we have invoices for metered water redirected to us so we can invoice the tenant and pay the water provider on behalf of the owner. In most cases these come in very early in the month so the tenant is sent an invoice immediately to be paid within 7 days. If they have not paid with that time they get a text, then email reminder in order to have the payment before the invoice is due to be paid.

Do you charge a % on outgoings you pay?

[Salamander]

Do you charge a % on outgoings you pay?

No we do not charge a % on regular outgoings or on invoices for maintenance.

If we are doing a substantial renovation for an owner that requires project managing we will include a charge for our time in our quote.

[Judez11]

Hi.
I have been in property management for over 16 years and I consider it normal practise to consult with the owner before taking any action, including rent reviews. While I agree it is our business to know the market it is the owners decision on weather they want a rent increase. I believe a lot of property management companies push rent increases as a way to increase their income. (percentage based)
Regarding on charging the water. Paying watercare and than recouping the money is normal practise.
As a way of off setting late payments I now offer my tenants the option of paying extra per week to help keep on top of this cost. A lot of people live week to week and have to budget for extra costs.

We do not charge a % at all. All work is covered by the monthly fee.