• Login:
Welcome, Register Here
follow PropertyTalk on facebook follow PropertyTalk on twitter Newsletter follow PropertyTalk on LinkedIn follow PropertyTalk on facebook
Page 1 of 2 1 2 LastLast
Results 1 to 10 of 18

Thread: Rent increase

  1. #1
    Join Date
    Feb 2016
    Posts
    14

    Default Rent increase

    After 5 years of renting our home to a friend, I have engaged a PM to undertake inspections in my absence. The inspection went smoothly and the PM estimated market rent of $490-520/week (it's currently $430). The rent was slightly below market at the start of the tenancy as my friend/tenant took on my cats and I didn't have a PM so it kept costs down and was a mutually beneficial arrangement, with regular communication if any issues arose.

    The situation now is quite different with increased costs due to valuation > rates increase, maintenance (painting, front fence) and the bigger gap between market and actual rent. I need to increase the rent to cover increased costs but I don't want to lose my tenant (single working mum). She is a great tenant, looks after the house and there are absolutely no concerns about rent not being paid, damage, illegal activities, undesirables etc and with family and the children's father just around the corner, she has no intention of leaving the area (as pointed out by the PM, she also wouldn't be ale to get a 3 bedroom house for the same rent she's paying now).

    I realise I've not done either of us a favour by only increasing the rent $30 in 5 years and now needing to catch up, so was wondering if the more experienced forum contributors had any feedback about how to address this (besides the increase letter with 60 days notice) and a reasonable increase ($ or %).

  2. #2
    Join Date
    Oct 2013
    Posts
    1,617

    Default

    This is an incredibly common story with self-managed rentals. I'm afraid there's no simple answer.

    If you're on good standing with the tenant you can discuss this with them. You can make it clear that you're increasing the rent by a lot, but it will still be below market level (I personally keep rent for good tenants a little bit below 'new tenant' level - new tenants are inherently risky and pay a small premium for that fact).

    There's the option to increase rent slower; a $40 increase now, and another in 6 months (by which time the market will probably have moved up again, a little).

    Or there's the option to just hit her with the full market rent, see whether she swallows it (as you've said, she can't get the same elsewhere for less) and if not, get a new tenant at the market rent, and take the risk that they're awful. Most tenants aren't, but you can never tell for sure.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  3. #3
    Join Date
    Nov 2006
    Location
    Cyberspace
    Posts
    5,762

    Default

    This is why we have a clause in our TA which pegs the rent to what the market is doing at the time of signing. We can then refer to it for setting rent. In your case, I suggest you chat to them and ensure they know you deeply appreciate their tenancy but the rent needs to go up. Ask them what they believe the rent should be.

    You may be surprised.

  4. #4
    Join Date
    Feb 2016
    Posts
    14

    Default

    Thanks Anthony and Keys for your feedback. I hadn't thought of asking her what she believes the rent should be, but I'm sure she's aware of the market so will have that discussion first, then if it's at the upper end will use an incremental approach so it's not too much of a shock for her. Will still keep it slightly below market in recognition of being a good long term tenant.

  5. #5
    Join Date
    Nov 2006
    Location
    Cyberspace
    Posts
    5,762

    Default

    No no no!

    You misunderstand.

    Present the tenant with the statistics. Give them a couple of days to think about it. Then, ask them what rent they think is fair, considering all things.

  6. #6
    Join Date
    Feb 2016
    Posts
    14

    Default

    Yes Keys that was the approach I'm going to take still factoring in her good tenancy to keep the rent slightly below market. The only thing to consider is full increase now or one now and another in 6 months.

  7. #7
    Join Date
    Aug 2013
    Posts
    1,509

    Default

    Quote Originally Posted by Phi View Post
    I realise I've not done either of us a favour by only increasing the rent $30 in 5 years
    That's 5 years of hassle free landlordery. I don't get your complaint.

  8. #8
    Join Date
    Jun 2004
    Posts
    10,367

    Default

    Business doesn't quite work that was MichaelNZ.

  9. #9
    Join Date
    Aug 2013
    Posts
    1,509

    Default

    Quote Originally Posted by Wayne View Post
    Business doesn't quite work that was MichaelNZ.
    Why not? In my business I have held prices pretty stable and even reduced prices on a bunch of products over the past 3 years.

  10. #10
    Join Date
    Jun 2004
    Posts
    10,367

    Default

    Quote Originally Posted by MichaelNZ View Post
    Why not? In my business I have held prices pretty stable and even reduced prices on a bunch of products over the past 3 years.
    Is that due to costs remaining stable?
    Or due to competition?
    Or out of the goodness of your heart as some sort of social gesture?

    Rental property should be a business and run as such.
    That doesn't mean rorting your customers!


 

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. Rent increase
    By cecile in forum Property Management
    Replies: 13
    Last Post: 16-07-2015, 05:18 PM
  2. Rent increase 60 Day notice
    By fluffyb in forum Tenant Stuff (NZ)
    Replies: 11
    Last Post: 13-09-2011, 10:23 PM
  3. How much to increase the rent by?
    By plum in forum Tenant Stuff (NZ)
    Replies: 15
    Last Post: 10-03-2011, 08:38 PM
  4. TA with Rent increase clause - how to use them???
    By NIK in forum Tenant Stuff (NZ)
    Replies: 7
    Last Post: 30-11-2010, 05:52 PM
  5. Rent increase
    By EddyFranky in forum Tenant Stuff (NZ)
    Replies: 6
    Last Post: 19-02-2010, 09:00 AM
  6. Only small or no rent increase
    By fudosan in forum Commercial Property (NZ)
    Replies: 0
    Last Post: 18-02-2009, 08:58 PM
  7. If no taker, increase the rent!
    By fudosan in forum Commercial Property (NZ)
    Replies: 6
    Last Post: 16-02-2009, 09:23 PM
  8. Rent increase or decrease
    By casacamo in forum Property Investment (NZ)
    Replies: 15
    Last Post: 23-02-2005, 09:55 PM
  9. Rent increase
    By bigpoppa in forum Property Investment (NZ)
    Replies: 7
    Last Post: 18-01-2005, 02:15 PM
  10. Rent Increase
    By muppet in forum Tenant Stuff (NZ)
    Replies: 3
    Last Post: 23-01-2004, 01:38 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •