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  1. #1

    Lightbulb 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. #2
    Join Date
    Nov 2013
    Posts
    83

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    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.

  3. #3
    Join Date
    Jul 2005
    Location
    NZ
    Posts
    913

    Default

    Quote 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.

  4. #4
    Join Date
    May 2004
    Posts
    2,124

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    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.

  5. #5

    Default

    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

  6. #6
    Join Date
    Nov 2006
    Location
    Cyberspace
    Posts
    5,355

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    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

  7. #7
    Join Date
    May 2004
    Posts
    2,124

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    Quote 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!

  8. #8
    Join Date
    Mar 2013
    Location
    Auckland
    Posts
    1,445

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    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/

  9. #9
    Join Date
    Jul 2005
    Location
    NZ
    Posts
    913

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    Quote 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.

  10. #10
    Join Date
    Sep 2014
    Posts
    432

    Default

    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 at 09:55 PM.


 

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