Fair rent increase for 6 - - or 12 months?

Lawry

Lawry

Hi, a 6-month lease is expiring on one of our residential IPs and we were planning on offering +$20pw rise for 6 month re-let, based on reasonable market conditions, but the tenants have asked for a new 12 month lease.. any opinions on what would be a reasonable rent increase pw for a 12 month lease ?

They've been good tenants for 6 months so don't want to lose them, but also don't want to miss out on a potential increase in 6 months time
 
Lawry said:
Hi, a 6-month lease is expiring on one of our residential IPs and we were planning on offering +$20pw rise for 6 month re-let, based on reasonable market conditions, but the tenants have asked for a new 12 month lease.. any opinions on what would be a reasonable rent increase pw for a 12 month lease ?

They've been good tenants for 6 months so don't want to lose them, but also don't want to miss out on a potential increase in 6 months time
Click to expand...

what's the weekly rent atm? where is it?
 
$20 increase over 6 months in the current climate is quite good I'd say.

I guess it depends what sort of place you have, location, current rent etc.

Have you spoken to the tenants at all? I wouldn't want to push it too much further ($35/week for instance) at the risk of losing them if they are good tenants because that extra $15 a week may mean that your property is vacant for a week or two and could (potentionally) wipe out any gain you would've made otherwise - not to mention leasing fees, and then cross your fingers that you get another good tenant!

Also, if I were a tenant with a family (for instance) and I was only offered a 6 month lease with $20 increase, I'd probably look at moving along for more security.

Then again, you can always have a 12 month lease with an inbuilt increase after 6 months. I've done this with 2 year leases.
 
Whats weekly rent? vacancy % of the area?

talk to few PMs in that area to see what are the current comparable rents

it really depends, 10-20$ increase sounds reasonable but it really comes down to where prop is, fully furnished, etc

You can talk to your current PM and take their advice.
 
I'm with skater.

Vacant periods, reletting fees and any other costs are a lot of 10-15 increments if it turns to custard.
 
tbh as a tenant if i were looking at the prospect of a $20 increase every 6 months I would probably move on.....
 
Thanks for the comments. Property is in Sydney inner. Just mulling it over. Will post about how it turns out.
 
Yes, I know, just going on letting agent's advice. Seems to be an area in demand at the minute. Past tenants (multiple) have always asked for 6 month leases and renewals. We'd prefer 12 month, its a long term hold property for us and we'd like long term tenants - who wouldn't want that I suppose.. That's why we're trying to get the increase right, not trying to be greedy.
 
Lawry said:
Yes, I know, just going on letting agent's advice. Seems to be an area in demand at the minute. Past tenants (multiple) have always asked for 6 month leases and renewals. We'd prefer 12 month, its a long term hold property for us and we'd like long term tenants - who wouldn't want that I suppose.. That's why we're trying to get the increase right, not trying to be greedy.
Click to expand...

I would say if they are good tenants that you want to keep offer the 12 months at the $20 to bring it to current market. After 12 months at renewal time you can review the market again to bring the property back in line. If you are $10 below market for 6 months as a result the difference will be negligble and certainly you would be further behind if you lost the tenant from pushing for a bigger increase now.
 
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