I've just settled on a Western Sydney property where one of the tenants is probably around about 50% below market rent (paying $200 whilst market rent should be around $300). They are on an expired lease. The tenant looks after the place, but I'm really keen to have market rent. Has anyone jacked up rent by a large amount like this? Are there any avenues for the tenant to get rulings that the increases are unjustified and excessive?
Has anyone jacked up rent by a large amount?
- Thread starter HappyCamper
- Start date
Good to know for next time but how can a vendor guarantee that the tenant would agree to such a lease though?
They can't, but if the tenant doesn't agree, the clause says that the vendor has to give it to you vacant. Then you can readvertise at the market rate. Useful where the rent is below market and especially if the tenant is on a periodic lease.
last year I bought a place in Casula and I immediately increased the rent by$55pw
I actually wanted to get them out to fix up the property so I served them with a termination notice.
They looked around and couldn't get anything decent for less so they agreed to the new rent and my terms which were to partly renovate the property while they were living in it. I did a basic reno. (replaced the carpet, some light fittings, rangehood & shower screen and did some repairs)
Now 1 year later the rent went up again, keeping up with market movement.
I actually wanted to get them out to fix up the property so I served them with a termination notice.
They looked around and couldn't get anything decent for less so they agreed to the new rent and my terms which were to partly renovate the property while they were living in it. I did a basic reno. (replaced the carpet, some light fittings, rangehood & shower screen and did some repairs)
Now 1 year later the rent went up again, keeping up with market movement.
Why not talk to the tenant and see what price they are willing to pay.
Get Them Out
If the rent is so far under market you use this to justify the offer made. Then when the offer is accepted you include a clause within the contract requesting vacant possession. There is no point after the fact trying to increase the rent unreasonably.
Even if the tenant agrees, if they do default and it goes to tribunal they may determine that the increase was unfair and reduce the rent. If this occurs the determination will be backdated to the time the increase occured and any excess paid credited as rent paid.
Suggest you do not discuss an increase of rent with the tenant. Instead issue a notice to vacate as you wish to undertake renovations. Then get in there give it a quick spruce up and rent it at the market rate, otherwise you will forever be playing catch up.
Regards
Andrew
If the rent is so far under market you use this to justify the offer made. Then when the offer is accepted you include a clause within the contract requesting vacant possession. There is no point after the fact trying to increase the rent unreasonably.
Even if the tenant agrees, if they do default and it goes to tribunal they may determine that the increase was unfair and reduce the rent. If this occurs the determination will be backdated to the time the increase occured and any excess paid credited as rent paid.
Suggest you do not discuss an increase of rent with the tenant. Instead issue a notice to vacate as you wish to undertake renovations. Then get in there give it a quick spruce up and rent it at the market rate, otherwise you will forever be playing catch up.
Regards
Andrew
Last edited:
The tenant probably knows they are on a good wicket and will rush to the tribunal if you attempt to give them an increase of the amount you need to do in order to get the property up to market. There are many tenants in this area that know their rights and will fight you kicking and screaming. As Bargain Hunter said, the best thing is to get rid of them altogether and start afresh with new tenants on market rent. If you don't like this option the next best thing is increasing the rent by $20 each six months. This will, of course, take quite a while.
is it managed through an agent?
if not perhaps the tenants been paying 200 officially and a top in cash. i'm not suggesting you do the same - just the tenant might not be so opposed to an increase.
This one is managed through an agent.
there goes that theory.
years ago a friend (renter) had that situation. market 300, paid 200 officially and LL dropped around once a month to collect the top up. friend happy. LL happy. ATO sad!
Thanks skater & Bargain Hunter. I certainly didn't look at it from that angle, so I appreciate your input. I'll pose that scenario to the PM and see what their recommendation is.
No, but I've been on the receiving end of a newly-purchased jobbie like this one where the new landlord tried to pull the same trick. Lifting the rent from $150 to $200pw.
It was in a low socioeconomic area (Elizabeth SA) but right near the defence base. I was employed at the defence base, was looking after the place, but had the means to jump ship and buy my own house. So, I left. I hope the new landlord got unemployed local riffraff in there instead of a government worker.
It was in a low socioeconomic area (Elizabeth SA) but right near the defence base. I was employed at the defence base, was looking after the place, but had the means to jump ship and buy my own house. So, I left. I hope the new landlord got unemployed local riffraff in there instead of a government worker.
haha - somehow i don't think garbage's tenants would appreciate a rise of $50,000/yr plus outgoings!
if you can't increase it by, say $30 at now then at 6mths and 12mnths from now, then i'd terminate and start anew.
$30x3 would get you back close to market and not be quite so onerous on the tenant. i thought if rent was signficantly under market, and a reasonable increased was applied, the tenant couldn't plead hardship - learn every day.
but - were you paying signficantly under market rent for the area? if not, then i can understand getting miffed - but if you were paying under-rent for ages, then perhaps it should be viewed that you were fortunate for a period of time.
despite the troubles posted on this forum, there are a lot of good renters out there.
I had been there less than a year and was paying bang on market value for the house, if not a bit more - most houses in the area at the time were about $130-140pw. I wouldn't have minded so much otherwise.
I would have bought the place if the owner had told me it was for sale, too. By the time I found out it was because a for sale sign appeared and a group of 20 wannabe investors was tromping through the house twice a day with no warning at all.
Edit: I actually took that particular house (all in that area are identical, post-war housing is a bit like that) because it was with an obscure out-of-area agent and they actually didn't want a DNA sample and the lease signed before I was allowed to look like all the other houses. Local agents said it was standard policy. I thought it was a joke, personally, but in the brief time I was living there a house on my street got burnt down and there were a few shootings so an excuse to leave was fine by me. The house was for sale for $70k or so too, I think that area now they are worth about $250k and rent for about $200-250 a week.
I would have bought the place if the owner had told me it was for sale, too. By the time I found out it was because a for sale sign appeared and a group of 20 wannabe investors was tromping through the house twice a day with no warning at all.
Edit: I actually took that particular house (all in that area are identical, post-war housing is a bit like that) because it was with an obscure out-of-area agent and they actually didn't want a DNA sample and the lease signed before I was allowed to look like all the other houses. Local agents said it was standard policy. I thought it was a joke, personally, but in the brief time I was living there a house on my street got burnt down and there were a few shootings so an excuse to leave was fine by me. The house was for sale for $70k or so too, I think that area now they are worth about $250k and rent for about $200-250 a week.
Yes, we have lost tenants because they got miffed over what they saw as a too steep increase. One increase was $30 and we got $50 instead when we put it back on the market. The other increase was only $10, it was still under market at that, but we had really good tenants we wanted to keep. Those really good tenants got a little whiney over that $10 and left. I guess it must have been the straw that broke the camel's back. We got an extra $60 for that one when we put it back on the market, but the new tenants will never win tenant of the month.
Oh hang on, our PM says they are good tenants, a little bit messy and a little bit demanding but hey they always pay the rent on time. Obviously she thinks regularly paying one day before she is able to issue a breach notice as 'on time'. Oh well, the rent comes in eventually and it is now over market because the market has fallen back a bit so I guess we can't complain, well not too much anyway.
Oh hang on, our PM says they are good tenants, a little bit messy and a little bit demanding but hey they always pay the rent on time. Obviously she thinks regularly paying one day before she is able to issue a breach notice as 'on time'. Oh well, the rent comes in eventually and it is now over market because the market has fallen back a bit so I guess we can't complain, well not too much anyway.
But you pay a percentage of rent to the PM for their managment fee so have a guess what they are going to say about that....
