Rent Increase Threshold?

[pawprints]

Super quick question - is there a threshold as to the amount of increase rent can be increased? A friend of mine had hers increased by $75 per week! yes per week!

Now either that was disgustingly under market rental or someone is being super greedy. She is most likely going to have to move.

Is there a limit to how much you can raise the rent? say 10% over market value etc?

 

[Nathan]

No law, its the market, if she moves she will probably pay more.. people get conditioned into a price over a few years, and when it goes up it seems like a big shock.

would have loved seeing all my tenants coping interest rate hikes like most of us investors.

Not being smart, id suggest she checks what else is out there before she gives notice.

New deals i buy, i get vacant possession, makes it easier to get the market rent..

 

[lizzie]

why do you say super greedy? property investing is a business.

there is a high demand and low supply = higher prices (think petrol, food, utilities etc). the market sets the market rate. if someone else comes along and is prepared to pay $75/wk more for the property than your friend, why should the landlord subsidise your friend at the cost to his own pocket?

if no one is prepared to pay the extra $75/wk, then yes, it is over market and the landlord will have to drop the price. if someone is prepared to pay, than the price is "market value".

landlords have also had to put up with 12 rate rises over the last few years without being able to put up their rents. so mortgage interest repayments have practically doubled over the last 5 years or so - have rents also doubled in that time?

yields are currently around 5% of the property value (on average - sometimes more, sometimes less) - so your friend is paying less to live in the house than if she bought it and was paying 9% interest on her loan. so is she better off financially renting the property or buying it?

i don't really know the ins and outs because i leave that all up to my property manger, but i believe your friend can claim that the increase is too high. however, if she is off lease than the landlord has full right to not renew and force her to leave.

for the last 10 years it's been a renters market - now it is time for the landlords.

 

[buzzlightyear]

Super quick question - is there a threshold as to the amount of increase rent can be increased? A friend of mine had hers increased by $75 per week! yes per week!

Now either that was disgustingly under market rental or someone is being super greedy. She is most likely going to have to move.

Is there a limit to how much you can raise the rent? say 10% over market value etc?

Follow this CAV (I am assuming the property is in Vic) link and it will step you through what your friend can and cannot do.

 

[jasper]

No hard and fast rules as to how much you can increase by. By putting the rent up dramatically though, you usually loose your tenant and threrefore have to pay your releasing fee.
I try to work around no more than 10% if they are good tenants and don't give me any grief.
Remember that if your tenant thinks the increase is excessive they can challenge it in which case you can be ordered by VCAT (or your states) governing body to decrease the rent.

 

[BayView]

Super quick question - is there a threshold as to the amount of increase rent can be increased? A friend of mine had hers increased by $75 per week! yes per week!

Now either that was disgustingly under market rental or someone is being super greedy. She is most likely going to have to move.

Is there a limit to how much you can raise the rent? say 10% over market value etc?

As the others have said; it's a free market, and the rent levels are set by the demand. In recent years the cap growth has been good while rents lagged. Now, the rents are catching up.

It would seem that her area has become very in demand lately. The usual pattern is the cheaper rents will gradually move further out from the CBD.

 

[silversands]

Perhaps her LL wants her out?

I know she's your friend but are you aware if she is on time with rental payments? Is she a demanding tenant? Does she keep the home and garden in good order? A hefty rent hike might be the way to move her on, if answer to any of this, is no. How long has she been there and has much increase been passed on in that time?
What is this increase as a percentage of total rent?

Just a couple of things you could ponder.

Regards Jodie

 

[Dazz]

for the last 10 years it's been a renters market - now it is time for the landlords.

Praise the market Gods....

 

[Ausprop]

she is lucky she gets the benefit of the RTA to protect her form immediate cost increaes and give her a lot of rights.... a lot more so than when a bank decides to up their rates on landlords. "Dear John, you will now pay us an extra x%, starting today. Thanks"

yes the market gods bless em... now the weekly losses will be reduced from ridiculous to just plain crazy

 

[josko]

I wouldn't have the heart to increase it instantly like that, but I wouldn't have allowed it to get so far behind!

Regards JO

 

[Dazz]

She is lucky she gets the benefit of the RTA to protect her from immediate cost increases and give her a lot of rights.... a lot more so than when a bank decides to up their rates on landlords. "Dear John, you will now pay us an extra x%, starting today. Thanks"

That's a bit unfair to compare the two like that Ausprop. One is a business to squeeze every last dollar out, and the other business model is to provide accomodation and be nice.....they are worlds apart.

now the weekly losses will be reduced from ridiculous to just plain crazy

Yes - I wonder if the original poster ever thought about if the Landlord is actually still subsidising her lifestyle. Normally they are blissfully unaware.

 

[Dazz]

Super quick question - is there a threshold as to the amount of increase rent can be increased? A friend of mine had hers increased by $75 per week! yes per week!

Wacko !! That's massive. How are they going to survive ??

Is there a limit to how much you can raise the rent?

Hopefully not. As Noel Whittaker said, it's a process like plucking a goose.

Apparently the aim is to pluck the maximum amount of feathers whilst minimising the amount of hissing. It's a fine line to tread apparently. Not for me. I just pluck the bl00dy goose completely bare and then tape up the goose's mouth so it can't hiss.

 

[lizzie]

"Dear John, you will now pay us an extra x%, starting today. Thanks"

your bank tells you that it's happening ? i just find out when the amount removed from my bank account goes up and the statement is received.

i note pawprints has gone very quiet - perhaps not the reaction they were after.

 

[wylie]

That's a bit unfair to compare the two like that Ausprop. One is a business to squeeze every last dollar out, and the other business model is to provide accomodation and be nice.....they are worlds apart.



Yes - I wonder if the original poster ever thought about if the Landlord is actually still subsidising her lifestyle. Normally they are blissfully unaware.

I run a business to get every available rental dollar (with exceptions at my discretion) to provide accommodation and I am still nice about it. It works well .

Whilst I may well be subsidising my tenants' lifestyles, they are paying my house off. I am also happy with that .

I don't think that many landlords are "blisfully unaware" of how this works for both the landlord and the tenant.

 

[Novar]

In Qld I thought there was something about "reasonable rent increase"
ie. No humongeous jump in one go. Not sure

That being said I have a tenant in a recently aquired property that pays 240pw on a 12 mth lease till January. They will then get an increase to 295/300 to bring it to market. Too bad about 'reasonable rent increase' ... take me to whoever you want about it. They've had their free ride. I don't do 12 mth leases either without a 6 mth increase clause, so that's out too. Sorry

But then ... I put the rent down $5 pw on another property this week. Had notified of a rent increase from 325 to 340pw, ... then go a letter from PM saying the tenant wants to install a split a/con at own expense.
This is not the first time, they've also added lattice to the deck and an outdoor power point at their own expense. They never whinge.
I figure they are tenants worth keeping and so set the new lease at 335pw instead of 340.
Lucky me ... I think they are settling for the long haul!

 

[lizzie]

hahahaha - i like those tenants.

i have one that is currently putting in a new kitchen at their own expense. the old kitchen is horrible and falling apart - and he works at a kitchen installation place so can get one "off the back of the truck". it's also in writing that if they leave the kitchen stays ... hope you put that one in novar as you wouldn't want to be left with a airconditioning sized hole in the wall if they leave.

i have kept their rent in line with the market - but we have also had some major problems with the old house (recent purchase) and pm and i have always been very prompt in getting everything fixed. so we've both been good to each other.

 

[josko]

I've also been told by two different PM's that there is a $30 cap increase in Queensland.

Regards JO

 

[simonjulie]

You are restricted to the cpi increase over twelve months plus 20% of that increase.... in the ACT. Anything above that the renter has to find cause that it is unjustified.
Cheers
Simon

 

[yo yo ma]

I've also been told by two different PM's that there is a $30 cap increase in Queensland.

Not true... one of my properties in Q recently went up by $35. The rta site only states that it can't be "excessive" but no actual figures.

If a lessor gives a tenant notice of a proposed rent increase, and the tenant considers the increase is excessive the tenant may apply to the Tribunal for an order.

http://www.rta.qld.gov.au/print_page.cfm?menuItemId=72.00&item=114

 

[Novar]

Well there u go
The rent for my unit will go from 240 to 295/300 in january because it is fair market rent for what they are getting. Tough!

What the tribunal must have regard to when making an order

In deciding the application, the Tribunal must have regard to the following: -


The range of market rents usually charged for comparable premises The proposed increased rent compared to the current rent
The state of repair of the premises
The term of the tenancy
The period since the last rent increase (if any)
Anything else the Tribunal considers relevant