'Rent Review' or not "Rent Review'??? HELP!!!!!

[aussieamp]

I'm in WA and am having trouble raising the rent (or rather - with the tenants)on our IP.

The tenants signed an 18 month lease last June but I included a clause stating that there would be 6 monthly 'rent reviews'. We have now reviewed the rent and have decided to raise the rent for July to the end of the lease. The problem is that the tenant claims that I can't increase the rent because I wrote 'rent review' instead of 'rent increase'???!!!! I can't call consumer protection info until tomorrow (which she has implied agrees with her).

Has anyone come across this problem before? I would have thought 'rent review' was a very commonly used phrase in real estate referring to either a rent increase, rent decrease or no change. Am I wrong???????

HELP!!!

 

[HotRod]

Don't know what the answer is.

But these problems always seem to crop up when people try and do things themselves.

I've always used managers and things run smoothly. I have enough stress in my life. Trying to deal with feral tenants, no thanks. Paying a manager to do that is money well spent.

 

[Harris]

We raised the rent for one of our properties in Mont Albert through our Property Manager on completion of the lease.

The tenant went to Consumer Affairs and got one of the inspectors to come over and review the increased rental. We got a letter from Consumer Affairs stating that we can only increase the rent by around 10% (rent was increased by about 20% in line with current increased rentals in the area).

We could not even ask for the tenant to vacate the prop on completion of the lease since according to our PM, they can go back to Consumer affairs which might take the notice to vacate as retaliatory action and make things more difficult for us.

 

[silene101]

IMHO a 'Rent review' would suggest that the rent could change either up or down at a future date as you indicated i.e 6 Months. Why would you just review it and take no action(unless no change was required at the time of reviewal)

 

[Andrew_A]

We raised the rent for one of our properties in Mont Albert through our Property Manager on completion of the lease.

The tenant went to Consumer Affairs and got one of the inspectors to come over and review the increased rental. We got a letter from Consumer Affairs stating that we can only increase the rent by around 10% (rent was increased by about 20% in line with current increased rentals in the area).

We could not even ask for the tenant to vacate the prop on completion of the lease since according to our PM, they can go back to Consumer affairs which might take the notice to vacate as retaliatory action and make things more difficult for us.

Wow.. I didn't even know that was possible.

Is this really such a socialist country or is there more to this story? That seems incredible that at the end of a lease you aren't allowed to ask whatever you like for intended rent.

 

[HotRod]

We raised the rent for one of our properties in Mont Albert through our Property Manager on completion of the lease.

The tenant went to Consumer Affairs and got one of the inspectors to come over and review the increased rental. We got a letter from Consumer Affairs stating that we can only increase the rent by around 10% (rent was increased by about 20% in line with current increased rentals in the area).

We could not even ask for the tenant to vacate the prop on completion of the lease since according to our PM, they can go back to Consumer affairs which might take the notice to vacate as retaliatory action and make things more difficult for us.

Just do another 20% in 6 months and go through it again in another 6 months and again.

They will get the message.

Oh do they want some AC for summer? That will cost another $30pw. etc etc.

 

[Norwester]

Harris,

Putting myself in the tenants shoes I would have done exactly the same thing..........

I'm only new to this but must ask the question at what point does the need to improve ones yield warrant the need to gouge??

Obviously every case must be subject to it's own circumstances.....but I am really starting to wonder what being a landlord is really about.

So what was the reasoning behind a twenty percent increase.....I'd truely be interested to know.

AussieAmp,

Review is exactly that. Personally don't think the tenant has a leg to stand on from arguing that point.

ciao

Nor

 

[landlubber]

What Harris says is true. It has been our experience that if you get an "inspector" from CA , they will defintiely "err" on the side of the poor, poor tenant . The fact that the tenant is enjoying your nice half-mill IP for a below market rent is totally immaterial .... as YOU are the RICH, UNCARING landlord. If the tenant is "otherwise OK" your only hope is to keep asking for regular, reasonable increases. And keep asking.

New leases with new tenants is whole new ball-game ..thank goodness.

Back to the thread.. a rent review would seem to imply just that ...it can go up or down ... but you need to prove a review process DID take place. That's why we use a PM ... it's easy for them to say "This is the market...here..look at our rent roll of similar properties."

LL

 

[Bargain Hunter]

The threat is laughable. Increase the rent and if they do not pay issue a notice to vacate. It will go to tribunal but providing the increase is reasonable it should be upheld.

 

[Harris]

The rent had not increased a cent for 4 years leading to the increase... not even the cpi increase. It was increased by our PM believeing that it was the going rental after substantial rental increases across all inner melbourne suburbs due to 1% vacancy rate.

No gouging Norwester. 4.5 years of zero rental growth and carrying a property with 3% rental yield over that time warrants adjustment of yield according to market forces of supply and demand.

I am not complaining that the tenant went to Consumer Affairs - just stating my experience relating to the rental increase.

Harris,

Putting myself in the tenants shoes I would have done exactly the same thing..........

I'm only new to this but must ask the question at what point does the need to improve ones yield warrant the need to gouge??

Obviously every case must be subject to it's own circumstances.....but I am really starting to wonder what being a landlord is really about.

So what was the reasoning behind a twenty percent increase.....I'd truely be interested to know.

AussieAmp,

Review is exactly that. Personally don't think the tenant has a leg to stand on from arguing that point.

ciao

Nor

 

[aussieamp]

Well, the rest of the story is:

They have been in the IP for 18 months.
6 months at $250/week, 1 year at $260/week.
I want to increase the rent by $20 to $280/week.

Comparable properties are:
1 in the same suburb for $350/week
2 in the next (very close) suburb for $350/week and $370/week.

At the end of the year when their agreement runs out, I told them that the rent would rise to market (I would have it professionally appraised) and if they chose to continue the lease, we would keep the rent just below market for them but no less than $20 below market. I thought this was reasonable given the market in WA at the moment and the fact that until now, they had been pretty reasonable tenants.

What bites the most is that they are landlords themselves and should know how it goes.

 

[Norwester]

Thanks Harris,

Under those circumstances I would agree entirely with you and understand your point.

The next question that I must ask is why had the property been let get behind the market to that degree? Poor management by the PM? or other circumstances?

Excuse the questions, it's just that I'm currently going through a simultaneous property puchase and rental negotiation with tenants that aren't even mine yet.....seems silly, but the tenants are good people and the house a good buy.

Unfortunately the current owners just let the mangement of the place slip right away...........I'm just trying to understand how someone can let that happen.

ciao

Nor

AussieAmp.....the tenants are landlords.........there's got to be some irony in that. I think you're getting played.

 

[jingo]

We raised the rent for one of our properties in Mont Albert through our Property Manager on completion of the lease.

The tenant went to Consumer Affairs and got one of the inspectors to come over and review the increased rental. We got a letter from Consumer Affairs stating that we can only increase the rent by around 10% (rent was increased by about 20% in line with current increased rentals in the area).

We could not even ask for the tenant to vacate the prop on completion of the lease since according to our PM, they can go back to Consumer affairs which might take the notice to vacate as retaliatory action and make things more difficult for us.

Hi Harris,

This is interesting information. It must be what my PM is trying to tell me with the IP we have just bought in North Melbourne. We need to raise the rent from $300 to market value which is actually $365. We are going to raise the rent to $350. The tenant's lease expires in July and my PM said that he could object to the rental raise. I said we would issue him with a notice to vacate and refuse to rent the property to him after the expiry of his lease if he didn't agree to the raise. My PM was quiet cautious and said that he could go to Consumer affairs. Sounds like my PM is correct in what she is advising me. She did say though that $350 was very reasonable for the property in question, and that even if the tenant objected it was a realistic amount of rent for the property.

The funny thing is we investors can't object if the Reserve Bank decides to raise interest rates. Why are tenants always 'Molycoddled?'

Regards Jason.

 

[Harris]

Current tenants have been staying there for over 3.5 years and we decided to let the initial rental continue on if the same tenants decided to keep re-signing the 12 mth lease each year... hence the major adjustment.

Thanks Harris,

Under those circumstances I would agree entirely with you and understand your point.

The next question that I must ask is why had the property been let get behind the market to that degree? Poor management by the PM? or other circumstances?

Excuse the questions, it's just that I'm currently going through a simultaneous property puchase and rental negotiation with tenants that aren't even mine yet.....seems silly, but the tenants are good people and the house a good buy.

Unfortunately the current owners just let the mangement of the place slip right away...........I'm just trying to understand how someone can let that happen.

ciao

Nor

AussieAmp.....the tenants are landlords.........there's got to be some irony in that. I think you're getting played.

 

[Norwester]

Hi Jingo,

I think that this would be a good argument to insist on a purchase with vacant possession if it was identified as a possible issue in the DD.

Something to add to the DD checklist as well if not already on it.

ciao

Nor

 

[aussieamp]

When they rented the place, the rent was about right but there has been a 25% + increase in rents in WA due to the influx of workers for the mining boom. I blinked and the rent shot up.

I am not a greedy landlord, I have done everything to the letter of the law and have fixed everything that needed fixing in the property (to the tune of plumbers every 2 months for 'tree root blockages' in a 50yo house which did not have this problem with either of the previous (different) tenants over the previous 6 years before they moved in???!!!!????? hhhhmmmmmm.....)

They obviously thought that because I self-manage, I would be a pushover. Norwester...I think you may be right...

 

[jingo]

Hi Jingo,

I think that this would be a good argument to insist on a purchase with vacant possession if it was identified as a possible issue in the DD.

Something to add to the DD checklist as well if not already on it.

ciao

Nor

Hi Nor,

The only problem this time was that the tenant's lease ends in July. I purchased in March. But its a learning experience for me. Something definetely to consider next time round.

Regards Jason.

 

[Norwester]

Learning experience for me too.

That's why I'm asking all these dumb questions..........

Thanks Harris for being so candid. It allows me to think about developing a strategy to ensure I don't get caught the same way. Must be hard as you're damned if you do and damned if you don't.

Aussie Amp,

25% will be hard to justify in any circumstances, but several lower percentage rises shouldn't raise any ire.........particularly over six monthly periods. Ask them how they manage their property.....that should get them thinking.......

Re the sewer: The next time it happens get the plumbers that have the little cameras. You'll be able to see exactly what is causing the problem. Most tree roots dangle down from the top of the pipes...........the sewerage will generally pass until certain cotton based objects are flushed down the toilet (just think pink string.....blue string or things with wings or other latex based items and you'll get my drift)

Alternatively check out the end of the cutter when it comes up.......you'd be surprised what some people flush down toilets.......ughh.

And if it does come up with the goods...............you need to explain why they will be paying the bill.

ciao

Nor

 

[aussieamp]

Oh, they told me...

"we haven't raised the rent on our Melb. prop more than $50 in 12 years because he's a good tenant and we didn't want to chase rent, etc...It's more than $90/week under rent" !!! (Funnily enough, they didn't mention their other property which I understand is being managed by a PM...)

It's landlords like this which cause problems for the rest of us...tenants go around believing that landlords should subsidise their living expenses like we are centrelink or something. Grrrr!

Thanks for the advice Nor. I think it is high time that I do exactly that.

 

[Norwester]

Ha ha..............

Hope they don't own the place I'm negotiating on at the moment.....


Just tell them that now they have an excuse to raise the rent on their own IP.........to cover the expenses on yours. I'm sure they'll understand..............

best of luck

ciao

Nor