When most of us have free rein, we’re tempted to do everything on a whim. For instance, we might want to go out for a pint every night or purchase a new car as soon as our finances are in order – nothing wrong with that. But, when making significant choices impacting other people’s lives, it’s advisable to think things through before going all out.
Are landlords invincible? Not by any stretch of the imagination. Perhaps you’ve partnered with Loganholme’s reputable property management company. Or, you’re wondering, “is it okay to go nuts with the rent?” Well, just because you own a rental property doesn’t mean you can raise the rent at will. You need to consider your tenant’s rights before making sudden changes.
That said, rental prices are constantly changing. Sometimes it’s due to market forces, and other times it’s a result of the landlord’s expenses. But how often can a landlord raise the rent? Let’s examine some variables that could impact a landlord’s decision:
1. Rental Increase Laws
If the urge to raise the rent is strong, check your locality’s rental increase laws first. Depending on the location of your property, there could be a limit on how much you can charge for rent, not to mention the frequency of the increments. Besides, your tenants should be in the know before a rental increase.
For example, in Western Australia, landlords can only increase the rent once every six months. And you must notify your tenants in writing at least 60 days before the intended change. Such a notice includes the date the increment is bound to take effect, including the amount of increase.
In New South Wales, landlords may only increase the rent once every 12 months – for leases that took effect on 19 June 2019 or after. If the rental agreement dates before the specified day, you can increase the rent twice a year. Also, if a tenant opts to continue renting your property in the same jurisdiction, you can only increase their rent 30 days after they sign their new lease agreement.
As is evident, various states have specific rules. Do your research to ensure you’re in the clear before proceeding. Breaking such laws could land you in hot water. So, stay informed to avoid legal hassles.
2. The Condition of the Property
Remember the last time you carried out maintenance on your rental property? Would it make sense for tenants to pay more while living in a run-down house? If the answer is no, don’t even consider raising the rent.
Instead, take care of repair issues and spruce up your property to make it livable again. You can start by addressing visible damage, such as a broken window or peeling paint.
Also, consider improving your property’s curb appeal by doing some landscaping. These simple changes will make your rental property more attractive, which could help you command a higher price.
3. The Current Market Rate
If you’re itching to raise the rent but are worried about turning off potential tenants, do some market research first. For starters, look at comparable properties in the area.
How much are they renting for? If you find that your rental price is significantly lower than the going rate, you might have room to increase the rent without pricing yourself out of the market. You don’t want to make a huge jump, though. A 10 to 20 percent increase should do the trick.
If demand for rental properties in your area is low, on the other hand, consider holding off on raising the rent. Otherwise, you could end up having your property sit vacant for months. And we all know that vacancy equals loss of income.
Also, be mindful of the type of tenants you’re targeting. For instance, if you want to attract families, you might have to forgo a higher rent in favor of offering more amenities. That said, amenities burden your finances, so it’s a delicate balancing act.
4. Your Tenants’ Circumstances
Even if you adhere to all the rules and market trends, you still need to consider your tenants’ circumstances. For instance, what if they recently lost their job? In such cases, raising the rent could force them out of your property. And usually, it’ll be costly and time-consuming to find new tenants. So, be objective when planning to raise the rent.
5. Duration of the Tenancy
How long have your tenants been living on your property? If they just moved in, it’s not a good idea to immediately hit them with a rental increase. After all, they might be on the lookout for a more affordable place. Along the same lines, if your tenants have been with you for several years, they might be more likely to understand (and accept) a reasonable rental increase.
As a landlord, you need to be strategic when adjusting the rent. Weigh all the variables we’ve discussed before drafting a rental increase notice. By so doing, you’ll be less likely to lose out on good tenants and can avoid potential legal repercussions.