Raising the rent is usually a normal part of being a landlord.
But in 2020, it’s not that simple. We look at what’s happened with Perth rents in 2020.
The basics of rent increases
Rent increases are a normal part of most residential tenancies.
In normal times (i.e. outside of COVID-19) in fixed-term tenancy agreements, the rent can be increased once the fixed-term has ended, or even during it if it’s stated in the tenancy agreement.
Where a tenant pays rent month to month without an end date in place – known as a periodic lease – the rent can be increased once every six months. However, landlords need to give tenants 60 days notice of the increase.
What happened when COVID-19 hit?
The COVID-19 emergency measures stipulated that rents can’t be raised.
Fortunately, that hasn’t been the case.
Instead, as we reached September, REIWA figures showed the vacancy rate was at a 12-year low of 1.3 per cent.
Meanwhile, the rental market was tight, with around 3,000 rental properties in Perth currently available for tenants to lease.
Compare this to a year ago when there were 6,599 properties available to rent and the vacancy rate was 2.6 per cent – double what it is right now.
Perth is actually now experiencing something of a rental shortage.
What are rents doing in Perth during 2020?
The low vacancy rate caused the median rent for houses to rise $10 a week during August to $380. The overall Perth median rent is now $360 per week.
The average Perth rent has barely changed for the past three years, so this rise – even though it may seem like a small one – has caused a lot of people to sit up and take notice.
In February this year, the median Perth rent rose for the first time since January 2017.
A potential rise in income thanks to increased rents was promising news for property investors who’ve held on through such a flat market.
The impact of Covid-19 measures on Perth rents
In September 2020, when the emergency measures were due to expire, the WA State Government announced an extension so that they now run until 28 March 2021.
This means that the Residential Tenancies (COVID-19 Response) Act 2020 will apply to all tenancies until that date, regardless of whether or not COVID-19 has financially impacted a tenant.
This also means that rents cannot be increased until the emergency period ends.
REIWA is arguing that this is unfair because the majority of tenants haven’t been impacted by COVID-19 and rents have finally been rising after three years of zero growth.
REIWA says that, as a result of the rules, landlords may be forced to sell their investment properties and that property investors are being forced to sit on the sidelines.
They also argue that because of the low vacancy rate and competition in the rental market, tenants will potentially face a steep rise in rents when the emergency period expires. It believes that it would be better if they had their rent increased, in small, manageable increments. And, they believe that the current rental shortage may actually have the potential to morph into a full-blown rental crisis.
If you have any questions contact our team of experienced property managers today.