When your tenancy agreement comes up for renewal, a question that often arises is: “Should we increase the rent and, if so, by how much?” Here are a few things you should know if you’re considering raising your rent.
Is your tenant looking after the property and paying the rent?
If the answer is no, then renewing the tenancy could be a bad idea. Our number one aim is to maximise your income. If the tenant isn’t doing the right thing, renewing the agreement could be detrimental to your investment.
If, however, your tenant is paying the rent on time and looking after your property, you may like to consider a rent rise.
The next step.
If you decide to increase your rent, we’ll do a comparative market analysis of your property to assess the price it may rent for on the current market.
How much can we increase the rent by?
The days of arbitrary increases of $5 or $10 a week, once a year, are well and truly over. With more rental information available online, tenants are becoming savvier and more aware of the market. You should obtain an accurate assessment of your property and where it sits in the market and this should guide you as to any increase.
Why increasing your rent can be a good thing.
If you have loyal tenants, you may be reluctant to increase your rent. While keeping the rent steady can be a good idea, especially when vacancy rates are high, this approach could backfire on you, and your tenants.
As the market rents continue to increase, your tenants will be shielded from true market conditions. When it comes time for them to move out of your property, they’ll be completely unprepared for the increased living costs.
As a property owner, it’s important that you move with the market. If you decide to sell your property, and it has a rent that is less than market value, this may have a negative impact on securing a sale at a reasonable price.
The decision to increase your rent is one you shouldn’t take lightly. There are many factors you need to consider, but the best place to start is by having a chat with your Property Manager. We’ll be able to advise you on a course of action that works for you and your tenants. If you’re thinking about raising your rent, get in touch.