A part of our job when you engage our office as your managing agent, is that we ensure that your rent is the correct price. We do this regularly on our properties, by ensuring that we check current market conditions and comparative properties, making sure that you are achieving the correct price for your property, so as to maximise your investment return.
The first thing that you need to know is that if your tenant is on a fixed term lease, their rent cannot be increased during the fixed portion of the lease. This is the law in NSW and it is why we review the rent prior to putting a tenant on a new lease. If a tenant is signing a longer lease, you are allowed to ask for a rent increase to be written into the new lease, but the correct notices still need to be provided to the tenant and the lease must state when the rent is increasing and the tenant must agree to this.
When you first list a property with our office and it is vacant, we take a look at the property, we assess the market conditions by looking at what else is available at the time, we also check out the prices that other similar properties are achieving and set a price for the property. We do this to ensure that we get the right sort of interest and enquiry for your vacant property. If we are not getting the enquiry that we were expecting, or the feedback when we show the property is not suitable, we will speak with you regarding reviewing this price. This is to ensure that your property does not sit vacant for too long.
Once you have a tenant in your property, we continue with reviewing the rent on a regular basis, to ensure that your rent is not falling behind the market. We ensure that when we conduct a routine inspection, that we are putting in a date to review the rent, and we also do this when a tenant is requesting a new lease. This does not mean that every time we look at the rent price, that it will go up. In a lot of cases, the rent may need to stay at the same price.
We will always speak with you prior to making any decision about rent increases, as we have some landlords who do not want their rent increased, for a number of factors.
Occasionally we have a landlord that is exceptionally happy with their tenant and with the way that they are looking after the property. They may make the decision to hold off on a rent increase, even when one is due, so that they can keep their current tenant happy. In these cases, we ensure that we inform the tenant that the landlord has made this decision, so that they are aware of the benefit that they are receiving. As you can imagine, this creates a mutually beneficial situation, where the tenant is happy with the price that they are paying and they feel appreciated by their landlord, and the landlord gets to keep their great tenant for a longer period.
When the rent is increased, a tenant must be given 60 days notice of the intended increase. There are requirements around postage for providing tenants with notice, if we do need to post the increase to them rather than email this to them. Not every tenant has an email address and not every tenant has agreed that we can send them notices via email, so this needs to be looked at, to ensure that the notice period provided is correct. The increase must also fall on a rent day as well. As you can imagine, this is not as straight forward as counting 60 days on a calendar and putting the rent up!
The other important thing to remember is that rents do not always go up! If market conditions change, or you are having difficulty renting your property, the price may need to be adjusted accordingly. We need to be able to defend a rent increase on your property and prove that an increase is in fact justified. We do this by checking comparative pricing, looking at when your tenant last had a rent increase, ensuring that the increase requested is not above a reasonable percentage, assessing current market conditions and speaking with you about your requirements as well. If a rent increase is not done correctly and then at some point in the future, you find yourself at NCAT for some reason, a member at NCAT will always check that increases have been done in the correct format with the correct notice periods provided. If it is found that an increase has not been done correctly, they can make orders that the increase portion of the rent be paid back to the tenant, which can see you out of pocket for a lot of money.
For all of the above reasons, you can see clearly demonstrated the reason that it is important you employ a qualified real estate agent, who understands the complexity of tenancy law and the requirements that need to be met under the NSW Residential Tenancy Act 2010. Our commission is indeed a small price to pay when you consider the wealth of knowledge that a good agent can bring to the table regarding your obligations. If you have questions with regard to rent increases, please do not hesitate to give me a call at the office on 63525125 to discuss this.
