You don’t know what you have until it’s gone

Last week we discussed the option of rent increases, particularly how and when rents can be increased. This week as a follow up, we will discuss the effects that follow from changing the rent and whether it is suitable in the current market.

When it comes to rent increases, it can definitely be beneficial for the landlord by receiving more income from their investment property; however it may also be detrimental for the tenant. If you are thinking about increasing the rent at your property, as well as following the legal requirements set out in the Residential Tenancies Act 1995, you should also consider how it may affect the tenant.

If your tenant pays rent on time and maintains the property well but can no longer afford the rent with an increase, you must consider if it is worth losing them over something as small as a few dollars a week. In the current market, as discussed in previous blogs, it’s a tenant market and they have a huge choice of properties at the moment. Rents are also on the decline so increasing the rent at your investment property may not be the best option for you.

Good tenants can be hard to come by, so the safest bet is to suggest an increase at the end of the lease term when you are asking if they are going to renew. If the tenant decides not to renew, prompt them to find out why. If it is due to the rent increase, you should consider keeping the rental payments as is, particularly if they are reliable tenants which you would like to keep on.  You should also consider the rent you may lose if they property takes longer than expected to find a new tenant.

The truth is, you don’t know what you have until it’s gone. Your tenant may decide not to renew with you in order to find a cheaper property and you may find it hard to find tenants which are just as reliable.

So consider all of the facts and make sure you are aware of the current market situation before making any decisions and increasing rent at your investment properties.