Navigating a rent rise
With the vacancy rate remaining at an all-time low and rental properties in high demand, rent increases have been a big topic in the media over recent months.
So, let’s look at how both rental occupiers and owners can navigate a rent rise including the rights and responsibilities of each party.
Why do rents rise?
Rents tend to increase as a result of market forces. Like anything, it’s about supply and demand. When demand for properties in an area outstrips available supply, that tends to mean the prices for available rentals will increase.
And that’s been a major driving force of the recent rental increases seen across Australia, as seen by the national vacancy rate which is currently sitting at an all-time low.
In a balanced market, the vacancy rate sits at about 2-3 per cent, meaning 3 per cent of all available rentals are currently unoccupied and available to be rented at a given moment in time.
At the present, Australia’s rental vacancy rate is hovering below 1 per cent, which means there are fewer rental properties available.
When can the owner raise the rent?
In most cases, a rental owner can only raise the rent at the end of a fixed term rental agreement. In other words, they can’t raise the rent during a current contract, but can when that contract expires or if the rental agreement is periodic.
In some states, such as Queensland, the regularity of a rent increase is also subject to specific laws. For example, in Queensland, they can now only raise the rent once a year, regardless of the length of lease the rental occupier has.
How much can rents increase by?
Again, the market tends to drive how much the rent can be increased by, but there are provisions under some state’s rental laws if a rental occupier feels the increase is excessive.
How rental occupiers are notified
If your fixed term agreement is coming to an end or if you are on a periodic agreement and the owner opts to increase the rent, notice of this needs to be provided in writing.
In general this notice needs to be 60 days in advance, but timeframes also vary, depending on what state the property is located in.
Should you as an owner raise the rent?
Whether or not to raise the rent, and how much it should increase by is a big question for property owners, and it’s one that should be weighed carefully.
On the one hand, raising the rent will increase the return on your investment and could help to cover those rising mortgage costs brought about by increased interest rates.
But on the other, when you increase the rent by a large amount, there’s a chance the rental occupiers you have will start looking elsewhere.
That means you might have a property sitting vacant for a period and you could lose good occupiers who pay their rent on time and look after the property.
In other words, it’s a decision that should be made in consultation with a trusted property manager, who can guide you through the pros and cons, depending on your situation.
The options for renters
At a time when the cost of living is high and the hip pocket is being hit hard for a multitude of reasons, chances are the last thing you hope for is a notice to indicate your rent is also rising, so what are the options available?
Well, the first is to speak with your property manager and see if you can negotiate a smaller increase that might suit both your needs and those of the owner.
There is also of course the option of finding a more affordable property elsewhere or you can contest the increase.
Regardless, raising the rent is a situation that should be carefully considered and thoughtfully communicated by all parties involved.
Both rental occupiers and owners have expenses, and the best solutions are often achieved by understanding, working together, and appreciating each other’s needs.
How we can help
Our experienced property managers pride themselves on establishing great relationships with both rental occupiers and owners.
We manage every property as if it were our own and you can learn more about our property management services here.
Alternatively, if you are looking to rent a property, you can view the properties we currently have available here.
