When reviewing rents and tenancy agreements, the question often arises; “Should the rent be increased and if so, by how much?”
When we review the rent, the first thing we do is to determine the nature of the tenancy and then do a comparison of similar property rent levels and current vacancy rates, to assess the rent the property may achieve on the current market. This is how the market rent is determined.
Many investors are reluctant to increase rents at properties where they have retained a good long standing tenant and this is a good practice. However it is also important to consider increasing costs of ownership and ultimately these must be passed on in the form of rent increases.
We always conduct rent reviews every 6 months and let our clients know our advice. Quite often we recommend no increase in the first six months providing the tenant is consistently doing the right thing. Increases going forward from there then need to be fair, consistent with the market and conducive to keeping a good tenant in the property.
As always, please speak to your Property Manager if you need advice in the important area of property investment.
