Real Estate Agents and Rent Increases

[Sugar Dunkaton]

I have just received a letter from our Real Estate Agents saying that they would like to increase out rent by about 6% which equates to $30 a week. I get the feeling that they are just trying to sucker us for more money because we rang them early to renew our lease.

Although it is not much, I don't really feel like paying the extra. We are good tenants, have paid our rent on time, everytime and have not had any problems with any of the neighbours (maybe one, but that story another time).

Does anyone have any evidence or any strategies to negotiate the price downwards. I keep reading that in Manhattan you can negotiate three free months on a year long leave and get a discount of 10% off what you were paying for renewing your lease!

I have so much equipment that it would be such a hassle to move, and if push comes to shove, we will pay the extra - but ideally would like to be paying the same or less rent.

Cheers

 

[bluelabel]

Hi Sugar,

I wrote to our landlords last when they put our rent up $20 a week it was. In the letter i spoke about their investment and the long term security of it (especially relevant in these uncertain times!) About how we had been in the place for 3 years and were great tenants who maintained the property and paid rent on time. i also spoke about the human element and how we had recently started a family and the place was now our home.

They offered a 6 month lease. I offered a comprimise and went for 12 months with a $10 increase and they took it.

All you can do is write and ask. all they can do is say no.

funny thing though it is up for renewal again and the landlord has stated increased costs as the reason to increase rent this time. mmm interest rates halved doesnt sound to bad to me. I cant see the justification for increased costs.

:bier:

blue

 

[awg]

It depends a bit on your location.

I would possibly ring some other local R/E and ask them what the trend in rents was for that area.

It could be a try on by the agent.

I would definitely write a pleasant well worded email to the RE explaining your reasons why a increase would not be good, and even may cause you to reconsider renewal.

Hi Sugar,


funny thing though it is up for renewal again and the landlord has stated increased costs as the reason to increase rent this time. mmm interest rates halved doesnt sound to bad to me. I cant see the justification for increased costs.

:bier:

blue

Many investors have a fixed rate loan, so wont yet have gained any benefit from falling interest rates

 

[prawn_86]

I think it varies from state to state, and im not 100% sure, but i can remember hearing somewhere that landlords are not allowed to increase rents by X% each year. So if your rent went up 30% last year also, then another big rise wouldnt be allowed.

Sorry i cant be more helpful, but it might be something worth looking into. (Although they can always advertise for new tennants to get around that rule)

 

[Knobby22]

My wealthy uncle owns a lot of properties and he has not raised rents in the latest half and has in fact reduced rents in some cases.

I would consider calling the agents bluff. Do some shopping around of rentals in your area so you know the score.

 

[Basilica]

Hi Sugar,
Prawn is right. There are limits how much rent can increase per year and in NSW it is regulated buy the CTTT Consumer Trader Tenency tribunal. i think it is about 10% or less / year. But the downside is if you win an pi$$ them off then can still ask you to leave. I would negeioiate and describe what a good tennant you are and tell them costs involved in agengy fees and vacency period to replace you, then offer 50% of what they asked politley in a letter to the OWNER. The council will tell you who the owner is and then address it to your address and it may get redirected. The real estate agent is probably the one who started it all and has the most to gain by changing tennants (a few $K )
Good luck

 

[glads262]

My wealthy uncle owns a lot of properties and he has not raised rents in the latest half and has in fact reduced rents in some cases.

I would consider calling the agents bluff. Do some shopping around of rentals in your area so you know the score.

Our realestate agent did this two years back - but we know the owner personally. I don't think the owner knew that they had requested the increase.

We called their bluff - basically said we would move out with a 10% rent increase as there was plenty of property around. They called back the next day, and renigged.

Its a risk/reward scenario.

If you do move out, your landlord has to pay two weeks rent as a releasing fee - $600 on $300/week rent. Plus, if the house is vacant for, say, two weeks, they lose another $600. = $1200 loss

If they are asking for a $20 increase, then that is $1040 for the year.

That is what the landlord is risking.

You are risking a $2000 bill for moving & the hassle of finding a new place.

 

[Basilica]

Our realestate agent did this two years back - but we know the owner personally. I don't think the owner knew that they had requested the increase.

We called their bluff - basically said we would move out with a 10% rent increase as there was plenty of property around. They called back the next day, and renigged.

Its a risk/reward scenario.

If you do move out, your landlord has to pay two weeks rent as a releasing fee - $600 on $300/week rent. Plus, if the house is vacant for, say, two weeks, they lose another $600. = $1200 loss

If they are asking for a $20 increase, then that is $1040 for the year.

That is what the landlord is risking.

You are risking a $2000 bill for moving & the hassle of finding a new place.

+ the RE agent will charge usually 4 weeks rent to re-lease it to someone else.

Maybe ask the owner to REDUCE the rent by 3% for trying it on.

 

[Glen48]

Most properties you are lucky to get 48 weeks rent, and by the time the owners loose the first weeks rent, pay the agents their 10% rates and insurance clean the place up and re let it will take a lot of $30 just to get back to were they are now. Rents in Sydney are starting to come down as more move out and live with parents..in the 80's a lot were in Caravans in the back yard. Maybe agree on lesser amount and hold on until the collapse.

 

[adobee]

I would suggest you right a letter into them asking for a decrease in the amount if you want to try and get it cheaper, stating that you think you will have to move. If you dont the agent might not even consult the owner but if they say you will move then they will ask cause they wont want the vacancy..

If the above fales you have 30 days from receipt of the letter to apply to the CTTT for a hearing re fair rental. Pretty much the landlord can increase the rental as long as its in line with the market rental. Check comparable rents if its not inline then apply if it is inline dont bother..

Lastly check the notice period they have provided.. If it is NSW they must provide 4 clear days postage plus 60 days of notice.. If this isnt provided the increase is not valid and they must resend all over again..

 

[white_goodman]

what we do in commercial is look at where else we could go with a tenant and compare its features, rentals etc....

id find out home many similar properties there are in the area and there rentals... they are more likely to lower the rent if you can show other houses in which u could easily move to.... however it depends on the location, some places atm tenant has the bargaining power, others landlords do.... its all a supply and demand thing...

also a owner would rather give rent free incentives then lessen the face rent as increases to face rent over time equate to more money, tho also depends on the cash flow of the landlord... so yeh maby try and bargain on the incentives... also owners want to advertise a high rent as it makes there property worth more in terms of yields.

 

[skyQuake]

Have a look at your contract, assuming its a standard NSW one there's a bit about how much the landlord can increase rents by.

 

[SM Junkie]

I'd go to a site such as www.realestate.com.au and search the rents in your area, you will soon learn if you are being overcharged or if the increase is actually reasonable.

Also what is the vacancy rate in your area? Perhaps the owner does not think there will be a problem in re-letting the property?

Generally the rents on my properties go up with market value and I find that properties with long term tenants always fall below market value.

The suggestion to write to the owner stating your case is good and would certainly be considered. Just don't use any threatening language.

As far as the cost to re-let, if the owner is in a financially sound position then it would not be a problem and is just part of the course of being a property investor.

 

[Naked shorts]

Well I think ive learnt a good lesson here... Never get attached to a rental property.

 

[gfresh]

Attached to a rental property? : it's a roof over the head for me, nothing else

I think agents are pushing landlords for higher rent to give them increased revenue seeing as they are running lower sales volumes in their sale departments. They know it's a hassle/costly for you to move too, so it could be a battle of who is willing to budge.

 

[Sugar Dunkaton]

Cheers everyone, Will send off a letter when i get around to it.