Hi all. just wondering what the maximum limit is in NSW in relation to raising rents. Is it a percentage of rent or a fixed dollar amount? How many rent rises are allowed per calendar year? Thanks in advance.
There is no set amount that you can raise the rent either as a % or fixed amount. How much will the tenant bear before you lose them and then are up for a replacement (ie advert, agent fees/comms/lease prep as well as lost rent)?
By law you must give 60 days written notice of a rent increase, this will limit you to 6 per year. Tenant can always take you to the tribunal in what may be seen as an unfair/exhorbitant rent increase (you are more likely to lose).
Any rental increase needs to be seen as 'fair and just'. The tenant can easily argue if the increase is substantial (eg. over 5%) or if the increased price is higher than a comprable property.
You also need to weigh up how likely it is to find new tenants, and also how much you like your current tenant.
Be sure to get the advice of your property managers before deciding on an increased amount.
Do you think a rental increase of over 20% is ok and acceptable, if it is in line with the current market? Probably not ok with the tenant of course, but do you think a tribunal would take into account the current market and the fact the existing rent is way under market rents?
If you have evidence that the rental is this far below market value then you may be able to increase the rent by this much. However, as stated above, you may be at risk of losing a tenant. It may also be worthwhile to inquire from both your real estate property manager as well as other property managers in the area what the current vacancy rates are. If you do put the rent up by this amount and the tenant moves out, how long is the property likely to remain vacant?
My view is if you find a good tenant then look after them with rent as it is very difficult to find good tenants these days, that pay thier rent on time consistently, not trashing the place, not having massive parties.
One tenant I have has been in the property for 5 years has not missed a rental payment, rarely calls me for anything I have to call her every now and again to see that all is OK. So in turn I have only raised the rent twice in that time(mainly due to the wife's insistence during interest rate rises) it was originally $160 p/week and now is $188 p/week so an increase of 17% over 5 years.
Yes I possibly am losing in rent and I know the rent is under market value at the moment but I believe I am gaining by not having to advertise, interview and suss out potential tennants and then build comfortablility you have with a long term tenant(ability to pay rent and on time, no trashing or parties)
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