Hi all
I am about to settle on a property where the tenant has been paying $250/week for the past 2 years. Since rents for similar properties in the area are around $280+, I would like to start increasing the rent from day 1. I am about to meet with the property managers who currently manage the property to sign up a new agreement between the tenant and myself, however, I have recently received advice that I would sign up a short tenancy with the tenants at the current rate, then when this contact finished, start increasing the rent then??
What are the options in this situation, can I put up the rent as soon as I sign a new agreement, or must my first contract with that agency and tenant be for the current rate? Ideally I would like to introduce the tenant to regular, small rent increases again and if they don't like it and move out, I can do some much needed renos on the tired place!
Many thanks
ChrisA1
Persistence is 'to keep on keeping on, no matter how hard the going may be'
You will need to give the tenants a notice of rental increase.
In most cases this notice is around 60 days. I am sure you could give that notice once the property is unconditional and your ownership is locked in. (Terry ?) It may be that you will have to sign a property management agreement with your property manager before they will issue the notice.
When talking to the property manager you should ask why the rent has fallen behind market rates – I suspect the REA hasn't been proactively working with the previous owners and things have lagged. In discussion and in your agreement I would make sure the REAs are required to advise you of current market rents when a lease is due to expire and in sufficient time that the new lease can reflect current market conditions.
Too many lazy PM out there.
Hi Derek
Great points. Your point about the 60 days reminded me about why we couldn't increase the rent – yep, sign a new agreement (short term!) on the current rent, work out what's happening and increase the rent as I can.
From some background checks, I dare say a lazy PM and landlord.
Anyone know of a good PM in Liverpool NSW?!? I'll have to pound the pavement.
Cheers
ChrisA1
Persistence is 'to keep on keeping on, no matter how hard the going may be'
Hi Chris,
Not across all aspects of NSW RE tenanting laws but my first thoughts were you have been spun a line.
If the tenant is currently on a periodic tenancy give them 60 days + 4 days delivery notice of a rent increase as soon as you possibly can. I suspect this can happen before you take ownership – but seek some professional counsel on this.
If the tenant is on a fixed term lease then you'll have to wear the remains of the existing lease agreement. If the lease is within 60 days of expiry give notice of rent increase as soon as you can. The increase will take 60 days to come into effect.
If the tenant is a on a lease which goes beyond 60 days then you can give notice of rental increase no less than 60 days from lease expiry. If there is a review clause in the current agreement you may be able to use this.
Bottom line is any rental increase requires 60 days notice.
Recommend you check out the NSW Tenancy Act – would be very helpful to you.
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