Should I raise the rent in 2021?
Brisbane rent increase $100 per week in 2021!
Within the first 7 months of 2021, Domain.com.au has reported a median rent increase in Brisbane of $100 per week, which equated to an extra $5,000 per year. The current supply of rental properties are making it increasingly harder to secure with most rentals achieving multiple applications within the first few days of being on the market. There were only 4,520 houses advertised for rent across Greater-Brisbane region at the end of June 2021, compared to 9,222 just 5 years earlier, Brisbane in this time has an additional 230,000 residents.
Does this mean I can just increase the rent $100 per week?
Yes and no. How a Property Manager appraises a rental property for the market is comparing at least 3 similar properties in the same suburb, taking in consideration the differences, property conditions, street position ect ect. We also need to make sure we are following the correct legislation so the rent increase isn't deemed to be 'excessive'.
If you have a tenant in place its important to ask yourself some questions which will assist in making the decision if it and how much you want to increase the rent by.
Is my current tenant looking after the property and paying their rent on time?
How long has my current tenant been in the property for and are they actively improving it or making it in worse condition?
What do my current tenants do for a job and can they afford a rent increase?
What are comparable properties in that suburb renting for?
How much can I legally increase the rent by?
A good property manager will guide you on the best course of action for achieving a rent increase and also keeping a good tenant in place. In Queensland, there is certain legislation we need to keep in mind when and if, we can increase the rent, below is from the RTA which is the legislative governing body in Queensland;
Rent cannot be increased during a fixed term unless it is stated in the tenancy agreement and all of the following occurs:
- the agreement states the rent will be increased
- the agreement states the new amount (or how it will be worked out)
- the property manager/owner gives the tenant at least 2 months notice in writing, and
- it has been at least 6 months since the tenancy started or since the last increase
The property manager/owner and tenant can agree to a rent increase at the end of a fixed term agreement by entering into a new agreement. However, it must be at least 6 months since the last rent increase. There is no requirement to serve a notice about the increase.
What happens if the tenant finds the rent increase excessive?
A tenant can dispute the increase if they feel it is excessive by discussing the issue with the property manager/owner. If the tenant still feels the increase is excessive, they can apply for dispute resolution once the new agreement is signed. They may also apply to QCAT for a decision.
QCAT which is our court and overruling system here in Queensland may take the below into consideration when deciding on if a rent increase is excessive or not;
- range of market rents usually charged for comparable properties
- difference between the proposed and current rent
- state of repair of the property
- term of the tenancy
- period since the last rent increase (if any)
- anything else QCAT considers relevant
The best next step is to assess the above, considering when your current lease agreement expires and start having the line of conversation with your Property Manager so they know your intentions. Top Property Managers complete lease renews 3 months in advance, as in Queensland we need to provide 60 days notice of any rent increase.
If you Property Manager isn't achieving you market rent at all times, you may need to assess who is looking after your biggest asset. Call My Logan Realty for a free Rental CMA, obligation free!
