Rent increases.

In My Humble Opinion
1

I’m interested in others’ opinions (from both tenants and property owners) about the problems associated with increased rents.

My partner and I have been in this property for a year now, and with a review of the lease and a property inspection, the agent/owner has asked for an extra $15AUD per week.

Not a huge sum by any means, but given that we are always two months ahead with our rent at any time (giving the owner free ‘use’ of the monies for that period) and that we have kept the property in immaculate condition, improved the garden and household environs AND the fact that my partner is totally incensed by the gaul of them and is threatening to move house just on principle… :rolleyes:

As an owner, would you try to retain decent tenants rather than go through the rigamarole of finding new ones (with the inevitable advertising and non-rent times payable in the interim)? I guess another question (be candid please!) is that if you DO have good tenants, are you more likely to increase the rent knowing that they will put up and shut up rather than move house?

As a tenant, would you be pissed-off if you had done all the right things and your landlord chose for whatever reason to up the rent? Would you move just on principle?

Note: there are properties of comparable size and quality in this area for the same or less than we are paying now. The rent increase will put the property up into the higher level/s and quite honestly, it’s a nice place, but doesn’t really deserve such a price per week. But for gawdsakes, moving? I really don’t want to do that! Again! Fuck right off! Arrghhhhhh. :cool:

2

As a tenant, I’ve flat out refused rent increases in the past, and gotten away with it (even though we actually weren’t very good tenants - students, you know!) As an owner I can understand the temptation with rents going through the roof everywhere and a 1% vacancy rate. We had to move at Christmastime and it was really awful finding a place - viewings with fifty people all queueing up to look things over, and then having to decide pretty much immediately whether to put in an application. We ended up close to doubling our rent, just to find a place we liked as much as the last one (which was, admittedly, a bloody good deal)

TBH, in the current market $15 more a week in the inner city (which is where I think you are?) doesn’t sound totally unreasonable in the current market, depending on what you’re paying. But I may be skewed by the hideous rent we pay for a house big enough for a family of five (and with kids so - at least some garden space needed) - it would be less than 3% for us.

And I would probably up the rent on our house-that-we-own after a year without any shame, but only under one circumstances - namely, if the owners of the house-we-rent did it to us first. And I’d definitely be prepared to compromise if the tenants had issues with it.

But your landlords may be in the same situation we’re in - given the current tax laws it’s not totally unheard of for people to be owning in one place and renting in another. Maybe they’re just spreading the pain around? (or the pain of the interest rate rises, come to think of it)

3

I can’t answer your questions as I’m not a landlord, but I was just curious as to whether weekly rent is a common thing in Australia. I don’t think I’ve ever heard of that here outside of people paying to live in dingy motels by the week. Do you actually send a check every week?

Oh, and as to the question for tenants, I guess I’d probably (grudgingly) put up with it if it was a modest increase. Moving is one hell of a hassle.

4

My rent has generally increased by 2 to 5% every time I renew a lease. It’s just a fact of life, I think. Australia’s mileage may vary.

Do you have a lease? Does it address rent increases?

5

[QUOTE=Aspidistra]
TBH, in the current market $15 more a week in the inner city (which is where I think you are?) doesn’t sound totally unreasonable in the current market, depending on what you’re paying.

[/QUOTE]

I’m not in Fitzroy anymore, alas. :frowning:
I’m down south near Frankston, but as you say, 15 pw is neither here nor there in the financial scheme of things, really. It's more the ethics of rent rises and refusals etc that interests me. Personally, I don't give two fucks really, and would happily stay here for the extra just to avoid the hassles of moving.

OTOH, I feel the agent is getting a bit uppity, and has pre-empted a rent hike on behalf of the owner who would probably rather have some decent long-term tenants in her joint instead of a rash of short term bogans…it’s Seaford afterall!

6

[QUOTE=neutron star]
I can’t answer your questions as I’m not a landlord, but I was just curious as to whether weekly rent is a common thing in Australia. I don’t think I’ve ever heard of that here outside of people paying to live in dingy motels by the week. Do you actually send a check every week?

[/QUOTE]

Properties are advertised by their ‘weekly’ rent, but rents are (almost) always paid by the calender month in advance. Not by the week, and never by cheque!

IOW, if a rental property is advertised at $250 per week, that amount is multiplied by 52 then divided by 12 to get the monthly payment of about $1083 per month. That is the amount you pay.

7

I don’t see anything wrong with raising rent to keep up with inflation. But a lot of landlords, thinking that they have their tenants over a barrel, raise rents at a much higher rate than inflation. This puts the tenant to the burden of weighing the trouble and cost of moving against the annoyance of paying more rent than they should.

8

I haven’t been a tenant in eons, but we do have to rent a slip for our boat, and our monthly rent just went up $10 with no explanation. There’s no lease per se, so we can just take our boat to another marina if we want, although we’re staying in the cheapest one on the creek, so we’re not moving.

I’ve seen a lot of work going on at the marina, so I’m guessing we’re all being charged to cover those costs. Plus the people who work there likely believe they’re entitled to pay raises, and the materials to maintain the place (like wood for the docks) are all getting more expensive. And the facility insurance costs have probably risen also. Such is the nature of life.

I expect you can extrapolate that to a landlord of one or many properties. Said landlord is running a business, so expenses must be covered, employees (self) must be paid, and the current market must be taken into consideration. That’s just the way things work. I would think, at least as a courtesy, a tenant would be informed why the rent is going up, but it’s really not a requirement, is it? I know when my mortgage amount changes due to property tax or insurance increases, I am informed a couple of months in advance, and I’d like to think as a landlord, I’d do the same. Of course, I’m just nice. :smiley:

9

I used to be a property magnate prior to my divorce (2 rental properties). One property was rented by the air force who had along term contract with no leeway for negotiation. We routinely kept our other property priced about $15 - 20 under the market rate for properties in the area so that tenants didn’t have any incentive to leave. As you point out, if a property renting for $300 is vacant for 4 weeks that is over 2 years worth of a $10 rent rise.

Mind you the rent rose with inflation but always stayed a bit cheaper than the place down the road.

10

[QUOTE=neutron star]
I can’t answer your questions as I’m not a landlord, but I was just curious as to whether weekly rent is a common thing in Australia. I don’t think I’ve ever heard of that here outside of people paying to live in dingy motels by the week. Do you actually send a check every week?
[/QUOTE]

Australian rents are generally advertised as a weekly rate. This is for the majority of residential tenancies, not just dingy motels. A brand new McMansion with a pool and quadruple garage will likely be advertised at a weekly price. Very upscale residential properties and most business premises are advertised “per calendar month”.

The actual frequency of payments depends on the agreement between tenant and landlord, and will be written into the lease. In my case, my landlord asked for fortnightly payments in cash, but he’s a nice guy, he lives next door, and I know he’s doing it tough with a mortgage and a young family, so I tend to pay him one or two months in advance, and I do so monthly, not fortnightly. He’s happy with that.
Basically, the frequency of payments is just a convention and not an indicator of sleaze so much, since you’re locked into a six or twelve monthly lease, so it’s not very motel-like at all.

11

I expect my rent to increase at a pace just slightly behind market rents. So say I rent for $900/month but I think my place could fetch $1000/month, I would expect him to raise my rents to $950-975. It’s not his job to cut me a deal, but at the same time I know there is a cost and risk associated with turnover and it’s to his advantage if I stay put.

You know you can negotiate the rent increase (well, in the US at least you can). Tell them why you think you are good tenants, that you would like to stay in the apartment but the new rent is an issue and would they reconsider. Mention market rates too since it works in your favor. They may shave a few dollars off.

12

That tends not to work in Australian capital cities, circa 2008. Theoretically, yes - of course you can negotiate. But I’ve heard figures of a mere 1% vacancy rate for residential properties in some suburbs, and stories of a hundred people turning up for an inspection of one shitty flat, with an informal auction taking place later where folks will offer, say, $50 on top of the advertised weekly rate. We’re in a mother of a rental squeeze here. If my landlord kicked me out, I’d be fucked. Despite the altruistic “he’s a nice guy” (and he is) reasons I gave in my above post for paying well in advance, I’m also making sure to keep on his good side.

13

[QUOTE=kambuckta]
As an owner, would you try to retain decent tenants rather than go through the rigamarole of finding new ones (with the inevitable advertising and non-rent times payable in the interim)? I guess another question (be candid please!) is that if you DO have good tenants, are you more likely to increase the rent knowing that they will put up and shut up rather than move house?
[/quote]
I definitely think that some landlords hate the hassle of finding new tenants, and are willing to forego or minimize rent increases in order to keep good tenants. As others have pointed out, the place only needs to be vacant for a few weeks to completely wipe out any extra income from a small rent increase.

While i guess it’s possible that some landlords deliberately raise the rent on good tenants because they know the tenants will put up with it, in my experience that’s not the case. My wife and i are good tenants, and i know our landlord likes us, and likes having us in his place. When we first moved in he actually dropped his asking price by about $40 a month because the place was near the top of our budget, and he thought we looked like good tenants. In the three years since then, he’s raised the rent every year, but those three years have been a period of rapidly increasing rents in this area, and we still pay less than market rate for the type of place and the location. He’s the best landlord ever, and we’ll be very sorry when we have to move out of our place this summer.

[QUOTE=kambuckta]
As a tenant, would you be pissed-off if you had done all the right things and your landlord chose for whatever reason to up the rent? Would you move just on principle?
[/quote]
It would depend. Moving is one giant pain, and i would be very hesitant to move for the sake of a small rent increase, especially if it was going to be difficult to find another place for similar money. On the other hand, if you feel he’s taking the piss, then this might be an indication that he’s not someone you want for a landlord anyay, and moving might be a good option.
[QUOTE=kambuckta]
Note: there are properties of comparable size and quality in this area for the same or less than we are paying now. The rent increase will put the property up into the higher level/s and quite honestly, it’s a nice place, but doesn’t really deserve such a price per week.
[/quote]
This is the key, i think.

We can bitch all we want about landlords who raise your rent, but the fact is that, if the local market can sustain the rent increase, most landlords will do it. But if there really are comparable or better places for less money in your area, then it might be worth pointing that out to the landlord, and letting him know that if he goes ahead with the increase, you will leave and take one of those other properties.

While raising rents in line with market conditions is rational and understandable, some landlords are just as prone as house-sellers to unrealistic assessments of what their place is worth. When the real estate bubble burst here a year or so ago, there were plenty of sellers who refused to believe that their house was not worth what they thought it was worth. Some houses in our area stayed on the market for well over a year, with vendors asking prices that were completely unrealistic in the falling market.

Well, the same thing can happen with landlords. For example, if interest rates go up, and his property is on an adjustable-rate mortgage, he might say to himself, “Well, my mortgage payments just went up by $80 a month, so i need to raise the rent by $80 a month.” But if the market value for that property isn’t $80 a month more than what he’s getting now, he might lose his tenants, and have trouble finding someone else at the new price.

14

[QUOTE=TheLoadedDog]
That tends not to work in Australian capital cities, circa 2008. Theoretically, yes - of course you can negotiate. But I’ve heard figures of a mere 1% vacancy rate for residential properties in some suburbs, and stories of a hundred people turning up for an inspection of one shitty flat, with an informal auction taking place later where folks will offer, say, $50 on top of the advertised weekly rate. We’re in a mother of a rental squeeze here. If my landlord kicked me out, I’d be fucked. Despite the altruistic “he’s a nice guy” (and he is) reasons I gave in my above post for paying well in advance, I’m also making sure to keep on his good side.
[/QUOTE]
Well, if OP stated that he didn’t think the apartment ‘deserved’ the new rent. Both these conditions can’t apply – if multiple applicants would snatch up the apartment at the new rent, then the apartment deserves this rent. One can argue why the current tenant should be charged less than market rate, but that doesn’t change what market rate is. Unless I’m missing something here.

15

[QUOTE=sugar and spice]
Well, if OP stated that he didn’t think the apartment ‘deserved’ the new rent. Both these conditions can’t apply – if multiple applicants would snatch up the apartment at the new rent, then the apartment deserves this rent.
[/QUOTE]

I get what the confusion is about. TLD was talking about the inner city market (which has something like a 0.5% vacancy rate), but kam lives in the outer suburbs. I don’t know what the rental situation is like there, but renters probably have more wiggle room.

Even in the inner city Melbourne market I know some people who have successfully argued against rent increases. One wrote a letter to the agent pointing out that she:

  • always paid her rent on time
  • kept the property in good condition
  • had made improvements to the property (taming the garden, doing minor repairs)

She also looked on rental websites and found that for the same price in that area she could get a study, or a recently renovated kitchen, or off-street parking. She also found comparable places renting for less. So basically she argued that she was an ideal tenant, and even if they managed to find someone to rent at above-market rates, they probably wouldn’t be as good a tenant as she was. A bird in the hand and all that. The rent was still increased, but to maybe $10/week below market rates which she was happy with.

The agent knew that a good tenant made her job far easier. Her cut (5% of the proposed increase) wasn’t worth the extra work of open inspections, handling applications, and possibly ending up with a crappy tenant, which would require a whole lot more work on her part.

I would definitely try the letter route.

As a landlord I have kept the rent down for good tenants. If I were a tenant, and I liked the place and had already settled in, I would probably accept the above market rate increase. But if I had been a good tenant until then I would just be an average tenant from then on. A leaking tap that I could easily fix myself? Nup, sorry. I’m useless with these sorts of things, you’re going to have to get someone in.

16

[QUOTE=mhendo]
This is the key, i think.
We can bitch all we want about landlords who raise your rent, but the fact is that, if the local market can sustain the rent increase, most landlords will do it.
[/QUOTE]

Right. Just as it would be unreasonable for a landlord to say “Sure, you could easilty get a similar place for less money nearby, but it would be hard on me if you moved out,” so it is for a tenant to say “Sure, there are lots of people who’d be willing to pay this higher rent, but it would be hard on me.”

17

I’ve been lucky with rent. It’s at a reasonable level compared to some places (and I’m in a very nice suburb), and I have only had one increase in five years, which was quite recently, and that was only by $10 a month. I know I’ve got it good.

18

If you think the agent has pre-empted the owner, I’d attempt to negotiate. You could point out that inflation is at 3% and offer them a 3% increase on your current rent. The worst they can do is say “no”. In which case, you move (back to Fitzroy or St Kilda or something, sheesh) or suck it up but at least you didn’t just fork out $15/week which you may not have had to.

19

I’ve never heard of a rent increase as high as that- 65/month. All of mine were in the 10-20 per month range.

20

[QUOTE=Wee Bairn]
I’ve never heard of a rent increase as high as that- 65/month. All of mine were in the 10-20 per month range.
[/QUOTE]

Ha! Prepare to be amazed. We have been renting a place for coming on four years. We have been good tenants with positive reports from all of our rental inspections (one every three months is standard here, annoying.) The agent has just informed us that they want to raise the rent by $150/week. Yes, that’s one hundred and fifty dollars!. An extra $7800 each year. This is on top of a $50 increase last year. We are trying to negotiate. We’ve told them it is excessive and have offered to pay an extra $50 for six months and then an additional $50 for a further six months. They have come back with an offer of $100 increase with a rent review after six months. The problem with that is there is no limit on what they can increase rent by at the review yet we would still be locked into a 12 month lease regardless.

Unfortunately the increase is in line with market rents and we have literally no negotiating power other than the hassle of getting new tenants. This is in a town where cheap houses just don’t exist, there is no cheap area, just expensive and more expensive. Also there is a critical housing shortage. It is difficult finding a house at all let alone one in your price range.

I am on a reasonable salary and can afford the increase, in fact it’s not a big deal financially, but I find it a hard pill to swallow, paying an extra 7800$ a year for what? I don’t get anything more out of it than before. I get the privilege of maintaining a roof over our heads. The owners have made no improvements over the four years except to replace the oven and one air-conditioner (both replaced with very cheap models.)

I have no idea how people who work normal jobs, McDs workers, checkout chicks etc, can afford to live here. Anecdotally they have more than one job and work their arse off 6 - 7 days a week all for some kind of lifestyle that they probably don’t have time to enjoy.

We will be moving at the end of this year whatever happens.

kambuckta, I think an annual increase in line with inflation is reasonable. If you were paying $300/week then an extra $10-$15 sounds ok. Also realise that interest rate rises mean that the house owner’s mortgage is more expensive and they will be trying to cover that. I would definnitely try and negotiate a lower increase though. Improving the properties gardens may even have a negative effect for you. You make the place look nicer, the bank values it higher, the owner is able to borrow more against and then he has to find the means to pay his increased mortgage!

P.S. I have a day off in Melbourne tomorrow, anything I should be doing? I have no personal transport and am staying by the airport. I was planning on taking the airport shuttle into town and doing a bit of shopping.