Long term tenant and market rate rent
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| 1 | If a long term tenant - established well before the recent demand for rental properties - has been paying rent well below today's market rates, should be paying at today's market rates? (As you know, rent has significantly increased in some parts of NZ in the last few years.) Be interested in your thoughts, either way. Thanks. Edited by camelot9 at 8:33 pm, Sat 6 Feb camelot9 - 2021-02-06 20:30:00 |
| 2 | Entirely up to the landlord. We are well under market rates on our rental but we have the BEST tenants ever. Have been there for 13 years. Keep the property immaculate and have done improvements on the property for us. Would far rather have less rent and retain them. Should say though it still well and truly covers our outgoings so that makes a difference I guess. wachael1 - 2021-02-06 20:47:00 |
| 3 | Yes this above, if they are good then don't scare them off, next ones might not be so good. msigg - 2021-02-06 21:11:00 |
| 4 | To me it depends on how far below the market rent they are paying, because there are tax implications if you under rent by too much. huggy5 - 2021-02-07 07:01:00 |
| 5 | Just being taking for a sucker. Edited by pcle at 7:27 am, Sun 7 Feb pcle - 2021-02-07 07:26:00 |
| 6 | If I look like a mean old man that’s what I am kestrel43 - 2021-02-07 09:43:00 |
| 7 | If it's $50 a week under market rent, after ten years it works out to $26,000. If you are ok not having that money because they are good tenants then no issue. If it's more under market rent then it's more money you are missing out on, only you know how much it's worth to you having good tenants. annie17111 - 2021-02-07 09:50:00 |
| 8 | The tenant is happily paying off the OPs mortgage for them, so they can eventually sell and make not only the "capital gain" but also get back that mortgage that has also been paid off. sparkychap - 2021-02-07 09:54:00 |
| 9 | does anyone know how much under market creates a tax issue? our sitting tenant (4 years in a few months) pays less than the lower quartile as shown on the tenancy.govt.nz website for new bonds received. But when she took the property on, it was almost bang on the lower quartile for that time. We have not increased the rent as although rates and insurance increased in this time, our mortgage costs have gone down. I know there is a school of thought that would consider us suckers for not increasing but if our costs have not increased I can't see why we'd do so. But if we're going to cop some flak from IRD, it may be time to address it. jamesnmatt - 2021-02-07 10:24:00 |
| 10 | What rights do the IRD have to tell you how to run your business? Next people will be blaming the IRD for the increase in the price of cabbages at the supermarket. supernova2 - 2021-02-07 11:51:00 |
| 11 | jamesnmatt wrote:
It's generally only an issue if the tenants are either relatives or if there is an employee relationship. If it's a genuine 3rd party tenant IRD won't get involved jhw2 - 2021-02-07 16:23:00 |
| 12 | jhw2 wrote:
Not necessarily. IRD has intelligent systems and it is well known that the systems can and do raise red flags. For example, IRD can identify businesses that report income outside the normal bracket for that sector and type. A few years back there was a focus on fruit and vege shops and more recently on tradies. There is a section in the IRD booklet Rental Income on 'mates rates'. A landlord is more likely to get a 'please explain' if there is a longer than usual history of reporting net rent losses or a different pattern. Wrt the OP, that situation might not trigger a looksee by IRD if net rent is positive, and/or similar to previous periods. But if say in one year the house is vacant for a while, it is repainted and the HWC needed to be replaced a net rent loss could easily trigger an enquiry or an audit. That will be no fun. artemis - 2021-02-07 19:19:00 |
| 13 | charging my tenants under market rent but they do more that what most tenants would do for my rental - it works both ways.... mansonprincess - 2021-02-07 21:13:00 |
| 14 | Market rent less a little for long term tenancy. The little could be 5% or ?%. market1 - 2021-02-08 12:32:00 |
| 15 | This message was deleted. kittycatkin - 2021-02-08 12:57:00 |
| 16 | kittycatkin wrote:
I think you are a little naive of how property investment seems to work in NZ. Income from actual rental returns is for real landlords, the ones who are in it for the long haul. Many are not. They acquire property and negatively gear them, no tax along the way because they haven't turned a profit. Keep for five years and sell for capital gain. sw20 - 2021-02-08 13:22:00 |
| 17 | supernova2 wrote: Doesn't the IRD indirectly tell one 'how' to run their business? There are specific returns that need to be made in a specific way, specific payments that need to made in a specific way, specific benchmarks that need to be met and if not questions will often be asked as to 'why' ...... brouser3 - 2021-02-08 16:28:00 |
| 18 | sw20 wrote: Ahhh - you don't seem to factor in the group of 'landlords' who never intended to use the house as a rental, but their personal living circumstances have changed but they for one reason or another do not wish to sell the house. eg somebody on a work transfer for several years. pre-covid days, somebody do some extensive overseas travel for a couple of years, there are many other scenarios just as relevent. brouser3 - 2021-02-08 16:36:00 |
| 19 | They might be putting up with things that other tenants may not. Market rate is subjective. sweetgurl108 - 2021-02-08 18:08:00 |
| 20 | sweetgurl108 wrote: Absolutely. It seems that its fine to rent illegal properties that are not consented as a dwelling or don't meet healthy homes standards as long as you are charging cheap rent. sparkychap - 2021-02-08 19:00:00 |
| 21 | sweetgurl108 wrote: I thought that the market rent on tenancy website shows the average of actual bonds collected, so it'objective. evoalg - 2021-02-08 22:33:00 |
| 22 | The member deleted this message. angel34 - 2021-02-17 10:33:00 |
| 23 | sparkychap wrote:
If it was cheap enough and livable (i.e. up to my standard), I'd certainly take one. Edited by loose.unit8 at 11:15 am, Wed 17 Feb loose.unit8 - 2021-02-17 11:10:00 |
| 24 | sweetgurl108 wrote:
Yes this is a very good point often not taken into consideration. Always bare in mind too that bonds received at tenancy services can also include fully furnished places when they work out the median rent. I have been renting out 7 places for decades below market rent, no doubt has cost me hundreds of thousands of dollars.Long-term tenants are money for jam, plus I didn't have the money to make improvements for a decent change in rent. Hopefully coming into some money soon so improvements will be done and rents increased dramatically overtime. The poster saying about being a sucker charging well below market rent is an onto it soul. Yes $20 less to be competitive but that's it. Edited by doglover2003 at 5:42 pm, Wed 17 Feb doglover2003 - 2021-02-17 17:38:00 |
