Whats reasonable? 3 year tenancy with no rent increase. Whats a reasonable increase to ask?

vomo2 - 2021-09-25 20:39:00

25 - 30%

kenw1 - 2021-09-25 20:47:00

As an added bonus you get no wear and tear on an empty property.

headcat - 2021-09-25 20:54:00

vomo2 wrote:

Whats reasonable? 3 year tenancy with no rent increase. Whats a reasonable increase to ask?

Tenant we have has been there 5 yrs, so 20% below standard rent for the area.

smallwoods - 2021-09-25 20:56:00

Can be increased to current market rate. If that’s 200% more then that is perfectly fair. Have a look round. You might find something better for the price. Or realise what a bargain you already have.

Edited by pcle at 9:51 pm, Sat 25 Sep

pcle - 2021-09-25 21:51:00

From a landlord's POV, check out market rents for similar properties. Check costs now and for the next 12 months (until rent can be increased again), and how much the landlord wants to subsidise the tenant's living expenses. Make a decision based on the above.

Future costs should include a risk factor as good business practice. Interest rate worst case increases, if bright line is triggered at some point (planned or not), possibility of big fines, and whether government policies might change. There is pressure from some quarters to increase tenant rights, including rent controls, for example.

artemis - 2021-09-26 07:07:00

Market rate.

amasser - 2021-09-26 12:13:00

artemis wrote:

how much the landlord wants to subsidise the tenant's living expenses..

.

What a strange attitude. What about how much the landlord wants to exploit the tenant's situation.

Such attitudes lead to very short term satisfaction.

tony9 - 2021-09-26 16:59:00

tony9 wrote:

What a strange attitude. What about how much the landlord wants to exploit the tenant's situation.

Such attitudes lead to very short term satisfaction.

Then tenants now have an awful lot of tax to pay.

pcle - 2021-09-26 17:24:00

tony9 wrote:

What a strange attitude. What about how much the landlord wants to exploit the tenant's situation.
Such attitudes lead to very short term satisfaction.

It is not a problem at all. Because the Minister of Finance his very own self has told the nation that if they can't afford the rent they can 'look elsewhere'. Sounds like a plan.

In any case some landlords are quite happy to subsidise tenant living costs. And some are not. It is a choice they can make.

artemis - 2021-09-26 17:25:00

"holding on to one's wealth does not guarantee you happiness; in fact, you “will be full of darkness” (vs. 23).

kestrel43 - 2021-09-26 19:51:00

kestrel43 wrote:

"holding-
on to one's wealth does not guarantee you happiness; in fact, you “will be full of darkness” (vs. 23).

Ah, but at least you can afford the power bill out of your own pocket, not someone else's.

kenw1 - 2021-09-26 20:26:00

smallwoods wrote:

Tenant we have has been there 5 yrs, so 20% below standard rent for the area.

If the tenant has been there for 5 years and they are a good tenant, then you can attribute some "value" in that... do you want top dollar / market rent and a potential "rogue tenant" or a lower rent for a bit peace of mind that you are currently enjoying from the incumbent tenant ??
If the tenant is "reasonable" then a discussion along the line of "you are currently paying $x per week rent and as you will most likely be aware the current market rent, in this area is $x + 20%.. Its' been a couple of years since the last rent increase, so I was thinking of perhaps a modest rent increase of $x + 10%" ??

onl_148 - 2021-10-06 15:50:00

onl_148 wrote:

If the tenant has been there for 5 years and they are a good tenant, then you can attribute some "value" in that... do you want top dollar / market rent and a potential "rogue tenant" or a lower rent for a bit peace of mind that you are currently enjoying from the incumbent tenant ??
If the tenant is "reasonable" then a discussion along the line of "you are currently paying $x per week rent and as you will most likely be aware the current market rent, in this area is $x + 20%.. Its' been a couple of years since the last rent increase, so I was thinking of perhaps a modest rent increase of $x + 10%" ??

Not sure were you are, but we discount the market rent by 20% now.
As well as we have installed a HRV system as soon as we took over, as their kids suffered asthma and the place had damp issues.
2 years latter we replaced the fire with a brand new one, rather than fixing the existing one.
Last year we ran new carpets through all the bedrooms and hallway.
Next year we will relay new flooring through the kitchen, laundry and bathroom.
A year or so later we will refresh the lounge.
At 10 years they will go to 25% deduction off market rent.

smallwoods - 2021-10-06 22:49:00

If they are a good tenant then leave things as they are or maybe just increase slightly and let them know that you are not charging them the full increase because they are awesome. May be a 10% increase? I would much rather hold onto a good tenant that wouldnt destroy my investment.

sellontrademe - 2021-10-08 08:01:00

One should try to provide maximum value to one's customer if the customer is of value.

Therefore if the tenant is a good tenant, paying their rent every week and not trashing the place, it would be good to retain that customer.

In fact, one could even meet with the tenant and discuss with them how the new tax laws are causing a cost increase, and how one is being forced to raise the rent in order to pay the tax, and one could perhaps workout with the customer what a fair increase in rent could be. Tell the customer that one is unwilling to raise the rent but being forced to do so.

A good tenant is very valuable.

tygertung - 2021-10-08 08:31:00

sellontrademe wrote:

If they are a good tenant then leave things as they are or maybe just increase slightly and let them know that you are not charging them the full increase because they are awesome. May be a 10% increase? I would much rather hold onto a good tenant that wouldnt destroy my investment.

When the interest non deductibility was announced a woman with 2 or 3 small rental units was interviewed in the media. Had great tenants, charged under market rent. She said in order to pay the extra tax she would have to take on a second job. So planned to sell up.

Whether she sells or not, that is the other side of not charging market rent. Which of course is what tenants will almost certainly have to pay anyway in a new rental (if they can find one).

Being a landlord is way more difficult and expensive these days. Not a sector I would recommend the inexperienced entering.

artemis - 2021-10-08 16:12:00

headcat wrote:

As an added bonus you get no wear and tear on an empty property.

Some squatters trash the place but i would look after it.

Edited by ash4561 at 10:24 pm, Fri 8 Oct

ash4561 - 2021-10-08 22:21:00

The member deleted this message.

booksurfer1 - 2021-10-08 22:42:00

booksurfer1 wrote:

What you say is very much how I would approach it. If I had a rental property and the rent met all of the bills for that property and perhaps a little more incase of future problems, I would not want to increase the rent beyond what my tenant 'of good standing' was paying unless I started to have to lose money by renting the property due the govt or inflation bought on by the govt or any other factor.
I'd rather like to think that landlords expected to make the vast profit from their rental properties when they sold them after years of property price increases although I know some property guru's advice is to never sell, you get to a point in life where you'd like to have the money and live on a beach somewhere, surely?

Which works well until the stupidest Government in NZs history lumps a new 39% tax onto the rent. Just something else for the tenants to pay.

pcle - 2021-10-09 08:18:00

pcle wrote:

Which works well until the stupidest Government in NZs history lumps a new 39% tax onto the rent. Just something else for the tenants to pay.

39%? Only if you are already in the top tax bracket, right? If the rent is your only income, then lots less.

zirconium - 2021-10-09 08:23:00

pcle wrote:

Which works well until the stupidest Government in NZs history lumps a new 39% tax onto the rent. Just something else for the tenants to pay.

Suck it up yourself or get out of the business. Costs are your problem not anybody elses, none of the investor class are going hungry but your tenants might be. Long overdue you started paying your fair share of tax, owning a rental property simply is not essential. The government you hate so much is subsiding your existance through supplements anyway via other taxpayers and don't you forget it.

Edited by franc123 at 8:37 am, Sat 9 Oct

franc123 - 2021-10-09 08:28:00

franc123 wrote:

Suck it up yourself or get out of the business. Costs are your problem not anybody elses, none of the investor class are going hungry but your tenants might be. Long overdue you started paying your fair share of tax, owning a rental property simply is not essential. The government you hate so much is subsiding your existance through supplements anyway via other taxpayers and don't you forget it.

Complete and utter BS from a do nothing but expect everything.

pcle - 2021-10-09 13:16:00

pcle wrote:

Which works well until the stupidest Government in NZs history lumps a new 39% tax onto the rent. Just something else for the tenants to pay.

You seem very angry.

tygertung - 2021-10-09 13:44:00

tygertung wrote:

You seem very angry.

The poster is saying tenants should be angry. Costs are being passed on to them.

Trademe's latest rent price report - ''Rents remain at an all-time high despite lockdown"

And the previous report - " Rents see biggest year-on-year growth ever, up 10% in 12 months".

artemis - 2021-10-09 15:55:00

zirconium wrote:

39%? Only if you are already in the top tax bracket, right? If the rent is your only income, then lots less.

Depends on the number of rentals, and other income of course.

artemis - 2021-10-09 15:57:00

Have always run things along the lines of Smallwoods and others in here. 10 to 20% discount.

Had tenants for 22 years, 15 years, 10 years plus is common.
Lot of landlords forget they are already getting good money but want more. If I buy in bulk I expect a discount why should it be any different for long term tenants ?
The "Smallwoods approach" makes for an easier life - Smarter not harder!

houseofdad - 2021-10-09 16:55:00

artemis wrote:

The poster is saying tenants should be angry. Costs are being passed on to them.

Trademe's latest rent price report - ''Rents remain at an all-time high despite lockdown"

And the previous report - " Rents see biggest year-on-year growth ever, up 10% in 12 months".

Yep, I have 4 rentals in central Wellington and all due to come off fixed term leases in Jan/Feb next year.My Property manager (Wellington's largest) is suggesting for all of them a 12% increase. Not that I will or agree with them but I suspect rents (in Wellington at least) are going to skyrocket early next year when lots of tenancy's like mine come off fixed term leases and are renewed.Due to a massive shortage of rentals, I suspect tenants will resign.

Edited by fxx99 at 4:33 pm, Sun 10 Oct

fxx99 - 2021-10-10 16:32:00