Maintaining Market Returns – 5 Steps to Raising Your Rent

While a rent hike isn’t something any tenant wants, there are steps you can take to make sure the increase is clearly communicated and in compliance with applicable laws and regulations.

When to raise rent:

In response to rising property maintenance costs and market demand, you should be looking at rent prices in your investment property neighbourhood every 6 months.

According to the Residential Tenancies Act, AND assuming your own personal tenancy agreement allows for rent raises – you’re allowed to raise the rent every 180 days with 60 days’ notice (plus delivery times).

If the market rents for similar, nearby properties have increased you might consider raising your own investment property rent. You might also raise the rent if you are making upgrades to the property or tenancy agreement which benefit your tenants such as installing a heat pump or allowing a new pet.

How much to raise rent:

Just as you did when deciding your initial rent amount, you’ll want to look up three to five nearby properties that match your property’s specs when deciding how much to raise the rent. It’s important that you are able to justify your rent raise by having comparable properties to point to that validate your decision. Keep your rent raise within a reasonable range that matches the current market value to avoid losing your tenants to another property.

How do I raise the rent AND keep my good tenants?

As long as the rent raise is small ($5-10per week) and keeps the property on par with similar nearby properties there is no reason for the tenant to move on.

Remember moving is a great and costly hassle. Tenants will be paying for movers, cleaning, time off work plus all the stress of the situation – searching for a new property, going through the application process.

Unless they have had a change in their lives which makes downsizing or a different, cheaper suburb a better option they have no reason to move as they will be paying the same rent for a very similar property just down the road.

Make it easy for your tenant. Keep rent raises small and frequent, to reasonable market levels. You need to be providing the best value for them in the moment.

Bonus: What can go wrong?

While there is no law limiting the amount of a rent increase there are steps a tenant can take if they disagree with the new amount. They could just give their notice and move out or if they want to stay they can go to tribunal which is able to order a rent reversal. Tenants will need to prove their rent is unreasonably higher than nearby similar properties, as you already checked the market rents before deciding on the new rental figure, allowed all appropriate notice time frames and kept a paper trail of it all – you won’t have any issues.

Disclaimer: The information contained in this publication is exclusively for promotional purposes and is not to be relied upon for legal or contractual dealings. Tenant Source recommends you seek independent legal advice, and that you may need to seek technical or other advice and information prior to making any actions in regards to tenancies in your investment properties. Tenant Source Ltd including its staff and directors accepts no responsibility for any issues arising as a result of taking advice from this publication.