Should Rent Increases be restricted to once a year?
August 30th 2018
Should rent increases be restricted to once a year?
While there will always be bad landlords as well as bad tenants, people on both sides of the tenancy transaction generally act responsibly; owners appreciate the rental income provided from tenants, and work hard to keep their rentals well maintained, to protect their investment and attract tenants who care; while most tenants will pay rent on time, keep the property well looked after and communicate promptly any maintenance or other issues.
However, like many proposed law changes this newest discussion is driven by poor behaviour on the part of a small minority. Lately there have been a deluge of terrible stories, about private owners, property managers or tenants.
Whatever your experience has been it’s important to make your views known, as this could impact on many investors ability to maintain rental property at a reasonable cost.
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Will this change how Ruby Housing manages tenancies?
The only major change could be if rent increases are only permitted once a year. Currently we review rents six-monthly, and advise tenants of the result. Now a review doesn’t necessarily mean an increase, it depends on whether the market in that area has moved, and if rents have increased overall for a similar type and condition of house.
- When we notify tenants of the review we provide the market rental stats, recorded and available for anyone to view by Tenancy Services.
- We also often allow some credit against any potential increase for tenants who are particularly great- even though all tenants should follow all the rules, we like to give a good behaviour recognition in a way.
- Lastly by keeping reviews to six-monthly any increase is generally minimal, and much easier to budget for. Sometimes market rent will have moved a lot in a particular area, but mostly we are able to keep an increase to around $5 or $10 for a two to three bedroom home.
The risk for tenants is that if a rent increase is only permitted annually, landlords may be more inclined to add extra to cover inflation and other essential costs. Rates, insurance, mortgages and maintenance are not subject to any restriction on charging, so landlords can be very worried about being able to cover future costs.
We have very few tenants who don’t renew/extend their fixed term agreements, and when tenants do leave this is generally due to a change in their circumstances. The other proposed changes as stated wouldn’t affect the Ruby Housing rental management process.