How regular lease reviews benefit Inner West landlords
As a landlord, having a fixed-term lease in place for your rental properties not only gives you peace of mind but it also keeps your tenants happy. It means that you’re assured of your property being occupied and regular rental income. For tenants, they can relax in the knowledge that they have a secure home for the tenure of the lease.
However, when it comes time to renew the lease, you need to consider the terms of the lease and the amount of rent that your tenants will pay. If the rent is too low, you’re leaving money on the table. If you increase the rent too much, you might lose your quality tenants.
As experienced property managers, we understand that regular rental reviews ensure your property is rented for market value that is pitched at the right level to encourage good tenants.
Should you increase your rent when renewing the lease?
This is a question that many established landlords struggle with, especially in today’s volatile rental market. In many inner-city and city fringe areas, demand has fluctuated wildly over the past two years.
In some areas there are more people looking for rental properties than there are available properties. After a long period of having to give rental relief, many landlords are taking advantage of open borders and people moving back into the city, and they’re increasing their rents. In some cases, rents are back to what they were before March 2020.
However, if you have quality tenants, you have to think carefully about how much you increase the rent when it comes to renewing the lease. The first thing you should do is speak to your property manager to find out what comparable properties in the area are currently charging.
If your current rent is well below the average, it’s a good idea to think about an increase but we suggest that a large single increase may mean your current tenants will vacate the property. This is where you have to strike a balance and maybe think about smaller rental increases on a more regular basis.
Why it’s important to keep your quality tenants
Even though rents in the area where your investment property is situated might have gone up quite considerably, it doesn’t mean that you should immediately put your rent up to match these increases when you renew the lease.
Quality tenants are priceless when it comes to ensuring that your property is tenanted and not sitting vacant. Great tenants not only pay their rent on time but they also look after your property and let the property manager know when there are minor issues that could lead to major problems if left unchecked.
So, when considering the lease renewal, look at a rent increase that your tenants won’t consider unreasonable. In our experience, great tenants who are happy in a property don’t look to move out and find another rental.
Most tenants are happy to pay a reasonable rent increase if it means they can stay in the property longer, especially if that increase is in conjunction with a new fixed term lease.
Why increasing the rent too much can lose you money
Remember that if your current tenants leave because they feel the rent is too high, you’ll be up for extra costs to find new tenants. These costs include advertising and screening new applicants, minor repairs or rejuvenation of the property, and loss of rental income while the property sits vacant waiting for new tenants.
This is where it’s worth talking first to your property manager who can gauge the mood of your tenants and come to an arrangement that suits both landlord and tenants.
Need help reviewing your Inner West rental lease?
As Inner West property management experts, we understand what keeps renters happy and can help you decide on reasonable rental increases.
We review leasing arrangements regularly to ensure that they’re equitable for both parties. We also ensure that we keep in contact with both you and the tenants to ensure that everyone is happy and that you’re getting the best return on your investment.
Free Property Management Advice, talk to an expert now!
Are you a landlord looking for advice? Do you have questions about these uncertain times? Changes to the rental market or anything specific to Property Management? Book a one-on-one, obligation-free, consultation with Jaime Pratt, Head of Property Management at Vogue Property Managers.
Book your session now:
With over 20 years of property management experience, Jaime will openly provide advice on improving rental return, enhancing your property, attracting quality tenants, and finding ways to alleviate your expenses.