Should I Increase The Rent?
The annual lease renewal is an important time to consider whether the rental amount you are receiving for your investment is accurate in today’s market. This year has seen so many different curveballs thrown at people, from every angle, and the result of this in the rental market has been different in different areas. Currently, demand for family homes and units in the suburbs is extremely strong whilst apartments and new builds are proving a little slower to rent.
So what’s the answer to whether your rent should be increased?
At every lease renewal, our team personally assess what the current rental demand is, whether the current tenant is valuable to retain and what the competition is like in the area.
Whilst increasing the rent by $5-$10 will give you a few more dollars in your pocket in the long-run, if retaining the current tenant is more important, you may choose to hold on an increase. The risk of course is that the tenant moves out, and a small vacancy period, coupled with advertising and let fees add up to more in the short-term. As our team at Turner are all long-term and know our tenants, they will also have intel on what the tenant’s current employment situation is. For those in a steady job, in an area where demand is hot, we may suggest that a modest increase this year is right. In other properties, it may be wiser to look at holding the current tenant, particularly where they have made rent a priority and look after the property as if it’s their own.
There is also the exception that if the tenants are affected by COVID19 financially, we have to delay any rent increases – but we are actually delighted to report that less than 1% of our entire portfolio is now in this situation. We are fortunate to be in Adelaide and not over the border in Melbourne.
When your renewal next comes, we’ll give you our initial recommendation and we’d love to talk about it more. We are always happy to negotiate with the tenant and of course if your property does become vacant, we’ll assess again what an achievable rent is and work hard to ensure your property is let quickly. Currently Turner’s average number of days vacant is 6 whilst the industry average is 12.6 days. That’s nearly an extra week of rent which we are collecting for our clients. And this certainly adds up.
Our team looks forward to reviewing your rental rates at the next renewal and ensuring that another 12 month lease is signed sealed and delivered for you as we head into 2021 and beyond.