Hi,
Our parents-in-law are currently renting out their house on a long 3.5 year lease. This enables them to have enough to pay for their care in a hostel, while not having to sell their home, which is their only asset.
The tenants are taking out their option to renew for one year, but have disputed the rent increase, because the lease does not state whether it is using the National CPI rate (3%)or the State CPI rate (WA 4.2%).
The property manager has stated they always go by the State rate. The tenant states it is common practice nationwide to use the National rate and is digging his heels in.
Has anyone any comment on this as to where the truth lies?.
The parents-in-law are not in a position to have to pay expensive Court costs, but we don’t want to see them being bullied into accepting something which is not correct.
I’m sure the property manager will be rewording their lease agreements more carefully in future!Thanks[blink]
jebro
I have one of my tenants on a lease with rental increases linked to the CPI rate. I have always used the national rate, never even considered the state CPI rates.
An extra 1.2% on a $400 per week rent is only $4.8. So there is not much point in digging your heels in if it is going to piss off your tenants – I think anyway.
Terryw
Discover Home Loans
Parramatta
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Thanks Terry,
I agree the amount disputed is small. I’ve been trying to find out what the Residential Tenancy Act for WA states and it mentions everything except cpi!
We are just trying to ensure that the tenant isn’t trying to take advantage of our elderly parents who don’t have a lot of spare cash.
A few extra dollars to them each week is important.
I appreciate your input.jebro
Hi Jeb,
I believe there is no LAW set in place to determine this.
Hence it will most likely come down to the decision Terry mentioned.
Are you willing to forego the extra amount for the current tenants?
Let us know what you decide and how it goes.
Thanks,
Steve (YI)“Knowledge is Power”
Hi Steve,
It seems the more people I ask, the more different answers I get!
I asked the PM for our own IP’s and she said she “had trouble” using CPI 15 years ago and now never uses it in any of her leases in her company.
The PM for the parents-in-law house is keen to get this sorted and is looking at trying to get a judgement from the Minister of Fair Trading, so we all know where we stand.
I spoke to REIWA and their comment was “definitely State CPI”Like all these things, I guess it is important to get clarity on the fine print so that everybody is talking the same language.
As Terry pointed out, it is a small difference in actual dollars. Parents-in-law do not want upset tenants.
Interestingly, the tenant who is kicking up all the fuss is a) not paying the rent himself, he’s on an interstate contract and has his rent paid for him by the Company he works for and b) has just bought himself a million dollar plus IP home in a very good coastal suburb here in Perth.So, it’s not that he can’t afford the few dollars difference. He’s not paying it anyway!!
I will let you know what the final outcome is. But I don’t know how quickly this will be resolved. Parents-in-law just want a quiet life with enough to pay for their keep in the hostel in which they live.
jebro
Hi again,
Well, the end to the story is that the tenant is taking his option to continue with the lease at Perth cpi. He and PM exchanged e-mails over the last couple of weeks and they have decided that neither has the energy or inclination to seek legal clarification and agreed to maintain their differences of opinion.
I think if it was the tenant himself who was paying the rent he would have taken it further. Who knows.jebro
Try Changing tack…. ask them … If there was one thing could we do to make living in this house better for you while at the same time increasing the rent $10-$20/week What would it be?
Gets aways from the us and them and team bonding occurs as you are siding with them.
Simply work out what it is going to cost … and then claim it back in the tax year…. speak to your accountant and they will be able to give you the ceiling on spending to eliminate capitalisation of your expense for the upgrade. Also the tennacy agreement master document should give you a right to increase rent for improvements and also to match the average rent for that area if you are finding that you are dropping below the normal rental retrun for the area.
Speak to another property manager that knows the insides and outsides Tenant agreements… Residential is over ridden by governing law anyway … so some of your special conditions may not be able to be enforced … however you should be ableto find out what you can do to increase it…. usually is 60 – 90 days notice.
Just a thought anyway.
CheersWhy Rent? Rent 2 own!
http://www.rent2ownaus.comGreat thoughts Kiwi-Fulla.
It’s always good to look at things differently.Thank you [hair2]
jebro
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