Hi Everyone
We rent a house (4×2) in Woodvale WA, and took out our initial 12 month lease in September 2007. Decent rentals were already in high demand in WA and many potential applicants viewed the property with us at an 'Open House'. Ultimately to increase our appeal to the landlord we requested a 12 month lease and offered to pay $20 more per week above the advertised rent of $460. Hence our current rent is $480 per week. The managing agent wrote to us recently to seek our intentions regarding renewing the lease and we have requested a further 12 months. The property is kept immaculate inside and out and we have always paid on time.
The agent has emailed me today to say that the owner has agreed to renew our lease for a further 12 months "but want to exercise their option to review the rent in accordance with the current market value of being $560.00 per week, please confirm if you accept the review and I will prepare the lease documents for you to sign."
I am absolutely shocked at this increase and the impact it would have on our financial situation. Surely even in the current market of very low vacancy rates and rising rents, an increase of $80 per week to a current tenant would be considered unconscionable? Can anyone advise me as to how best to reply to this situation? Is there a WA department that I can call for advice as to my rights?I should note that we would certainly prefer to stay put rather than to uproot when there are very few alternative places to rent. We also have two young children who both attend our local school and we would not wish to disrupt them again so soon having only just moved from NSW last year. All facts I'm sure the owner is trying to cash in on. I don't object to a rent increase in the current market (and from an investing perspective can certainly understand that it is warranted) but isn't the size of this increase excessive?
All advice appreciated.
Thanks
AngelaWe have experienced the same situation here(to a lesser extent) in Canberra.
Ultimately, in my experience the at the cessation of your current lease…… The landlord can raise the rent at his discretion(usually based off recommendations of the managing agent).
If I was in your position, before giving a response do some research…. start with realestate.com.au looking for rental properties in your area that are similar to yours. See what prices they are asking for a weekly rental and how they compare to the deal that you are getting.
If you find that the landlords' increase is excessive(based off similar properties in the area) then you can go back to the realestate agent and try to negotiate a fairer rent based of what could be considered as a fair market rent. If the landlord is asking an inflated price then he would be silly not to negotiate as, if you leave then he needs to replace you as a tenant(marketing and loss of rent for unoccupied time) and if he is already asking above the market then he will likely need to lower his amount to meet the market anyway.If the rents in your area are all similar to what is being asked by the landlord in the new tenancy agreement, you can still try to negotiate but dont be disappointed if you dont get too far.
I guess this is just a sign of the market. Sorry if this isnt the news you wanted to hear however, i have only had experience in the eastern states and there may be some sort of legislation in WA that im unaware of.
Good luck.
I just had a quick look at realestate.com.au……………………….
and only knowing a fraction of the details of your current house it would appear that he is asking a little much.
A search for rental properties yielded just 11 results in Woodvale.
10 of which were for $500/week or less.
Of these results 8 were 4 bed/2bath houses. (2 of these were asking $400 a week)
They look alright to me. Depend on your needs, id go armed with this information to your managing agent. If they dont budge on price, i think you will find despite the pain of moving that you will get your money back with the first month or so purely based off the savings available in rent.
There are many things to take in account when renting out a property. One of these things to take in account is how much you will rent the property out for. To determine how much you want to rent a property out for you must know the rental rates. The rent rate is the average a property will be rented out for in the neighborhood the property is in. The recommended thing to do is stay close to the average.
If the rent is too high it will take a longer time to find a person or a family to rent the property out to. If the rent is too low and something has to be replace or fix it can eat up all your profits. When picking a person or family it is important to do a credit check to see if they are consistent and if they will pay on time. Having no credit is not necessarily a bad thing. Some people rather save up then borrow money. In that case they might not have any credit. One other thing to make sure is that the earnings of the house hole you are renting out to be about triple the rent. Doing this save you from renting out a property to a person or a family that can’t afford to live there.
For more…
property investment in UKWhile in the face of the information given it would be fair to say that there could be some sympathy for your situation and while Patriotsoldier is correct in the rental side of the equation, the important part of the equation is missing. How much is the property worth on the market? (A quick search reveals that 4 x 2's in the area are mostly selling in the $600 to $700K price range (yes, there are some in the $500K range as well). $500 a week rent is a lousy rate of return even in the present market.
The other side to the story, but not taking sides as all information is not supplied.
The interest rates have moved up quite a lot in the past 2 years so you'll probably find that your landlord is just trying to recover some of his extra costs rather then "trying to cash in on." He's probably paying 2-3 times that amount on mortgage repayments.
You could try threatening to move out and hope he won't call out your bluff.
For info about your rights and going to court try the Dept of Consumer Protection (http://www.docep.wa.gov.au) but since the landlord is not obliged to subsidies your life you'd be wasting your time and money taking this matter to court and very likely have to pay his court costs as well. Realistically your only 2 choices are pay up or move out. ( or buy your own place)seems hefty but keep in mind that you have had the same rent for 12 months, and if you sign up you will have that rent for another 12 months. What the landlord sees is 24 months with one chance to review rent. You need to average the rent increase over 24 months and look around at the market to see if thats reasonable.
There are costs on the landlord side to re-letting also , due to agent costs and despite demand there can still be rental gaps. So you have some leverage , so make an offer
Thank you for all the replies. For those who are interested here is a bit of an update.
I have taken all the advice on board and have now done some further investigating. I spoke to the Dept of Consumer Protection (thanks harb) and basically the landlord can legally increase the rent by this amount, even though it does appear excessive it would be hard to substantiate 'excessive' in the current market. My research has shown that the rent being asked of $560 is too high for our area (probably by at least $40 per week), although we do live in the supposedly 'nicest' part of the suburb. I should also have mentioned that the landlord owns a number of IP's and this one was his PPOR prior to us moving in and is owned outright, so no mortgage payments that I am aware of. Also the rental returns in Perth ARE crappy at present given just how big the boom was – obviously rents are slowly catching up but all these corrections take time.
The end result is this has got us thinking and so we are definitely looking at all our options! Personally we actually hate renting. We are only renting here because my husband was transferred to Perth for work with very little notice last year. We have actually had own our home for more than 15 years and our PPOR in NSW is now a rental due to our relocation. We also found the Perth market was too expensive for us to buy in (for the type of house we require in an area we like) compared to our much less expensive existence in Maitland (Newcastle) area of NSW.
I have just started in the RESULTS program because we are serious about investing in real estate (me doing it full time) and we just can't stomach the idea of wasting another $80 per week just for somewhere to live when that compromises the $ we have to invest. We are currently looking at:
– negotiating the rental increase down
– renting elsewhere for much less then the requestd $560 per week
– buying a house to renovate and living in it whilst we do so
– using a trust (or similiar) to buy a house and rent it back from ourselves (if this is legal???)At the moment my head is spinning but obviously with our lease due to expire in September we need to research all our options asap.
Angela
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