SA Advice on increasing rent

Hello all,

Long time lurker, first time poster.

I have a rental unit in SA which I self-manage. Is currently rented to tenants who have been on a 12 month lease.

Lease started at $285pw and increased to $310pw about 6 months ago. This increase was written into the current lease agreement.

The current lease is due to expire in about 2 months and I'd like to increase to rent to $360 which is more in line with the current market rate.

I advised the tenants that I planned on increasing the rent under a new agreement.

They wrote back to say that the rent can only be increased once every 12 months, which is correct.

I know in the current market, with rentals being so tight, I won't have a problem finding a new tenant who will be willing to pay $360pw.

Should I not renew the lease with the current tenants and find a new tenant who I can charge the higher rent? Is there another option I haven't thought of?

Cheers

 

Given the pushback I believe these may not be your long term tenants in any case. Ie either they might will leave now or in 6 months when you increase by the sounds of it.

Is there an option to have the rent at 310 and then have it in the lease to that it increase to 360 at some point during the lease. You could try that and see if they sign to make sure.

 

Just double check whether the 12 month rule applies only if tenants are on a periodic, as it may be different when coming out of a fixed term agreement.

Alternatively I agree that a new lease with an increase written in could be another option.

 

You could end the tenancy and put new tenants in if rentals are so tight.....but if it were me, I'd be using a PM and not self managing either.

It's a bit of a balancing act though. How long will the property be vacant between tenants? If rents are still moving upwards, you may be better off keeping them @ $310 and increasing the rent higher than $360 in 6 months.

 

Thanks to those for their replies.

I have checked about the 12 month period and it would still apply if signing a new lease. The only way around this is if it were by mutual agreement.

I am leaning towards signing a further 12 month contract with the increase built in.

 

@D.T. any thoughts?

 

BTW....NRAS win. Rent going up $50.

 

Good!

 

Has to be 12 months between increases whether on fixed or period lease.

You could remove them and find a new one at higher rent, but take into account:

- few days vacancy to do exit / entry inspection, cleaning / repair if applicable
- marketing / letting costs
- wear and tear on property with moving out / moving in
- better the devil you know in most cases.

In my view, best option is to renew for 6 months so can align lease with peak leasing period. Reassess tenancy and market at that stage, go for increase in line with market. Whether accepted or not, you win in a rising market.