Long lease - specifying rent increases.

Discussion in 'Property Management' started by G.., 10th Sep, 2019.

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  1. G..

    G.. Well-Known Member

    Joined:
    11th Jan, 2017
    Posts:
    92
    Location:
    NSW
    Our units were already tenanted (by Housing Commission) when we purchased them and the lease had gone periodic, so all of the rent rises we have done in the past have been us sending a notice based on market rent (we have used the realestate.com.au suburb profile data to determine rent). Now they want to re-sign back into a 3 year fixed lease (which we are happy to do) and we need to agree on a calculation method to put into the lease.
    Their initial form (which seems to be mandated from "higher up") specifies either CPI or a fixed increase every year. We chose CPI (and specified the calculation to be used, there is a whole ABS web page dedicated to using CPI in contracts), but they responded suggesting that we use Fair Trading's "Rent Tracker" tool instead.
    This Rent Tracker tool is actually on the Tenants.org.au website (not Fair Trading) and tells you the median rent based on data from bonds lodged over a 3 month period (currently using May-June data). The problem with this is that there is only one single solitary bond lodged in this postcode for our dwelling type during that period, making the data statistically invalid (and it is significantly lower than market rent).
    The previous lease had a fixed dollar increase every year which we would be happy with, however the numbers that they are talking about using for the new lease are significantly lower than what we would agree to. The original lease (which is still recorded on the title, despite being long expired and superseded by another lease) was for 10 years and specified a third-party re-appraisal at years 4 and 7.

    So I am trying to find out what methods people use to specify rent increases in longer term contracts. Particularly ones with a specific benchmark and calculation (i.e. look up this value, perform this calc, and out pops up the number that will be the new weekly rent).
     
  2. Dean Collins

    Dean Collins Well-Known Member

    Joined:
    21st Feb, 2016
    Posts:
    982
    Location:
    New York
    Sounds like you already have your answer on this one :)

    I agree dont go with the 3ed option if there is only one lease to compare it with and instead insist on CPI (or better still do as i always have preferred.....fixed amounts per year).