Is there a certain % amount you aim to increase rent by each year? Or do you let the local market dictate increases, if any?
Local market conditions, can be up or down. Once the vacancy rate goes above 3-4% you often start to see falling rents although long term rents generally track inflation. I have always found small but regular increases are more platable for tenants who know costs increase year on year and won't move for $10 pw etc. Large increases often occur when supply is tight with high demand or rising interest rates.
For NRAS property yes, there's a rental CPI figure the DSS dept publishes each year that you can increase by. For all others, supply and demand dictates. You need to research the comparable properties to see where yours fits in. See also Tenancy Tip Thursday - Rent Raising Requirements
Thanks, I will work my figures on a guestimate of 3% p.a. just to get a rough idea of when I'm likely to hit my benchmarks.
We always do a comparison against other properties for rent and rate them as superior or inferior. I tend to agree the market decides. One lesson we learnt was that your PM doesn't necessarily know your property as well as you do (when they do a rental review). We had a 1960s inner ring property in south east Brisbane that was built in underneath (4th bedroom, small kitchen and bathroom) and our PM was comparing it to 3 bed/1 bath houses.
We suggest rent increases for our landlords every year (or suggest no increases), we supply a comparative market analysis of similar properties to justify our suggestion and what to increase. Another factor is the condition of the property. For properties that have overdue maintenance issues, that gets factored in. The worst thing you can do is increase the rent on a property that has had water pressure problems for 6 months and the landlord does not want to rectify the issue.
