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Tenant challenge Rental increase?

Discussion in 'Property Management' started by BallonTree, 11th Apr, 2016.

  1. BallonTree

    BallonTree Active Member

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    I raised the rent by $10 after a year from $260 to $270 and got the mail from my agent.
    Can they do that? Other properties in the same street are renting for $270 to $280.


    Please find attached letter that we have received from Consumer Affairs Victoria in regards to the recent rental increase that you asked to be sent out.

    They have advised that the rental increase is too much and the rent for the property should be between $250pw and $260pw.

    Currently the rent is at $260pw.

    The inspector from Consumer Affairs Victoria has advised to cancel the rent increase and keep the rent at $260pw and perhaps in 6 months time try to increase it $5pw.

    They have advised if it is not withdrawn the tenant may be able to go to court and have the rent reduced to $250pw.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    They can reject any amount they want, but they have to take it tribunal.

    The tribunal will assess evidence such as - the age, condition, location of the property, what features / upgrades it has, and what similar ones have achieved in the past and are currently asking now and will determine if its reasonable.

    So its up to you to decide and weigh up :
    - Continue with it and earn more money (if you think the above evidence is there, or that they might be bluffing)
    - Continue with it and chance it, go through the process of tribunal preparation and win/lose
    - Withdraw your increase until next time there's a renewal or change of tenant.
    - Risk not getting a lease renewal (depending on what vacancy rate is like in your area).

    A good property manager monitors the market in order to protect and enhance their clients returns.
     
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  3. Leo2413

    Leo2413 Well-Known Member Premium Member

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    wow that's crazy... can they actually take you to court over it....

    What if you just don't renew the contract and get new tenants? Can they take you to court over that too?

    Is it just Vic that's gone nuts?
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    That's seen as retaliatory and can get you in trouble as well. This is why having a property manager that knows all the rules and doesn't rely on their staff to know them is pretty important.
     
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  5. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Its just insane to me. Someone wants to increase the rent to what seems reasonable and then they can be challenged in court... Is SA like this too?
     
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  6. neK

    neK Well-Known Member

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    @DT, what bullocks! (Not you, the system).
    My property, i say rent increase.
    Don't like it, simple, move out.

    Its a business, not a frigging charity!

    What if i renew their lease for 3 months, then kick their ass to the curb after that?
     
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  7. BallonTree

    BallonTree Active Member

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    what if I were to ignore it altogether, and how much would they pay for the rent before it goes to tribunal? eg, tribunal is in 3 months time, and are they going to pay me $260 (old rate) or $270 (new rate)?

    Or even worse, they don't pay at all, citing subject to tribunal review?
     
  8. BallonTree

    BallonTree Active Member

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    and what if I were to lose in tribunal? how much fees I have to pay? do i need to get a lawyer?
     
  9. Santaslayer

    Santaslayer Well-Known Member

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    Another waste of time and money for the taxpayer having it go to tribunal.
    Sounds like it is better to ride it out as the tenant is a professional whinger and knows his or her way round the system.
     
  10. D.T.

    D.T. Adelaide Property Manager Business Member

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    All states have an unreasonable rent increase process, but each defines it a little bit differently.

    The tenant would initiate the tribunal hearing where they'll first assess whether the notice sent to the tenant to advise of the increase was valid. Then they'll assess whether it is a reasonable increase as per previous post. Then, if tribunal determines it is valid and reasonable, they'll ask the tenant to catch up on rent from that period, or vice versa if they pay the new amount and you lose, they'll ask you to refund the difference. Normally in a tribunal situation you don't pay any fees or costs. Your PM is your "lawyer" for tribunal purposes.

    PS; in the meantime (tribunal hearing can take weeks to book), if them paying the old amount instead of the new accumulates enough days in arrears you can issue an arrears letter too. This will of course get thrown out if you lose (since it'll be calculated on a different amount of rent) but gets the process in motion if they stop paying rent after that.
     
  11. Leo2413

    Leo2413 Well-Known Member Premium Member

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  12. Tink

    Tink Member

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    Where's Dazz, I can imagine his reaction to the OP and process
     
  13. BallonTree

    BallonTree Active Member

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    Thanks DT.

    My friend who is in the builder/renovation business advised me to withdraw it. They have seen a lot of cases where the tenant trashes the place, or make hidden damages to your property until it's too late. Not worth it for the $10 increment.

    Examples they quoted:
    - tenant rips out wires in the wall and plaster it back. so you wouldn't know and gives them bond back
    - tenant lifts off a roof tile at the back so rain water goes in and ruin the place
    - or simply damages the house and not pay rent

    they have came across such buildings when they renovated their customers
     
  14. D.T.

    D.T. Adelaide Property Manager Business Member

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    He'd say "remove with forklift", I'm sure.
    I wouldn't put that in the way of achieving good return on your investment. Yes, we all like to complain about tenants at times (and them about landlords I'm sure), but we forget that they're humans and 99.9% of them are decent people. Heck, I've even got some lovely ones. Don't plan your moves around the 0.1%, insurance covers that stuff anyway.
     
  15. Casteller

    Casteller Well-Known Member

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    Perhaps the tenant is from Europe where usually the owner needs a very good reason to increase the rent or ask the tenant to leave. My rent only went up once in 10 years in Switzerland and was accompanied by a letter explaining why (increased heating fuel costs). Swiss friends told me it is virtually impossible for someone to have to leave a rental property if the rent is paid up to date.

    Landlords have the upper hand in Australia and tenants do not have much protection, asking tenants to leave their home or increasing rent by small amounts on a whim is not legal in many countries. I increased rent by $20 in Sydney a long time ago and the tenant fell behind, not worth it. I only increase rents now between tenancies.
     
  16. ashimashi

    ashimashi Well-Known Member

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    o_O......
     
  17. D.T.

    D.T. Adelaide Property Manager Business Member

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    Relative to Europe perhaps, but not really the case here. Can't do things on a "whim" here either.

    - Get in trouble for increasing rent too much.
    - Get in trouble for "harassment" if you remind a tenant about their arrears every day.
    - Have no way of removing a tenant if on a fixed lease.
    - Get in trouble if a rent increase or eviction is seen as 'retalitory'
    - If tenants know the system correctly, they can potentially go 6 months without paying.
     
  18. Xenia

    Xenia Adelaide Property Manager Business Member

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    Rent increases need to be backed up by comparative rental analysis and for the purpose to have something to show if it does get challenged.
    they can challenge, it does not mean they will win.
     
  19. BallonTree

    BallonTree Active Member

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    I only have building cover. Not tenant protection. hmmmmm, probably I should get it too.
     
  20. Nick Valsamis

    Nick Valsamis Well-Known Member

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    You should get landlord insurance ASAP. Check out EBM or Terri Scheer.

    Get your property manager to show the tenants what the other properties are renting for and hope that they accept the increase without any more trouble.
     
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