G'day bargainers,
just got a letter from the RA advising my rent will increase from $1430 fortnight to $2500 a fortnight. That's almost 75%
Now, I understand I had a good rate due to Covid, but 75% increase? I was expecting 40-50% increase tops. Is this legal?
Any advise on how to negotiate with the RA to bring the rent down? I'm almost having a panic attack here with the huge increase.
Thank you.
I really like this area but. Yes I know increases is happening everywhere, but 75% increase is a bit steep
If 30% - 40% increase is hitting the news, what do you call my 75%??
https://au.news.yahoo.com/sydney-couple-shocked-landlord-rai…
yea we love our building and location too. Rent going from 400 to 700. Nothing we can do. Our agent is more than happy to give it to someone else for an even higher price. I've been to a couple inspections and the demand is insane for my area.
It can't hurt to reply asking for a new rent of maybe $2000-$2100. They can only say no.
@oscargamer: was thinking that but want to know if there's any tactic to persuade them to accept that.
@Homr: Nope. Just tell them the obvious things. Good tenant. Always pay on time. Never any issues. Assuming that is all correct?
@oscargamer: Yes that's all correct.
There's also few times where I also helped the REA buzz their tenant up my floor because their keys didn't work on a Saturday night.
@Homr: Prepay a few months would be one way (not suggesting it's ideal) and you could remind them of the cost to find new tenants albeit you're communicating through the agent who collect those fees!
@drprox: I'm a landlord and honestly I couldn't care less about being offered months up front. It sits with the REA in their trust account anyway. I don't benefit from it. The REA does.
@Cyphar: and the tenant deals with the REA, not the landlord. So if the REA is happy with the tenant, then happy days!
@Cyphar: Youre REA is ripping you off. Ive been paid upfront and it got paid straight away. Made a huge difference as not paying interest on that upfront amount now
@Cyphar: Last year my tenant paid 6 months up front for the lease and my REA transferred the entirety minus agent fees in one lump sum.
@Viospeed: You might want to be careful doing that, I believe in some states you are not allowed to accept more than X weeks prepaid - it's to protect tenants from unscrupulous landlords/REAs…
@oscargamer: It can hurt. Apparently it can be construed as a rejection of the initial offer and they can increase their offer.
That’s what happened to us. Received offer, tried to negotiate, received a new offer that was higher. Property managers are scum of the earth and landlords aren’t any better.
The manager of my unit wanted to increase by 15%. I said no just CPI, 6%. Ours increased by 15%, didn’t want to pass that on, that’s just how everyone ends up getting screwed…
@Viospeed: I don’t pay interest on my mortgage anymore (about 100k to go). My offset account is higher than my remaining balance. Additional savings above my mortgage balance is earning me 4.35% interest in BOQ.
@Viospeed: I didnt choose to take out the loan to comodify housing. interest is between the owner and the bank. rent is different.
@hawkshead: So you don't want to take out a loan to buy your own house. You want free housing, funded by others, as per your "right"?
@Ughhh: What houses? the landlords have been buying them up to get tennants to pay their mortgages as "investments" on more for decades.
It can hurt. Apparently it can be construed as a rejection of the initial offer and they can increase their offer.
So then you move, like you were going to anyway if they didn't accept your counter offer. No harm done.
Which area you live in?
so glad mines only going up by $30 a week then lmao
I think 30-40% is to be expected (e.g. I came off a fixed rate and I'll be paying 35% more). It's passing on rate increases to renters. Not sure if morally correct (I don't own an IP), but it's to be expected. I have no idea how much investment only loans would increase or if someone came off an investment only and now had to cover I + P. So 75% might be possible - but not sure if reasonable.
PS. Either way, sorry to hear that, hope you can re-negotiate for lower or find something more affordable
If a 75% increase brings them in line with the current market, it means that they probably dropped their price way more than everyone else in the market during covid.
Were you cheering at the time it dropped? haha
A good point. It's a shocking amount but if it's in line with the market not worth OP cutting off their nose!
Most landlords were dragging their feet when we had peak vacancy in 2020.
Like many other renters, we had to move to get a better deal.
Our REA refused to acknowledge that rents were dropping around us. But as soon as we gave our notice they listed the place at a lower rent. It ended up vacant for around 6 weeks and rented for less than what we were trying to negotiate.
The current market is a joke.
REAs are taking full advantage of the current crisis. With 100s of properties under management each, they are in total control of the floor price.
Meanwhile, our politicians are looking the other way.
@ChrisFrenchy: I'm not a property investor, but like any kind of investment/business, it's a bit of a gamble either way. The investor tries to gain the max return and prices things as high as they think the market will tolerate. I don't think many people felt bad for owners in the last couple of years when they were forced to drop rents significantly.
I'm not defending them, but I saw my own monthly mortgage payment go up by 20% in the last few months and my mortgage is about half of the average. That's just the mortgage payment itself. So property investors would be copping the same thing and, naturally, as much of that increase would get passed onto tenants as possible.
.
@bobbified: Nobody knows if OP's rental is mortgaged or not.
Those across-the-board rent increases have little to do with interest rates. It's merely a convenient excuse for every property investors (mortgaged or not) to collectively push the floor price of rentals across the country.
Those across-the-board rent increases have little to do with interest rates
That is wrong.
If I had $100k (or $1m) why would I let someone else use it for 2% return when I could stick it in a bank account at 4%?
Reason why there is a rental shortage is in part because landlords are getting out (or they have having to airbnb them to make a return)
Just like nobody knows if the OP property is mortgaged or not you have no idea how desperate financially some landlords are.
@netjock: I never said they weren't any over-leveraged investors being hurt by their poorly timed investments.
But with half of the properties in Australia owned outright, I still think it's merely a convenient excuse used by most investors to increase rent.
Even if they technically don't need an excuse since the rental market is almost completely unregulated.
I wonder what would property investors do if rent increases in Australia were regulated like in most of continental Europe?
If I had $100k (or $1m) why would I let someone else use it for 2% return when I could stick it in a bank account at 4%?
This is the question you need to answer.
Whether you borrow or not to borrow isn't the question. It is the allocation of capital when there is better investments out there. Why should I (in theory) give someone a house to live in for 2% rather than putting money in the back for 4% when property prices are flat or going backwards.
I wonder what would property investors do if rent increases in Australia were regulated like in most of continental Europe?
Why don't our renters all move to Europe?
This is the question you need to answer.
Don't think it needs answering, because you are comparing a long-term illiquid investment to cash. And comparing it over the last 6-month only. But I will try.
If you are actually invested in property, but can't stomach a country-wide drop in the price of less than 10%, how will you be able to handle a further drop in property price and further IR increases?
While you can make tenants pay for your poor financial decisions in the short term by increasing rent to the max. There's only so much you can squeeze.
With aggressive layoffs in silicon valley, the UK in deep recession, and China in all sorts of troubles, I don't think the Australian economy will be immune for much longer. Will be hard to try to squeeze even more rent if we also enter a recession.
Maybe time to revert to cash?
Maybe time to revert to cash?
Maybe that is the reason why there is a shortage of rental properties.
Don't think it needs answering
Answering the question with another question isn't the answer. The answer to the question is already there. It is there is better places to put your money than the property market. A lot of landlords sold out to first home buyers (or people who wanted a home). Bad luck for those who are left renting because all the affordable homes have been purchased by people who can afford to live in them.
If you think about it. Being on the end of rental increases you can't afford is usually the symptom of a different problem. Not the cause.
Bad luck for those who are left renting because all the affordable homes have been purchased by people who can afford to live in them.
Please tell us more about those afordable homes you're speaking of.
It's Ozbargain after all.
@netjock: It is absolutely correct - rent is defined by demand, not costs.
Sure, there is a correlation, but it lags massively - if rents are too low, landlords will go away from the market, but that in turn reduces supply, which will eventually cause prices to increase.
Just because a property is really expensive, doesn't mean the owner can charge astronomical rent. Hence why capital cities tend to have lower returns than regionals.
Nobody knows if OP's rental is mortgaged or not.
I was just using the recent mortgage rate increases as a factor in the rental 'market rate'. Just because someone doesn't have a mortgage on the property, it doesn't mean that they shouldn't make a profit. What you're saying seems to be that just because they're not paying a mortgage, they should give you something for nothing? There's the "opportunity cost" of having that much money sitting there. If they weren't making much of a return and they thought they do better (relative to the risk) putting their money elsewhere, then you likely wouldn't have a house to rent. The whole market rate is based on demand and supply.
Like I was saying earlier, investors will naturally try and maximise their investment return. Because that's the whole point of investments. You'd most likely do the same if you were the investor.
investors will naturally try and maximize their investment return. Because that's the whole point of investments. You'd most likely do the same if you were the investor.
I agree and disagree.
I would not invest in something that is a human need (shelter) while aiming for significant returns. All of this is at the expense of the less fortunate.
Happy to instead invest in companies that have great growth potential and do not screw others in the process (no Uber shares for me)
The problem is that in Australia, properties have been painted as a way to get rich relatively quickly. And with the help of an anemic local share market, it has been true so far.
In other countries, real estate is mostly a way to preserve wealth and beat inflation.
Investing in businesses (listed or not) represents a much bigger share of wealth creation.
The rate of change is irrelevant, not sure why people keep getting fixated on that. Pay the market price or move.
Correct. In Melbourne CBD 50% of some builds were vacant during lock down. In theory when it rents out now at $500pw it is better returns than get rich quick scheme if you look at percentages.
Do you prefer staying in this area or do you prefer paying less rent?
How does the other property rents look in this same area compared to the new proposed rate?
Do you prefer staying in this area or do you prefer paying less rent?
Answer is both (yes I read it as OR but you know people like to invent their answers).
How does the other property rents look in this same area compared to the new proposed rate?
Don't do that. You'll justify the increase. Find some really low number at the bottom and say it is really bad.
Example the stock market has gone up 20% from the lows therefore it is not good value. Just don't mention is is about 20% off all time highs.
Answer is both (yes I read it as OR but you know people like to invent their answers).
I did mean "or" because this might be the market rate at the location. So you've either got the location or the price.
Don't do that. You'll justify the increase. Find some really low number at the bottom and say it is really bad.
It doesn't matter what anyone cherry picks during a negotiation. In the end what will decide for the landlord is how much similar competitors are charging. If OP can just move down the road for only a 10% increase, OP will do that if the landlord doesn't budge. If similar competitors are charging the new rate, OP can pay the rate they want, elsewhere and Landlord will try to get someone in.
Thats assuming that people want to stay in this area so another factor is how long competitors are taking to get their properties listed at said price.
Pretty much this, only way to reduce the price if landlord cant find anyone to rent.
In landloads point of view, they always like to adjust it up to market conditions. No brainer.
Based on NSW Can increase based on current market condition, as long as its not too excessive. Maybe not to $3.5k when market is around $2k?
In landloads point of view, they always like to adjust it up to market conditions. No brainer.
Not just landlords but everyone wants to sell at market price. Nobody wants to be going around giving massive discounts. I don't see there is a lot of proud people on OzNegativeCashflow
you can probably apply to the tribunal
https://www.fairtrading.nsw.gov.au/housing-and-property/rent…
Sounds like they are trying to shuffle you out… as for legal… it depends. Did they give you 60 days notice? Is it a fixed period agreement or a month to month?
They are giving me 60 days notice for rent increase and also offered me to renew a further 12 months
Far out, maybe im just a humble aussie battler but i could not fathom paying literally 2500 a fortnight for anything…
Have you looked at disputing it, that is a DISGUSTING increase, and I'm also going to take this chance to voice my dislike of REA's/ Agencies, literal VULTURES adding little to no value to society.
How do I dispute?
https://www.abc.net.au/news/2022-10-21/rent-increase-rules-c…
If you've received a rent increase that you believe is excessive, Fair Trading NSW and the NSW Tenants Union both suggest negotiating with your landlord as a first port of call.
You can also apply to the NSW Civil and Administrative Tribunal within 30 days of receiving the rent increase.
The tribunal considers a range of factors when making a ruling, including the general state of the market; the state of repair of the property; and when the last rent increase was.
However, the onus is on you to prove the price rise is excessive.
Like all things of this nature, theres only a bare framework when it comes to disputes - I think to any reasonable person, 75% increase considering it started from a fair market value would be excessive, without having to 'prove' it….
If all else fails, just say ' It's the vibe of it '
It actually sounds like they are currently way under fair market value and the rate increase is just correcting that. If not then move or dispute. If just bringing to market rate then it is fair.
Even if its in line with current market avg you could argue that a 75% increase regardless of the price but way of the percent increase is excessive by looking at the percent of increase or even just the #$1200 of your neighbors. If the area generally doesnt do such excessive increases such as 75% or $1200 might help?
@hawkshead: if it takes a sudden jump of 75% to make it 'fair' (what even is fair, really, in this ****ed up disgrace for a housing market) - then maybe at least do it in 2 steps over say 12 months. 35/40% would at least be easier to plan around, unless OP is literally swimming in cash / is willing to accept a hot room mate?
@Jimothy Wongingtons: i dont think its fair at all, I'm just thinking of what might help? I have no real knowlege of how tribunal makes decisions. I just know LL are all scum.
if you dispute, the landlord may view you as a troublesome tenant because many others would happily accept pay that rent
they can withdraw their intent to lease to you.
The alternative is to move anyway, so its the same outcome. Might as well use it to try to get what you want.
Maybe, however the land lord should also appreciate that a 75% increase is surely going to bring some question.
in qld thats too bad but I dont really know about nsw: too bad for the landlord I mean. I dont think thats a valid reason to end a tenancy.
I don't even pay $2500 a month for the mortgage
Same. Living in a home bought for over $1m and paying less than that on the mortgage.
That is standard I think. My understanding is that mortgage repayments are only higher in Melbourne and Sydney than rental payments. Every other city in Australia it is cheaper to own than rent.
I know this is a popular comment, but how tribunal going to help when rent is increase up to the market condition? All you doing is keeping tribunal busy for real issues.
You either keep it up with Kardashian or move somewhere that you can offered.
If its there for anybody its there for everybody.
Have you looked at disputing it, that is a DISGUSTING increase
Depends on what you are comparing it to.
I know places that latest proposed increase will only bring them to 3% less than the amount charged at Jan 2020, but it would be a 50% increase from COVID lows. Don't forget inflation in the last year people got at least a 3% pay rise.
It's not a disgusting increase if there was a similar decrease.
Now, I understand I had a good rate due to Covid
What was the rate prior to Covid?
Not sure, I moved in here in August 2020 when lockdown 1.0 finished
What is the rate for similar places now?
$2000 - $2500
@Homr: Then the increase seems fair? Not like you can move anywhere cheaper, and a tribunal will find that the rent is in line with market rates, and they aren't just trying to force you to leave by giving a ridiculous price increase.
@Homr: Will be tough to justify an unfair increase then if that's the market rate and what they can achieve from someone else.
Rent of $65k a year!
Man, I gotta own me a couple of these properties.
Sorry to hear OP. What's the market rent like for an equivalent property?
around $1000 to $1200
Then move.
$1000 to $1200 a week?
still expensive to me.. but I'd find a 'cheaper' $1,000 pw property then.
yes $1000 to $1200 per week
I'm at the Haymarket area
@Homr: its moments like this i'm glad i have no desire to live anywhere near the CBD, but good luck to you & those who do and can justify these ridiculously high rents.
@TilacVIP: I thought people were fleeing the cities? Maybe it's the Ponzi immigration scheme artificially propping up these rental prices
@Windows7forever: "Artificially". Lol artificial means man or human made. Imagine thinking we could have non-man or human made outcomes in a human made society.
@Homr: Christ, what sort of job do you need to afford that. I bairly earn that a week. See how the other half live
@Geoff01: Yeah i know crazy. I make 1000 dollars in a good week. That wouldn't even cover 1 week of OPs rent to live in grimy Sydney CBD.
You said it was $2000-2500 in the comments above. Which is it?
Pays to read the OP before commenting.
I think it's both: $1000 to $1200 a week ~ $2000 to $2500 a fortnight
You sure?
Probably worth 2.5 - 3 mill
Interest on investment loan rate - 120k
Land tax - 15 k
Other - 10 k
Fair point, but could be worth $1.5m of which they paid $500k and paid off.
Who knows?
Would be very little land tax on apartments.
they paid $500k and paid off
How much is that $500k worth now? Inflation my friend. If I had $1.5m and I sold them then put it in the index it will pay 2.8%. $42k is $807pw ($1614 per fortnight) then add body corporate (I'd suspect for that price apartment it is probably $10k a year if not $15k).
I'd sell and put it into the sharemarket. Better diversification and less complaining.
Interest on investment loan rate - 120k
… Assuming they bought the property yesterday. They might have bought it 20 years ago
Man, I gotta own me a couple of these properties.
Why? For OP's rents, the property probably costs like $2.5m - you borrow $2m, that's $10k in interest payments per month.
As above but could be worth $1.5m of which they paid $500k and have paid off.
Who knows?
Who knows?
Real estate dot com dot au has sold prices if it was disclosed.
Australia is owned by rich landlords for negative gearings.
it's happening everywhere, just move. that's what I'm doing. Even your profile pic is panicking