Hi,
So my landlord has increased rent by $170 per week or 25% with 2 months notice. New rent on par with market rate then. I am not on a current lease. Is that fair or normal? Also is it true the landlord can only evict with 90 days notice? But I can leave with 21 days notice.
This is Sydney.
Is this rent increase justified or normal?
Ta.
Or $9100 per year, depending how you read the post I guess.
Ah yes, grammar… A lost art form.
Let's eat grandma.
Let's eat, grandma.
Or,
Helping your uncle Jack off a horse.
Helping your uncle Jack, off a horse.
Helping your uncle Jack off a horse.
No judgement, there's a lot of money to be made from selling horse semen. The extraction process uses a machine anyway, so it's not like you have to use your hands to physically do it.
Helping your uncle Jack Off, a horse.
In that case it becomes jack-off, not the addition of a comma.
@[Deactivated]: If you want to get technical. Jack off is a phrasal verb in this context, which does not require hyphenation.
@Rochie: if you want to get technical, jack off isn't a noun in this context so should not be capitalised.
Joke’s on you. Uncle doesn’t have a horse.
But to be picky, it'd really need to be:
Helping your uncle jack off a horse.
Helping your uncle Jack, off a horse.
GRABDMA GRANDMA LETS EAT
Unfortunately, rents will go higher. The government and the media is pumping the bubble even more by suggesting rezoning for more dense housing is the solution, no talk about slowing migrant intake a little till we build up our supply and infrastructure. There is too much vested interest in the gravy train of real estate in Australia. Mass immigration is the fuel that will be fuelling the property market fire into the future.
Agreed 100%
Everyone should stop blaming the landlords.
A single landlord or agent has no control over the rental market
If a landlord or agent asks for too much rent, tenants will avoid it and it will remain vacant.
It is tenant demand driving up the rents.
Especially as a result of this massive immigration program thanks to this Government's lack of planning and foresight.
And with thier immigration program to bring in another 700,000 migrants over the next 2 years and 1 million within 5 years, the rents we pay havent even starting going up, realistically.
Expect them to DOUBLE within the next 2 years
Its a case of far too many people chasing too few properties
I did a quick calculation and worked out that we would need to be completing 480 residences per day (including weekends) for the next 2 years, commencing from today, just to accomodate another 700,000 people (assuming 2 people on average per residence). Realistically an impossible task
@HeWhoKnows: Hold on to your kangaroos, mate! Downvoting just because the housing market knows how to do the hokey-pokey with changing demand? Sheesh! Picture this: more people storming the market like a stampede of wild dingoes. And what happens? Bam! Housing investments skyrocket! It's like a construction carnival, baby! New properties popping up like mushrooms after a heavy rain. But wait, there's more! The demand goes up, up, up! Homeowners go all MacGyver on their spaces, transforming 'em into rental units or giving 'em a fancy makeover. It's a housing bonanza, folks!
Now, let's talk about population growth. Sure, immigration adds some spice to the mix, but hold your didgeridoos, because there's more to the story. Imagine this: the death rate gets all feisty and outpaces the birth rate. Plus, some folks decide to take a walkabout and move overseas, like "Hasta la vista, kangaroos!" It's like a population rollercoaster, balancing things out and giving the housing market a breather. Phew!
Oh, did I mention Australia's got millions of old-timers above 65? Crikey! And the birth rate? Well, it's not exactly doing the cha-cha. People might just be fed up and saying, "Goodbye, Australia!" But wait, there's hope! With the government waving incentives at migrants to build new cribs, we're all set for a wild ride. Buckle up, mates, 'cause Australia's avoiding a downfall like a true champion. G'day to a bright and bouncing future!
@oneone001: your talking points are just hypotheticals.
actual historical data is that the aussie population would have shrunk with the given fertility rate over the last 30 years, whereas it's actually (nearly) doubled. approx (nearly) half the current population are migrants from the last ~30 years.
it's arguable that the citizen fertility rate would actually be higher (replacement levels rather than shrinking) with less economic pressure from migration, too.
in light of actual history, your extrapolations are pretty meaningless.
edit: should have realized that was a chatgpt post :facepalm:
@HeWhoKnows: When I saw TV, news,radio and internet as undisputable facts.
I just had to see what the AI had to say about it with a few input of being Australian based and a few other comical inputs .
@HeWhoKnows: It's amazing how much people derive their worth from random people on the internet. Why would you care about a few pesky downvotes? It just means people disagree with your opinion, that's a good thing. Who wants to live life saying harmless, pointless things so inane that everyone agrees with it? I get upset if I don't get the occassional downvote, it means I'm just playing it too safe.
Oh. I was waiting for the /s but I think you're serious
If a landlord or agent asks for too much rent, tenants will avoid it and it will remain vacant.
Or you'll just end up homeless while the LL will find a way to fit in 3x as many people to make the increased rent work.
We still need more houses built. Landlords are still useless scum of the earth. Two things can be true at the same time.
Have you researched how many people leaving Australia every year?
Plus the government wants to own part of your house now. i.e. You put some % in, they put in the rest, and when you sell again they revalue the property and get that % of the increase too. This is so foolishness. Prices will skyrocket again just as they did with the FHoG and later when it was doubled. (Which suits government just fine, since most of them own investment properties, seeing they're the ones that make the rules to benefit themselves more than home buyers. It's why you hear about some incentive, but then learn it has all these hoops that exclude or punish most buyers anyway.)
In other words EVERY TIME government interferes with property in some way prices only ever go UP.
Things like the FHoG only help for a very short period then everyone wants to funnel that increase into their wallet. e.g. The government gives buyers $14K FHoG then the REAs and vendors jack property prices up by that amount or more, cancelling out the benefit, increasing prices for everyone - not just first home buyers.
Never mind the increase!
How much was OP paying before the increase and for how long?
How much did the landlord reduce the rent for that property during 2020 and 2021 due to COVID-19?
Is the new rent above or below the market rate for comparable properties? …which OP has conveniently opted to omit
To answer OPs question about fairness…..That last question is the bottom line !!!!!
Because if OP decided to move out, that is exactly what OP would be confronted with.
So to rephase..
Is OP better off staying on in the current rental property after the rental increase or better off moving to comparable rental property in the same area…this is the REAL QUESTION
What many choose to overlook is that rents got absolutely smashed during COVID-19.
We are talking about 20%-30% reductions in rent during COVID19 which nobody is factoring in.
So many rents are still in catch-up phase after COVID19 and probably tracking well below inflation adjusted rents from early 2019.
This is a REAL example:
3 bedroom apartment rents in my area were about $770pw early in 2019
By mid-2020 during COVID19 those rents crashed to about $590pw
Those rents have since recovered somewhat and are currently about $750pw
Thats still $20 below the rents being achived in 2019
Is that fair to the landlord - definitely not!
Especially as the landlord's costs continued to escalate over the last 4 years even as rents collapsed.
Furthermore if we adjust the $770 rent in 2019 for CPI that equates to $915pw today.
Now that calculation is quite humbling really..
Now lets apply this scenario to each one of you…
Which of you were forced to accept such a massive pay cut in 2020 and today still happy to be paid less than you earnt in 2019 for exactly the same job?
Hmm I bet not a single one of you
Just food for thought…think about it
So when you hear rents are being increased by $100pw (or in OPs case by $170pw) thats from a very low base following rental collapses during COVID19 and today still well behind the CPI indexed rent from 2019
Let me also say that most landlords would rather increase rent by smaller increments every 6 months to make it easier on the tenants.
But with rental increases in NSW limited to once a year, the landlord is left with no other choice but to pass on the increase in one massive hit - thanks to your politicians over-regulating the market
You're assuming that everyone had the same experience of a rental cut or rent loss during covid, in my experience there were no cuts. As both a landlord and a tenant, no changes other than property prices sky rocketing. Now I'm seeing price hikes that aren't restoring decreases rents, but increasing a solid 20-30%. You're not doing anyone a favour if you slowly increase the rent by the same amount by the end of the year, or just keep piling it on throughout the year.
So, with higher property prices, the entry costs for new investors are higher yeah? Including their loan amount.
A higher loan, with higher interest rates pushes up the overall operating costs for that property.
As a result, that landlord will push up the rental price if the market allows for it. And so they should.
How did a simple question trigger such a response? All he asked was is it fair or not.
There's nothing in his post to suggest he wants people to 'feel sorry for him' nor is it one-sided.
You got way too much time on your hands to type that and then respond to every single person who doesn't quite agree with you.
amayzingone owns a rental property
Exactly, so damn obvious.
Ikr, op needs realiaty checks, my landlord put up $70/week 2 yrs ago, unless it is a typo … $170/weekly
I think thats fair
I am not on a current lease.
Then the landlord can pretty well do as they please.*
*Conditions apply
Not really
The landlord is limited to one increase a year which make it impoosible to pass on smaller increases webery 6 months.
Furthermore the landlord may be asked to justify the rent increase.
This is easily done by comapring rents with similar properties in the area
But Op hasnt provided us with this all important information
hence a rather one-sided "feel sorry for me - never mind about the landlord" approach
This post is way too far down the conversation chain for you.
Are you the judge and jury?
Not sure about other states, but in WA landlords dont have to justify a rent increase and can increase every 6 months
Are you all missing the point that there is no signed lease?
No lease, no rules.
@greatlamp: Wrong.
Even if there’s no current fixed rental agreement, the laws contained within the residential tenancy act still apply.
In NSW, one increase per 12 months still applies. But that doesn’t mean a landlord can’t issue a notice to vacate to a tenant on a periodical agreement, then Jack the price up after said tenant has moved out.
@Extreme: So the laws are ineffective then.
The OP reads as they have been given 2 months notice to vacate, or sign a lease at the new price.
@greatlamp: Ineffective with what exactly?
Home ownership costs have increased. They’re being passed onto the tenant.
The tenant has the option to accept, or move on, so the landlord can find someone else who is willing to pay market value for the property.
The OP seems to not want to pay market value. Why should the landlord afford them a discount?
@Extreme: Ineffective against protecting tenants against rent increases above CPI, or excessive rent increases.
I'm not arguing for such laws, but that is clearly their intention
@greatlamp: Incorrect!
The fixed period of the lease has expired. That all.
All the same rules are still there my friend as the lease rolls over to a month to month.
So the rent can be increased and either party can terminate within the conditions of the lease.
@greatlamp: NSW introduced 1 increase every 12 months during the pandemic. Previous to this you could increase every 60 days, the golden era.
is justifying a rent increase by "they did it too" really a justification? "we materialy improved the property" would justify.
Also known as market rates
Furthermore the landlord may be asked to justify the rent increase.
Not a smart move if your want to live in the place.
Renter - Mr Landlord, please justify your rent increase.
Landlord - get out.
Renter - noted.
When was and how big was your last increase? But yeah pretty standard increase this year it seems. I started a lease in 2021 when rents were low from covid. ~3% increase last year, ~20% increase this year.
Maybe, but I don't know anyone who saw a rent reduction during covid. There were some reprieves, but those were just debts which the tenant had to pay back.
No one owes anyone CPI on rent or any other charge. It's not a bench mark, just a measure of inflation.
There were many comments in these forums of people negotiating their rent down by huge margins.
Depends where you live.
Was widespread throughout Melbourne especially but also throughout the pasts of Sydney inhabited mostly be overseas workers (backpackers as most call them)who went back home
Many landlords had places vacant for up to 3 months which is a heavy loss.
Dont know why you didnt hear about this
It was all over the news!
Not really.
Its a fair and alternative measure of whether an increase is reasonable over a period of time.
Im sure you would be very upset if your employer told you that nobody owes you CPI increases and instead dropped your pay by 30%.
Meanwhile the landlords property costs keep going up at roughy the rate of inflation
Early on in covid rent was low before vaccines were available, then later on prices went up.
And you?
irrelevant.
i think musk earns 2 billion a year but he isnt giving me a free telsa
@AndyHates
Doesn't really matter what job your landlord has.
He's going to earn $308,840 p.a. following the increase.
"… and you would be on the street …"
Hilarious condescending post.
OP will be living in another dwelling. Full stop.
Why is it that some people equates renting to poverty?
It is very well known that many property owners rent somewhere else because of children schooling, lifestyle or "current" needs, still treasuring their little hideaway for the future (no kids at school, no work commitments, no need to go out every single night and day, etc etc etc …
True
Why do old farts like you love going on about bootstraps while ranting about the most out of touch inaccurate bs?
And pays $130,000 in Insurance?
Did landlords decrease the rent when interest rates dropped over the last 10 years? If the landlord owns the property outright are they not allowed to increase rent?
Its a weak argument for rental increases. He has to pay more each week yes but if you've got $500k mortgage on your investment property, you've got tax insensitive (depreciation, negative gearing, capital gains).
Realistically there is a housing shortage, its their asset and there are market rates for a reason. That doesn't mean landlords should exploit the situation, but yes $170 could be justified or it could be fine to complain about.
The market dictates rental prices.
There’s many factors that go into this. Such as the initial price of the house, the loan size, interest rates, condition of the property, vacancy rates etc etc.
Let’s not get confused for a minute here. A rental property is someone’s investment. They purchased the property to make money off. You don’t have to like it, but that’s the reality.
There’s many tax breaks for investors to purchase property. Why? Because returns on property investment are low in comparison to other options. These tax breaks are also incentives to encourage more people to buy investment properties to help house those who can’t afford to buy.
Tenants can always dispute an increase through xCAT if they feel the increase is excessive.
But a landlord is well within their rights to charge market rent.
I agree with the bottom line of your comment that the market dictates the rent, not the landlord.
And that a landlord is fully justified to ask a rent comparible with the market rate (regardless of any increase)
But I think you are somewhat confused about the rest
For example you say:
There’s many factors that go into this.
Such as the initial price of the house - SORT OF BUT COMES DOWN TO MARKET RENTS
the loan size - IRRELEVENT AND WRONG
interest rates - IRRELEVENT AND WRONG
condition of the property - YES
vacancy rates - YES
and most people buy a rental property for prospects of capital gain
These days there is no money to be made from the rent
A rental property might return 4% gross before expenses and repairs
So net return is closer to 2.5% and thats before accounting for the cost of the loan, nor repairs and maintenance nor a renovation every 10-15 years.
The same investor can park cash in bank instead and earn around 4.8% today NET
and tax breaks for (property) investors? What tax breaks?
They get treated the same as any other investment or business
Anyone who thinks landlords are making heaps out of rents has no idea
@HeWhoKnows: My comments regarding initial cost price, loan amount & interest rates are all factors that play a part with regards to the yield.
To suggest I’m wrong is just dumb.
Are they a factor in rents, not by any means. But they’re a determining factor on wether a property is a viable investment option.
With regards to capital growth/rental yield, it all comes down to the type/location of property as to the returns an investor will make.
Some investors rely heavily on capital growth, whereas others chase high yields. It’s still possible to find properties with a yield >8%, but you won’t find it in a capital city due to the high entry/purchase price of the home.
Some of the tax breaks I was referring to aren’t specific to property, but they still apply for property. Tax breaks such as negative gearing(although a smart investor would avoid an asset that generates a loss), CGT discounts, stamp duty discounts(where applicable). Then there’s other grants that have recently applied such as the $50k home builder grant the previous federal government introduced/ended during covid.
The fact remains tho, property investment returns are low. High property prices & tightening of tenancy laws are pushing property investors away.
The only way to solve this housing crisis is to encourage more property investment and more property development.
There’s many tax breaks for investors to purchase property. Why? Because returns on property investment are low in comparison to other options. These tax breaks are also incentives to encourage more people to buy investment properties to help house those who can’t afford to buy.
That isn't true at all.
The tax breaks for property apply to all investments.
@greatlamp: You’re taking me out of context.
Stamp duty concessions(where applicable) don’t apply to all investments.
The $50k home builders grant that was introduced & axed during covid didn’t apply to other investments either…..
@Extreme: Those concessions are not targeted at investors. But agree they do put upward pressure on prices.
That's the problem with real estate, it should not be seen as an investment anymore, the wealth disparity increases yearly, there's several other factors that can reduce house prices instead of approving developments that stage presales which is demand constraining ironically.
@Bearlion: Nope. It’s not a problem at all. It’s a free market.
Just like buying apples and oranges. People are making money off your need to eat to live.
Market manipulation just creates further problems in other areas that weren’t factored in when changing the rules/laws.
There’s only so much that can be done to reduce house prices. And honestly, it’s not a lot. Reduce house prices, then people stop constructing new ones as construction costs are increasing at rapid rates, along with the risk of the builder going belly up.
Letting the market figure itself out is sometimes the best way foward.
@Extreme: How's it a free market when there are rubbish policies like negative gearing in place? That's market manipulation right there. The housing market needs reform, when 1/5 buyers is a first home buyer, we can do with 5x less construction, lower shortages and construction costs will follow, and a correction of the housing bubble driven by long term low interest rates.
@Bearlion: Negative gearing isn’t specific to property. It applies to all investment options, including businesses.
To suggest construction costs will come down is laughable. A piece of timber costs what a piece of timber costs.
The only thing that will change is the number of builders in the game. Currently we’re seeing more and more go bankrupt. Which will only fuel the housing shortages going forward.
@Extreme: The builder's going bankrupt are large corporations who's directors/shareholders see it financially viable to liquidate than to honour their contracts, it's a loophole.
Timber costs are driven by market conditions, a reduction in investment demand will reduce local timber prices. Investors should look to other options than real estate.
Housing needs serious reforms, there will be generations of high income earning Australians unable to afford property in the major cities they work in, totally unacceptable.
@Bearlion: Not really there are plenty of smaller builders going broke. Any builder that entered a fixed price contract would be under pressure. These issues were all compounded by
maybe the property and the actual house should dictate the rental price? and the service the property owner does on the property.
@hawkshead: It currently does, along with the location. In fact, the location plays a rather large part.
A rental property is someone’s investment. They purchased the property to make money off.
And not all investments should guarantee a profit, it's a risk you take. Plenty of businesses make losses or go bankrupt but somehow the real estate market is coddled like a child.
This is my situation. My rental property didn't increase rent from 2017-2020, then COVID hit, people left and the rent had to go down by $120 (from $520 to $400) due to market condition. So I had to bear the $120 for 2 years until 2022, before the rent goes back up by $100.
Now that the rates has more than doubled from 2% to 5% in 12 month, the repayment goes up by ~$300/w. The market condition means rent can go up by about $150, so rental takes 50% of the rate increase. I don't think this is exploitation, because the rates just went up too much too soon. If you look at the whole investment span, I am just getting hit by COVID (-$120/w) then rate increase (-$150/w). Renters at least got a good break during COVID era. Overall, the rent went from 520 to 650 after 5+ years.
I am saving for retirement by investing my saving in a property, not gonna get crazy rich. So far, I might be breakeven because the house price went up to make up for the loss in cashflow. If I sell, there are so many fees and taxes to pay, so I hope I can at least breakeven. (I am starting to think property investment is probably not a great idea, lol….)
On tax insensitive, one needs to be making more than depreciation to get something back. Annually, I get back around $4000 (~77/w) from depreciation. Negative gearing is so small, it's a rounding error. Do you mean capital gain tax that I need to pay when I sell, which would probably be more than all the tax rebates I got over the years?
Anyway, I am sharing another side of the story. Most investors are normal people saving for retirements and providing incentives for builders to create more housing for people to rent. So we are just part of the system. (If we go upstream, the banks are getting $300/w more, what's their funding cost?)
Whatever is causing the rates to go up so fast is screwing both the renters and the landlords (w/ mortgage).
Completely agree with you. Oh well, I know who is to blame. Someone on 1Mil Salary.
I've just sold a property after owning it for 19 years. It takes with inflation and was only very slightly positively geared.
Over all, the only time it made any money was with the huge property price increases of the last couple of years.
I think many are sucked into this idea that property investing is going to net them gains for retirement, really it's a form of forced saving like buying your own home. Overall share market and indexed funds will achieve better results, but the whole borrow to invest market for property comes across as much lower risk. If you borrowed to invest in shares and tracked the market indexes you would overall be far better off if you can navigate the downturns and avoid margin calls.
Imagine Australia's share market and overall health of start ups and venture if ordinary people invested in businesses rather than trying to inflate the residential property market and contributing to housing affordability going down the toilet. It's tragedy of the commons and a ponzi scheme.
@Felixrising: I agree with you. The only benefit of property investment is cheap loan and highly leveraged. Though recently you can invest in indexed with leveraged and relatively cheap loan about 1% higher than home loan.
@Felixrising: This is true, the idea of housing market as a safe long term investment needs to end, there's better alternatives.
Overall share market and indexed funds will achieve better results, but the whole borrow to invest market for property comes across as much lower risk. If you borrowed to invest in shares and tracked the market indexes you would overall be far better off if you can navigate the downturns and avoid margin calls.
If you have $200k for a deposit for a $1m investment property, you could easily put that into ETFs without having to borrow any cash at all.
With hindsight, the best time to have borrowed to invest could've been around 2010. Depends if the interest rate on your loan was variable or not, but rates steadily declined from ~2010 to 2022 and there was huge growth in markets the past 10 years due to interest rates continually heading downwards (i.e. cheap money).
Me? I'm happy to invest in ETFs and let the dividends roll in without having to do any work. I don't love property enough to want to deal with all the potential issues that can come up, e.g. repairs, bad tenants, paying to have it managed (because we all know how reliable property managers can be) or spending my own time on weekends and money managing it. People who think property is a great investment can learn the hard way.
but you come out of it with a house in the end, why is the renter responsible for the costs of your loan?
@hawkshead: Lol.
This age old question from a tenant with no idea.
Go run some numbers, then come back to me. You’ll find in a vast number of cases, the rent a tenant pays doesn’t even cover the holding costs of the property, let alone going towards paying the property off….
@Extreme: would be far better for the tenant if rental housing was, by and large, provided by large corporations who use economies of scale to keep prices low, maintained houses to liveable standard and didnt sweat the small stuff
@Gdsamp: You mean a large corporation such as the department of housing & the like?
Have you seen the condition their properties are in? Standards that are generally worse than private rentals.
But that’s all beside the point. You’re arguing for pie in the sky stuff, that’s just not a reality. It’s never going to happen.
An extra $3.27 per week?