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.
looks like theres a lot of scumbag landlords ITT!
You could always buy your own house, or live with family, or in a tent…..
Is your life a charity? logic.
Welcome to OzB
Sounds about right. My sisters apartment in Docklands, Melbourne was out up $150 a week.
It’s just what’s happening unfortunately.
2 of our neighbours, in NW Sydney, recently moved out due to their rent increases of around 20%. Both units got snapped up instantly after just 1 day of inspection. The rental market is hot and I feel for the low income families whom would be working just to survive.
Big increase but they may have been holding back increases for a long time if its in line with current market.
People always put in the cities name but never location… WEST SIDE ? that's (profanity) expensive as but if its in CBD thats cheap as.
Hate when people do this shit.
It is harder and harder to make rental investments pay these days which is good because it will mean less people will invest in rental housing and then pricing may level out and eventually some renters can buy again. Real estate investing was such a reliably good investment that the market was dominated by investors. Its time we change that balance and let home prices settle. This will mean stable rents and eventually more affordable homes. Once we get some tenancy protection, say in the form of capped rental increases or longer stay leases (5+ yrs and even life time), and we sell homes with tenants, then we will be getting somewhere wrt the housing crisis.
Housing only going one way and rents with 1.5 mil migrants expected the next 5 yrs.
The pressure on rents will be far greater. We can't cope now imagine the future.
Exactly, I don't see any of what Waltervp said happening to be honest.
Out of Canada, NZ and Australia we're the only country not really doing anything about housing. Canada brought in some measures like banning foreign purchases and taxes on vacant homes. NZ scrapped negative gearing and also banned foreigners from buying properties. All three countries have seen huge price growth in recent years.
Try and negotiate. If he won't budge, then either move out or pay it. Those are your options.
Accidentally became a landlord over 20 years ago. Got out this year. Consistently knocked back REA suggestions to increase rents for sitting tenants and only reassessed when they moved out. Did repairs when requested, paid all the bills on time. Just sold the property and would never be a landlord again… mainly because I find it offensive that government (Vic) want to put all these new costs on people who are effectively doing the job that they should be doing… providing affordable, social housing. It's bullshit.
Its socialism. Tenant is a saint no matter what and landlord is devil not matter what
mainly because I find it offensive that government (Vic) want to put all these new costs on people who are effectively doing the job that they should be doing…
I must be misunderstanding, are you saying the government should give you free money to repair, refurbish, renovate etc. your investment property?
No, I'm saying that the government should provide affordable social housing so the need for private landlords disappears. And if they aren't prepared to meet this social obligation don't tell landlords that they have to accede to every whim of the tenant…pets, redecorating etc. Yes, landlords should always provide safe accommodation and ensure basic utilities are provided to the property.
I don't think people buy investment properties due to a sense of social responsibility to provide housing for others. They do it for the almost guaranteed increase in value whilst getting someone else to pay for it and reaping in big tax refunds.
@OzzyOzbourne: I didn't buy an investment property. It was a family home that we had to leave. My point is, and it's bloody hard to make, if governments stepped up and did their job, private landlords would be thin on the ground and the property market would look a lot different. I'm out of it anyway, and glad I am.
Interest rates on investment property loans have gone up over 200 percent (more than doubled) but rents have generally gone up less than 50 percent. With another 700,000 people moving to Australia there's still a long way to go. The current 20 percent annual increases seem likely to continue for a while.
What the hell is Labor doing?
We need a legislated rent cap so greedy landlords can’t just jack up rents to whatever they bloody want
Many renters like pensioners and the disabled now can’t afford basic needs - is this what everyone wants Australia to be as a country?
Australia as USA the 2nd?
Median home prices in Melbourne, Sydney and Brisbane for 2022: $924k, $1,250k, $817k
The RBA cash rate increased from 0.10% in April 2022 to 3.85% in April 2023
Investor homeloans are charged at a higher rate and realistically went from ~2.8% to ~6% over this time period
You will find in most cases, the rent increases, do not cover the interest repayment increases.
Rents aren't really correlated to interest rates anyway, they're correlated to supply and demand. Hence the policies to increase immigration.
If we don't get rents up, landlords won't be able to cover their mortgage payments and will default, and it will all come crashing down. Immigration is essentially a lifeline for landlords at this stage. Rents could even end up covering the increased interest payments in the next year or two. Who knows, but it'll be interesting to see how things go.
I mean they can move to Brisbane or WA, or SA.
That would be the logically thing to do if you can't sustain your lifestyle. Or you know, make more money.
If you're in the unfortunate scenario that you're incapable (i.e disabled), the govt will likely provide you commission housing eventually.
That's life, winners and losers.
None of the parties give a shit. Doing the right thing which would have an immediate positive (downward) effect on house prices would involve scrapping negative gearing, significantly scaling back immigration, taxing the circa-1 million holiday homes to the point where the majority are forced to be sold (to people who actually need them as a place to live), and remove CGT discounts. But no party who wants to get in and stay in power will ever initiate and oversee those changes.
People wants to do nothing and get rich with property investments. It's another bitcoin moment when people who got rich with greed wants to keep it going but this time with profound social impact on the poor.
At the end of the day, someone needs to absorb the cost. Most landlords have no choice but to pass on costs associated with mortgage repayments over to tenants.
I'm pretty sure landlords can advertise their property for whatever they want but it's up to the potential tenant to decide if they can afford that or not.
Not weather they can afford it, its more like is he does not want it then is there anyone else willing to get it for same price
*Whether. The outside conditions won’t affect their ability to afford rent.
fair, in victoria, land tax is skyrocketing due to the bankrupt state we live in, rates are up and investment loans are 6+% - landlords can pass it on
Friends apartment in Rhodes Sydney went up to $1100 from $650, the increase was insane. They tried negotiating but was only offered a $50 discount, so they ditched and moved to a nearby suburb and got a big house for $750 or $800 or so (not near a train station, but they never take public transport in any form anyway). The place they left is still on the market and the agents have been dropping it by $50 every week cos they haven't been able to find any takers…
So yes thats a market correction.
This story makes me happy, also Rhodes is a damn rip off area, just like Wentworth point.
Mortgage repayment has often doubled with the rate increase so it's normal the burden is reflected in the rent.
Otherwise just trying to match the current price of rental makes sense too.
So I have a property on rent for the last 3 years and never increased rent. As a landlord, i have fixed every issues raised within few days.
We recently did a market appraisal, and my house would be the cheapest rental property in the area by atleast $120/week.
So we sent a notice for rental increase by $100, still around $20 less than what a similar house go for.
Tenant responded and gave reasons why it should not increase by $100 and offered $50/week. They pointed out few properties that were priced lower, the overall inflation % etc.
I gave it some thought and decided not negotiate it down and kept the increase to $100/week, still under over all market appraisal for the area.
The increase in rent will still not cover for my mortgage rates that are now sitting at more than double interest rates. Cost of living has gone up, it’s a challenge to manage the property and continue to bear the expenses, including the new compliance checks - plumbing and electrical, resulting into not just the fees but fixing any issues identified.
Mind it the property I am talking about is just 3 years old.
So ya, I don’t want to lose a good tenant, however I had to make that tough call of increasing the rent and align it with the market and also assist me in managing and affording the property.
If interest rates keep going up that would mean rents would continue to rise as well
yea, landlords can ONLY raise rent ONCE in 12 months.
gotta luv the law in this country.
last year i raised rent but not the market value. it was unders. tenants were quiet.
this year im going to raise anothe $150/wk cause im under water paying my mortgage.
will flag, not negotiable to agency.
if they want to leave they have 3 months to do so.
i also need to wait 3 months to collect the new rent rise - again, luv the laws in this country.
then i can pick from any 1 of 50 interested parties willing to pay market rent.
its not easy either way, blame the RBA.
The increase in rent will still not cover for my mortgage rates that are now sitting at more than double interest rates.
I suggest you research what negative gearing is, it will allow you to mitigate your losses by reducing your income tax payable.
Mine went up 32% and legally I couldn't do anything.
Is it fair? Debatable on either side
Is it ethical? Debatable on either side
Is it justified? Debatable on either side
Is it legal? Yes
If an area for similar homes is 2000 per week and you're paying 1000 per week, you bet your ass the landlord and/or agent will push for 2000 a week, 100% increase and there's nothing a tenant can do about it but to try negotiate.
The reality is, it’s an investment. It’s designed to make the landlord money. It’s why they bought the property in the first place.
The argument of should rent increase or not is an argument of the money remaining in the tenants pocket or being put into the landlords pocket.
A family member decided to move out when they were faced with a $150 increase. Which IMO was reasonable and below market rates. After they moved out, the price was increased an additional $100/wk and it was snapped up at the first inspection.
There’s many factors at play here, but the only way for downward pressure to be placed on rent is to actually increase incentives for property investment & increase incentives on new developments.housing supply needs to increase to stop rents going up.
That's the thing, the family moved out and the new rent is $250 more than the previous tenant price, so if landlords and real estate agents are making it market price, is it really?
There are numerous reasons why an area can and could be X rent per week
These reasons could be
- Interest rate rise
- Overheads rising - council, strata, water etc
- Rent bidding
- Area
- Similar homes around the area
What I am trying to say is that there are so many reasons why rent can rise apart from the obvious RBA interest rate rise and the typical reason "we have to pass on the cost to the tenant".
For example with rent bidding, so many tenants will offer 10, 20, 30, 40 dollars more than the asking price then this will organically raise the other dwellings around the area over time. Let's say overheads, interest rates and so doesn't change. Landlords will speculate and say "Why unit 1 which is the same unit as mine on $600 rent? when I am charging $550!?!?, That's it when renewal comes around, I am going to charge $610!". And tenants can't fight this because similar units are the same or similar price, then the next LL will see the $610 price and raise their renewal to $620 and so on and so on…… then it becomes a price match war in the area.
There is no one monitoring these rent rises cause there are so many factors and variables to monitor but how can the market be stable when so many factors are in the rent rise.
Another reason are vacant homes, census showed, in Miller's point 1 out of 3 homes are empty and Kensington 18% homes are empty and Parramatta 16%. Approx 164,624 homes are vacant in greater Sydney and Sydney metro While we don't know the true reason why they're vacant but 'experts' theorised that they are holiday homes, airBNB, overseas investments and people just didn't fill out the census. But can you imagine how many of these homes can be rented out to people to ease the supply and demand?
I read one article that an overseas investor purchased a block of homes and wanted to build units on that land but after 5 years of battling with council and getting approval, they are still waiting on approval. Imagine those homes being rented while they get the approval? And imagine how many investors locally and internationally have investments that are vacant.
So you've been paying rent that's been 25% under market for how long? And your complaining that's it's now up and at market??
Well, strictly speaking, he's been at 20% under the market rate.
Australian landlords and bleeding renters dry, name a more iconic duo
One of the earliest posts named the culprit, that’s immergration. Next negative gearing and lastly governments world wide (cough, China) on a housing inflation bubble. I expect house prices to double again within 10 years if nothing is done
So renters are so screwed!
Oh, more houses than ever sit empty for most of the week and are only rented via airBnB on weekends. While 500 a week for the shacks near Bribie Is seems insane; you can make more than that for a Friday-Sunday rental
If I had an investment house at the moment I would also only do holiday or airBNB rentals. The reality is local governments with all the new rental regulations have made permanent rentals completely undesirable. In providing renters with more rights and making them harder to kick out they have triggered an exit from that market.
Not sure, why the increase rate is determined as maximum as the annual inflation rates?
This is the law in so many countries when it comes the increase rates in rental properties, sheltering.
Because property ownership cost increases aren’t limited to CPI. As such, why should rent be capped at CPI?
If rents are capped, how is this fair for the landlord? If they are being placed at a disadvantage, what’s to say they won’t sell up, thus reducing the pool of available rental properties?
There’s many issues that come into play when you start introducing restriction of trade laws(such as capping rental increases) that you haven’t given a thought to.
Why should the tenant carry the burden of the ownership costs?
If it is too costly, owners can stay in their own houses. If it is an investment, why should they make profit regardless? You can lose money with any investment. Why should buying properties to rent out be an exception?
Its called a free market, supply and demand. Supply is low demand is high prices increase. Just like any business we get charged what the market will bear.
It goes both ways.
Why should a landlord provide you a house to live in at a loss?
No one is forcing tenants to live in the landlords home. If you aren’t happy with what they’re charging, you either negotiate or go elsewhere.
If there’s nowhere else, how is that the landlords problem?
No one here is suggesting that landlords can’t lose money.
@Extreme: I feel like you shouldnt promote homelessness, cos it is actually the consequence for some people.
Maybe there are better solutions for shelter which is a crucial human need.
@baldur: Feel however you want to feel. I don’t really care.
But the fact remains, homelessness and the lack of housing is a much larger issue. An issue that goes beyond tenants trying to blame individual landlords.
For the most part, responsible landlords play within the rules and follow laws.
Don’t hate the player, hate the game.
@baldur: It's not the landlords responsibilty to ensure you have a roof of your liking (including location and other conviences) over your head. It's also not your responsibility to ensure landlords mortgage is paid and rented out. But if you use (rent, borrow etc) someone else stuff, you're bound by the real owners terms (as long as it's within the law). Don't like the terms the landlord, car rental, hotel etc has set? buy your own.
yep and those countries have nearly all universally run into a huge rental problem with investors pulling out of the market.
The real skinny.
During years of historic low interest rates, lenders and brokers were all about "Don't plan on low rates forever, plan to be able to afford your mortgage at higher rates, maybe around 6%".
Then they lent the money.
Now interest rates are going up, the financial industry and mortgage holders are talking about it being the end of the world for affordability if interest rates hit 4.5%
What does that tell you about what was actually happening in the lending market on top of house price growth that means that interest payments on an $800000 mortgage (plenty of those given out on million dollar small family homes at 80:20) at now $47,040 P.A.
Utterly (profanity) for everybody not well down the road to paying their loan off, or mortgage free.
We are only just warming up. Reassess when interest rates hit double digits.
You’re on drugs if you think interest rates will hit double digits.
But if you’re right, that’s going to be a world of hurt, not only for landlords, but tenants too.
As always, it’ll be those at the top that can weather the storm that will benefit and those at the bottom of the food chain who will suffer the most.
"New rent on par with market rate". You answered your own question OP.
The mortgage payment on one of my loan accounts has gone from $370 per fortnight last month to $539 per fortnight this month. A 48% increase. It sucks but it's been cheap for a while and now has gone too far the other direction. It will normalise at some stage and then go up and down again.
Perhaps your land lord has had a similar increase, in which case only passing on half of their increase seems quite generous.
"normalise" might well mean 4 years above 4% or higher so hunker down depending on the fed/RBA pivot.
Just move out and find another place that you can afford.
Just move out and find another place that you can't afford.
Easier said than done when 100000 other people wanting a cheaper rental home.
When my rent went up 32%, every week for 1.5 months I was looking at 2-3 units and putting my application in. We are stable, we pay on time etc… but when 40+ people are at the inspection every time, it became a headache applying and we just decided to renew…..
Now I don't know if they were rent bidding, offering months in advance etc…… that will obviously contribute to the final decision on who the LL wants
If you can find a cheaper place then just move out
Landlord's mortgage/cost of capital will have increased by far more than $170/week.
If you are generous you can offer to pay a larger amount to help him or her out - perhaps $250/week extra?
Otherwise, the answer is yes - it is fair.
Landlord's mortgage/cost of capital will have increased by far more than $170/week.
When did the landlord purchase the property and what price did they purchase it for?
A property I bought for $252k 15 years ago has seen interest go from <$500/month to >$1100/month since September.
The property is now worth almost 3x what I bought it for, but capital growth doesn’t pay the bills.
Seriously, complaining about mortgage payments going up when your property has tripled in value, that is pathetic.
@Ghost47: So are you suggesting I should kick my tenants out onto the street and sell to an owner occupier?
Because that’s what’s happened over the past few years and has contributed towards the current rental crisis….
You’re also missing the point. If the rent still doesn’t cover my costs with an LVR <40%, how do you think those with larger loans on newly purchased property are going?
@Extreme: He's saying sell it to another guy who can afford those larger mortgage repayments so that guy can raise the rent.
@Extreme: I’m not suggesting anything except the fact you’re not seeing the forest for the trees. You’re complaining about paying more in payments when the value of the house has tripled. It’s a bit entitled to be honest.
I would expect that after 15 years for such a cheap property in an ever decreasing rate environment that you would be close to paying that place off. $252k isn’t much money at all these days.
@Yola: Can you elaborate on this please?
If that’s what they want and if they assumed rates would stay low forever that’s a risk they should have taken into consideration.
I’m not suggesting anything except the fact you’re not seeing the forest for the trees.
Isn't this the same as not seeing investors who have bitten off more than they can chew?
If the repayments have now far outweighed their abilities, having equity gains doesn't mean anything unless you sell.
Doesn't this mean that raising rent is a legitimate means to make ends meet?
that rise is perfectly normal.
when u realise interest rates have gone thru the roof, the landlord will need to cover some costs.
in addition, the reality is every open inspection has lines of 50 people waiting to inspect it.
this shows the supply the demand issue.
id expect a higher rise, i think you got lucky.
sorry for the bad news, i expect a few neg's on OZB cause ppl dont like the realists.
when u realise interest rates have gone thru the roof, the landlord will need to cover some costs.
Please do some reading, rents are not driven by interest rates, they are driven by supply and demand.
I don't know why people seem to think interest rates correlate with rent costs, if there were millions of vacant properties and rates increased, there would be an upper limit that landlords would be capped at because renters could simply find another property. But that is not the case, we are seeing in the major capitals (Sydney and Melbourne) that vacancy rates are very low, leading to increased competition between people to secure a rental property, leading to people willing to pay more than someone else for a roof over their head, leading to rent rises.
To suggest interest rates don’t have a part in the equation of wether a landlord decides to increase rent to market rates or not is just dumb.
If market rates go up, but interest rates stay down, a landlord is more likely to pass on the savings to good quality tenants.
A landlord that’s feeling the pinch from higher interest bills, is more likely to pass on rent increases to tenants.
If market rates go up, but interest rates stay down, a landlord is more likely to pass on the savings to good quality tenants.
A landlord that’s feeling the pinch from higher interest bills, is more likely to pass on rent increases to tenants.
Do you see the issue with your comment in the parts I italicised?
No? The issue is that you are talking from the landlord's perspective. Just because the landlord can pass on savings or increases doesn't mean that they will automatically have a tenant willing to pay whatever they are offering. If 50 landlords kept lowering their rent it means no one is biting because there is no demand.
You are missing the fact that tenants have very little choice as to what they can do right now because vacancy rates are so low and demand is so high. A tenant is going to think 500 times through the course of the week about whether or not they should pay the extra rent or move out because there is a high risk they could have to move further away from where they work (because the rents are cheaper further away from their workplace) or they may not even be able to find a rental anywhere near the price they are going to end up paying.
If there is 100 people going for 10 properties, of course the rate for those properties is going to increase because the demand is high. Just like how during COVID-19 (i.e. 2020 and 2021) there was no one coming to Australia, so rents in CBDs dropped because the demand was low.
You are completely ignoring the crux of the issue and that is supply and demand, not interest rates.
*whether
Lol three downvotes when I’ve provided evidence that rents are not dictated by interest rates but supply and demand.
Made it 2 for you. 😆
Honestly the higher my rents go the better quality of tenants I get. These people complaining about increase are the exact low life’s I wouldn’t want in my houses anyway.
@Ghost47: In my experience yes. I used to have some cheaper duplexes. The lower socioeconomic types in them were nothing but trouble for me.
My current rentals I’ve got people who have professional careers that look after the place like their own. Sometimes they even pay to get things fixed and don’t pass the cost on to me. The turn over is higher. Often they’re building or renovating their own places. I was fortunate to get in with a mining company and they rent one of my houses for their executives that seem to be expats. The tenants change but the rent is paid on time every time by the company.
"New rent on par with market rate then. I am not on a current lease. Is that fair or normal?"
I mean… Is it normal for rent to be at the market rate? That is what the "market rate" is.
Yes. It is both fair and normal.
that's what u get
A controlled market rate is a good market rate
An out of control market rate is a bad market rate
Government Solution: Yeah, let's take in another 700,000 immigrants
New rent on par with market rate then. I am not on a current lease. Is that fair or normal?
It is fair and normal.
There are people that milk renter's rights to death . And if any of OZB landlord's run into them it will at least wipe out your rent dough. Especially in some special states . Add good luck getting rid of them .
They actually don’t need to provide anything other than notice for the increase.
It’s up to the tenant to dispute the increase if the tenant feels it’s excessive. If the tenant feels the increase is excessive, it’s up to the tenant to prove so.
It’s not up to the landlord to support an increase as being reasonable. However, an NCAT member may require them to do so at a hearing. That doesn’t mean the landlord needs to justify the increase to the tenant tho.
I missed OP mentioning they were in Sydney. Looked it up and you are absolutely right
I was commenting from my experience in Vic.
OP ignore my comment
If you disagree with the rental increase and believe you are overpaying, then you can give 21 days notice to leave and find another place.
But from if you can't find another place at a cheaper rate and also go through the hassle of moving, I would just stay put and accept the rental increase.
It is a free market after all, there is no point fighting it out, it will only burn bridge for everyone. Vote with your feet if you disagree.
Sucks to be trapped in the rental market of Sydney. Only going to get worse. Eventually people who aren’t home owners will either live in poverty or move. Or maybe they’ll build enough appartments.
Prices will push people further west.
The world is more divided by the Haves and the Haves not.
Yes and those who get an inheritance from parents that have properties and those that don’t.
If you are interested in staying, you can try to negotiate. The cost of getting new tenants will be letting fee + ad + some number days for vacancy.
Let's say your landlord want $850 per week and the ad is roughly $450. Agent might charge 1.5-2 weeks for letting fee, so the total cost to get a new tenant is about 1700-2100. Ask the landlord to cut $40/week and you sign another 1 year extension. Both parties will be happy, he/she doesn't get risk of vacancy, you get a slightly cheaper rent. I think that is probably the most reasonable approach. Explain your calculation
Worth a try to negotiate a lower rate. Investments are a risk. A good tenant lowers the risk.