Is now a good or bad time to increase the rent?
The rental market in Perth has changed considerably over the past 12 months. An extremely tight market, where rents increased more than 10 percent annually, has now been replaced by a far more balanced one.
One of the biggest changes has been the fact that the number of properties available for rent has been steadily increasing, with the Perth vacancy rate sitting just over 3 percent.
Why the slowdown? There are a few reasons. With historically low interest rates, many renters have decided to buy rather than rent, reducing the pool of potential tenants. The slowdown in mining investment has also had a flow-on affect on the rental market, but predominately at the upper end.
With more properties available for rent, tenants now have a greater choice than before and landlords must react accordingly. If you have a vacant property, you must be careful not to make your property uncompetitive in the marketplace. Your Property Manager should provide you with a plan outlining what the competition is, what the market rent is and what improvements and or lease conditions can be offered to minimise the vacancy period.
What about if you are renegotiating a new lease with an existing tenant? Again, if you price the property too much above the market rate then you risk the tenant deciding to leave. A vacant property can be costly, so you’ll need to consider the current market conditions to see if an increase is warranted.
The market is constantly changing and conditions can vary dramatically from area to area, so it’s best to rely on the advice of your property manager to set the correct market rent. A good property manager will always be able to show you evidence of whether or not an increase is supported by the market and what can be done to the property to make it competitive and appealing to tenants.