Our job as Property Managers is to ensure that the rent charged for a rental property is kept at a maximum amount. So how is this amount determined?
First and foremost is what the market will pay for the property. This is the pool of tenants actively seeking a new rental property at that time. This demand does vary according to a number of different factors, mainly driven by ‘supply and demand’.
Once it is determined what market rent can be obtained for the property comparing it with other comparable properties available in the area, the next factor to be considered is the tenancies legislation. Will the lease allow for a rent increase?
If the lease is in a non-fixed term, notice must be given to the tenant. If it is a fixed term lease (usually only done on a 12 month lease), then care must be taken to ensure a rent increase clause is available in the lease that allows for an increase mid-term. If this is determined, further care must be taken to ensure enough time has elapsed since the start, and the correct notice is given. If the lease is due for renewal, a new rent increase amount is easily done.