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AU Real Estate Q&A: Should I increase rent on my investment property this year?

Property Here - Tuesday, June 18, 2013

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I'm a landlord with good tenants in my investment property. Their lease will need to be renewed soon. Generally I increase their rent by $10 per year. Should I do so in the current economic climate?

Brett Wheatland, Senior Property Manager, LJ Hooker Glenelg:

Living costs have driven down the demand for rental properties and tightened returns. It would be wise to keep the status quo in the interim, to help secure your current tenants for a further 12 months. To potentially lose a good tenant and a reliable income stream, all for the sake of $10 a week, wouldn't be the best investment decision in the current economic climate. An increase in rent would only be warranted if your property was rented out well below its market rate, which is something only a qualified property manager could independently assess for you.

Sandra Westley, of Raine & Horne - Morphett Vale:

Answer: Some areas and types of properties are easier to rent than others. If rent goes up the tenant can move out if he can't afford the higher rent.

Then we have an empty property, possibly which is going to take a good four or so weeks to re-rent. Loss of rent would be greater than the $10 per week increase.

Due to the fact the tenant is good we would suggest a $5 increase would be best in this economic climate.

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