<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=275984476158575&amp;ev=PageView&amp;noscript=1">

5 questions to ask before you raise the rent

Rental Property Property Management Landlords

Property Brokers 20 Mar 2018


Increasing the rent of a rental property is fairly standard practice. However, it’s not always a question of whether you can up the rent, but whether you should. Here are five questions to help you sense-check your next rent raise:


1. Is it legal?

First things first, are you legally allowed to raise the rent rate? The New Zealand Residential Tenancies Act states that a landlord can only increase rent:


  • If their tenancy agreement permits it.

  • After the first 180 days of the tenancy.

  • After 180 days has passed since the last increase.


As part of the rent increase, you must also provide written notice to your tenant, along with the amount of the increase and the date when the new rent comes into effect. This date must not be within 60 days (or 28 days if it’s a boarding house) of your written notice.

See more at: Increasing Rent — TenancyServices


2. What changes have you made?

Upgrades to the property are one of the most common reasons for increasing the rent. However, it’s important to make the distinction between maintenance and upgrades. Repainting your property, for example, is not an upgrade; it’s maintenance and as such, doesn’t justify a rent increase. However, modernising a dated 1960s kitchen does. You not only significantly improve the property, but the upgrade is something the tenant will value.

If you’re about to increase the rent due to work you’ve done on the property, consider whether you’ve actually improved your rental, and whether that improvement matters to your tenant.



3. What are other similar properties charging?

How many other rentals like yours are in the neighbourhood and what are they charging? Speaking to a local property manager and researching the rental market in your suburb will help you keep in line with the current market rent rates. Going too far over the current rate is an invitation for your tenants to start looking elsewhere—including that competing property down the road.

As a rule, small regular increases are better than large, infrequent ones. A $10 per week increase twice a year is easier for tenants to budget than a $40 jump every two.


See more: Find the Market Rent in Your Area —TenancyServices


4. Do you risk losing your tenant?

Before you issue a rent increase notice, consider whether you risk losing your tenant. Is that extra $10 a week worth the cost of a vacant rental and the financial outlay of marketing and screening tenants to fill it? It comes down to cost versus benefit. Many landlords are willing to rent at below market rent to keep on a good tenant.

In cases where the rent increase is significant, tenants may also apply to the Tenancy Tribunal to end the tenancy early—which depending on the type of lease agreement and the tribunal’s ruling, may relieve them of any financial obligation to cover lost rent or advertising costs for a new tenant.



5. Is your tenant happy?

A rent increase is often not the sole reason for a tenant to pack up and leave. When you’re thinking of reviewing the rent, take the tenant’s situation into account. Are they in hardship—financial or otherwise? Are they satisfied with the property, or have they had unresolved issues with it? Happy tenants are more inclined to absorb the increase and stay at the property. However, in the case of an unhappy tenant, a rent increase may be the final straw.

If you have a property manager, they may also provide useful insights into your tenant’s situation and can offer guidance on increasing the rent without losing your tenants in the process.

Want to maximise the return on your rental? Uncover some of our best renovation advice on the market in our new eBook: Renovating for Maximum Rental Return.


Download now