Property
Issue No. 40 - April/ /
Good tenants too good to lose
by Pamela Brombal
With interest rates hitting a 12-year high, high purchase prices for SA properties and rental vacancy rates very low, landlords may look to recover costs by raising rents.
But Carolyn Majda, Marketing and Operations Manager at Terri Scheer Insurance Brokers, says landlords who raise their rents too high risk losing good long-term tenants.
Carolyn warns landlords not to take their tenants for granted.
“Rising interest rates are likely to be taken into consideration by landlords when leases on their properties come up for renewal,” she says.
“It’s understandable that landlords may need to raise their rents to keep pace with rising costs.
“However, financial considerations should be balanced against the importance of keeping good tenants in a property.
“Unreasonably high rent increases may prompt the angry departure of good long-term tenants, leaving empty rental properties generating no income for weeks.”
Carolyn observes the Adelaide rental market has eased recently with the vacancy rate increasing to 1.6% in January.
Real Estate Institute of SA President, Robin Turner says tenants are regaining some control of the rental market by refusing to pay the high rents some landlords are seeking.
“Most of the properties which are vacant at the moment are above $350 per week.” Robin says.
“At the same time, other properties are easily attracting 10 or more applications and have huge tenant enquiry, so there are definitely two ends of the market at the moment.”
While it is difficult to determine how much is too much in a rent hike, Carolyn says any increase should be fair and reasonable and considered in light of the risk of a good tenant leaving if they can’t pay the increased rent.
“For example, it would be difficult for a landlord to justify a $20 week increase if an interest rate increase only adds $50 a month to the landlord’s mortgage,” she says.
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