In order to be successful, your property portfolio has to be sustainable. And sustainability depends largely on adequately consistent cashflow.

Essentially, you need your asset(s) to generate enough return to minimise any shortfall between your investment’s incomings and outgoings.

One way to achieve this, is by ensuring you keep on top of the local rental market at all times, conducting annual rent reviews and adjusting your returns in line with market trends.

How often can and should I review rents?

Rent reviews should logically coincide with an evaluation of your property investment portfolio, and therefore be conducted annually at the very least.

As each financial year ticks over, assess the past 12 months’ performance of your asset(s) to make sure you’re still on track to meet your investment objectives.

In Queensland, the laws around how and when a rent review can be conducted are as follows:

•    No rent increase is permitted during a fixed term agreement, unless specified in the lease. But an increase can be made during a periodic agreement as long as the tenant is notified in writing 2 months beforehand.
•    If provision is made for a rent increase within the terms of a fixed agreement, the tenant must receive 2 months notice in writing prior to the increase taking effect.
•    Rent cannot be increased more than once every six months.
•    Rent can be increased at the end of a fixed term agreement – i.e. after the expiration of a 6 or 12-month contract (in between tenancies).
•    Tenants have the right to dispute any proposed rent increase if they believe it’s excessive, by speaking with the property manager or landlord, or signing the new agreement and then applying for a dispute resolution.
•    The bond can be increased in line with a rent review (and the additional amount lodged with the RTA), provided it’s at least 11 months since the commencement of the tenancy or a previous bond increase. 

Source: Residential Tenancies Authority

The importance of a pro-active property manager 

Each rent review is an opportunity to further consolidate your investment cashflow.

As such, it’s essential that your property manager maintains a close watch over vacancy rates and comparable rentals in your area, communicating regularly to advise if they feel an increase is warranted.

At Rental Express, we evaluate your property investment(s) on the renewal of each tenancy, with extensive consideration of local stock levels, average vacancy periods and yields and comparable properties, in order to maximise your returns.

A good property manager will contact you well before any proposed increase to advise what your best option might be, talking you through the review process so you can rest assured their advice is based on a meticulous assessment of market fundamentals. 

A fine line…

While you have every right to enforce rental increases (within the relevant parameters of the Act), getting too greedy could potentially alienate desirable tenants.

For this reason, your property manager needs to guide you when weighing up whether gaining that bit of extra income in the short term, could see you lose out as your property sits vacant and unlettable.

By nurturing a positive relationship with your tenants, responding promptly to genuine maintenance issues and showing some flexibility when it comes to things like pets at the premises, they’ll be less likely to balk at a rent increase.  

Food for thought next time your property manager calls to pass on a request for installation of a split system air conditioner on a 40-degree plus day!

Demonstrating empathy for your tenants can make all the difference to how a proposed upward adjustment to the rent they’re paying is received. 

The competition

Whenever a lease expires and your investment property hits the market, it’s essential that your expectations are realistic, in respect of comparable vacant properties.

Common sense suggests that lower vacancy rates mean the potential to ask for a little bit more from the market.

Whereas vacancy rates trending above say 3 or 4%, mean higher local property supply levels and the need to tread carefully, so you don’t get left with an asset sitting empty for months at a time.

As the conduit between you and your tenants, Rental Express understands the need to sensitively negotiate rent increases, ensuring you get the best possible return on your property investment while retaining quality tenants for your asset. It’s all about getting the balance just right. 

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