Balancing act: should you increase your property’s rent?


Perth’s rising rents have been a hot topic in recent months, with median rents climbing over 10% across 2021 according to property research firm, CoreLogic.

While this is a great opportunity to maximise the performance of your investment, adjusting your rents can  be a fine balancing act between meeting market conditions and retaining good tenants who value and care for your property.

So, why does it pay to keep good tenants? And how can you ensure you strike the right balance between these two essential factors?

Why it pays to keep good tenants

1. Reduced maintenance costs 

A good tenant who looks after your property will help minimise the cost of ongoing maintenance and repairs, and reduce the likelihood of damage to your investment.

These are all factors which contribute to healthier long-term returns and help to preserve the overall value of your property.

If you have had the same tenant for an extended period, then it is likely they may want to stay well into the future which can also help minimise vacancy periods moving forward.

2. No vacancy periods

Even in today’s tight rental conditions, getting a new tenant for your property may not happen overnight.

If it’s been some time since you last leased the property, there are aspects you may need to consider before advertising to new tenants, such as whether you need to make any additions or improvements to re-align your property to evolving market demands.

Not only does this mean you may have to outlay some capital to have these features added, you also need to factor in the time the property might be vacant before you’re able to onboard new tenants.

3. Avoid the costs of re-leasing

As well as considering the potential for lost income while your property is vacant, you also need to factor in the costs associated with re-leasing your property.

If your property is managed by a professional property manager, you will need to consider their letting fees, which are often equivalent to one to three weeks of rent. You will also need to cover the marketing costs required to help promote your property, which might include photography and online advertising.

All of these processes will cost you money directly from your pocket. While you will be benefitting from a higher rental income, it is important to understand how much these initial costs can eat into your extra returns so you can make an informed decision.

The best of both worlds – raising the rent and keeping the tenants?

As we’ve outlined above, sometimes it can make sense to keep the current tenants that you have, but that doesn’t mean that you need to miss out on increased rent altogether.

A good property manager will be able to work with your tenants and can come up with solutions that suit both parties. One common practice is to incorporate rental increase clauses into lease agreements.

Instead of dramatically increasing the asking rental price upfront, rental increase clauses allow for rental increases after six months, something that can benefit both the landlord and the tenant while keeping your property in line with changing market conditions.

Landlords will benefit from the increased rental returns that align with movements in the broader market, and tenants will be able to remain in a property they are happy with while having time to prepare for the increase in rental payments.

Despite the misconception, many landlords value the tenants they have and are happy to make compromises to keep both parties happy and satisfied. If you’re questioning how to adjust your rental strategy for current market conditions, or you’d like to discuss recent trends in the rental market, contact our property managers for more information.


Subscribe to get our expert insights delivered straight to your inbox.

Newsletter Subscription

  • This field is for validation purposes and should be left unchanged.