Unfortunately, some tenants believe that a rent increase is a kick in the guts after all the hard work they’ve done to keep the property in good condition and always paying the rent on time. But the honest truth is, it’s just a part of living. Everything goes up.

The trick is to provide them value and reason to keep living in your property. This is how we do it.

Good Tenants Stay with Good Property Managers/Owners

Good tenants are those who always pay the rent on time, easy to deal with and look after your property with great care. These are not rare qualities, but they are valuable. When good tenants hand you notice that they are moving out over a rent increase, you not only lose the income while the property is vacant, you have to deal preparing the house for inspections, advertise the property, schedule inspections and screen new tenants.

The first step to avoiding the loss of tenants over a rent increase is to make the tenant’s renting experience the best it can be. Of course, you need to begin giving value long before it is time for an increase. This means providing a clean and comfortable house, and to stay on top of maintenance issues as they occur. Be responsive to your tenant’s needs, communicate well and ensure that you are available when they have an issue.

A reasonable rent increase alone is usually not enough to cause tenants to move. Being a responsive and responsible property owner or manager who looks after the property to give tenants the best value takes this factor off the table. However, there are still times when the tenants see a rent increase as a reason to move. If this is the case, there are still a few things that the property owner can do.

Educate Tenants on the Current Market

Education is the key! When discussing rent increases with the tenants it is always a good to let them know what is happening in the market, what local properties have recently rented for and the current trend that is happening.  Below is chart showing the current rent increase trend.  If you can show to your tenant that you are increasing the rent however keeping under market averages it will feel like a win to them.

Remind Them That Staying is Cheaper Than Going

It is very important to ensure that your rent increase really is reasonable. In part, this means increasing the rent a small amount on an annual basis. The most important factor is to keep track of the rental rates in your area. If your tenants are paying a higher rent to similar properties in your area currently up for rent on realestate.com.au, your tenants really do have a good reason to consider moving.

If you are indeed giving your tenants good value, you may need to point out to them the costs that they will have to deal with if they do move. They will need to be ready to pay move in costs for their new home, which will include first two weeks rent and a 4 week rent security bond. There will also be utility connection and moving costs that is sure to be a minimum of $2,000 for typical local move.

The most convincing case for staying usually comes down to numbers. Point out to your tenants how small your rent increase actually is. If they are paying $400/week, a 5% rent increase is only $20/week which comes to $1040 annually. They will end up spending more than this just on the move alone.

There’s Always Room for Negotiation After the Rent Increase

If you feel there is a possibility that your tenants are considering moving out, a polite phone call or email outlining these factors is not out of line. Don’t forget that even after you’ve sent a rent increase notice and you’ve had the conversation about costs, there is still room for negotiation. You may come to an agreement to reduce the increase slightly, but increase the lease term for another year or two.

Some tenants have other reasons than increasing rent for moving, but if they are planning to stay in the area for a while, you may consider offering them a longer term lease. This eliminates any “surprises” of rent increases for the tenant. The best part for you is knowing your property will be occupied for the duration of the lease.

Negotiation Tip: Find out their actual reason for moving before negotiating. Then, look for a win-win result for both of you.

If you are considering your next rent increase however don’t want to lose your good long term tenant then give our team a call, we would love to assist.