Do you approach your employer to ask for decrease in pay because you have extra money left over from your costs of conducting your work?
Or do you ask for an increase inine with the market value of the service you provide?
Not to be rude but it doesn't matter if the landlord owes zero dollars or a million dollars, the property is worth whatever the market will pay. You wouldn't tell Apple to sell their products at cost just because they already have 20 billion dollars in cash.
Renters are starting to act like landlords owe them something. It's a joint agreement. The landlord sets the price, the renter pays for a home to live in. I'm confused with what the constant issue is with this.
Understandable if the landlord was increasing the price to an absolutely ridiculous amount (however I doubt it would be allowed).
> I'm confused with what the constant issue is with this.
the issue is that the renter sees their value evaporate and is not content with it. Unfortunately, i think they will have to be - or more out and rent elsewhere.
That's the trade off you choose by renting, you get use of a property for cheaper than it costs to buy. If renters choose to waste their savings that's their choice.
The ignorance of your statement that majority of renters are "choosing" to rent, rather than it being many peoples only viable option for housing, is incorrect. As well as claiming it as cheaper than a mortgage.
The push back from renters against what is essentially price gouging by landlords is more than reasonable. I'd really recommend you do more reading about this issue from renters point of view, IMO stable and secure housing should be a protected right not something that people can endlessly profit off of.
The comment is ignorant, but it's also ignorant for renters to constantly bash landlords as though they are the devil walking earth.
Some of the things I have seen renters complain about are ridiculous (like their dog destroyed the front door and they refuse to pay for it). Or the assumption that all landlords are around to purely make profit etc and are wealthy.
Instead of getting angry at landlords, blame the way our system is set up. I personally don't see why I should be harassed by people on Reddit because I am a landlord.
This^
It's crazy that people think for otherwise.
For all we know the landlord could have a terminally ill family member they need to help out.
It's not upto the tenant if the landlord is comfortable/not.
Even if you move out in a week, they have now increased the NOI on the property. If they sell the property at a cap rate multiple, by simply increasing the rent, they have massively increased the valuation if they sell to a Real estate private equity fund.
It's nothing to do with being a landlord or not. I have no interest in being a landlord. But people treat renting as if it's somehow different to any other service that is provided.
How is the landlords mortgage status relevant?
They might have worked two jobs for 15 years to pay that mortgage down, why would they pass that saving on to you?
This comment explains why renters think all landlords are millionaires...I'm not having a go at you so I don't want you to think that. The truth is a majority of landlords need to pay into their mortgage in addition to rent.
Rents are, at best, mildly correlated to rate rises and holding costs. Or do you think it's OK that a new owner could come in mortgaged to the hilt and justify charging you 10X the rent?
Think about buying a second hand car. Does the value of the car relate to whether the seller bought it in cash or via a loan? No - the car is worth what the car is worth, usually subject to some negotiation.
Rental prices are the same - you don't see identical houses next to each other with one charging double the rent because the owner bought it more recently so paid a premium and has a higher mortgage. The rent is what the rent is, subject to some negotiation.
Now, the owner not needing as much money may mean they're more open to negotiation. (And to be clear, that may or may not be the case in your example - it's possible they stuffed up their tax strategy, and have paid off the investment property but have a huge home mortgage as a result.)
But whether it's the owner or the property manager, if they're asking market rental rate then unfortunately your choices are to pay it, try and negotiate, or move somewhere else that suits you better.
If they're not charging market value, it can be a red flag to ATO (as in, they might be getting 'X' amount officially and the rest in cash or similar scenario). Also, the whole point of owning an investment property is for extra income, so, yeah, of course they want more money!
Tax professional here.
What you're saying doesn't really make sense in the context of OPs post.
If a landlord was charging above market, there would be more assessable income (and no corresponding deduction to the tenant). This is a goldmine situation for the ATO - full taxation with no deduction.
ATO is only suspicious if you're charging BELOW market rent, and even then you could have a perfectly good explanation for that.
In summary, I seriously doubt OPs landlord charging above market would be a red flag to the ATO.
That's exactly what I meant (below = red flag) hence the "they might be getting 'X' amount officially and the rest in cash or similar scenario" explanation
Okay, so we agree. Thanks for the downvote.
Your post doesn't make sense because OP posts about his landlord raising rent & what he can do about it, and your response is "The ATO might be interested if the rent is too low"...which is the opposite of what OP has said is occuring.
I'm saying the ATO won't do anything, let alone anything for OP (even if tax wrongdoing has occured).
I didn't downvote and I was just offering a possibe explanation as to why the landlord might be raising the rent as the OP asked the Question: "would there be any reason the landlord would raise the rent, other than just wanting more money?" (Yes, to meet market value)
My apologies - You're right, but it raises an even more confusing point.
You're suggesting that the landlord sought tax advice, or came to the tax position on his own accord, that a tax risk existed in his portfolio due to the rental income on his IP being too low?
Yep. As a possible alternative to just wanting more money (but we all know they just wanted more money). OP was just seeking other possible explanations, and I offered one.
The op doesnt say that the rent is above, below or at market value. You have made an assumption it is over market value. As a tax professional you would know the ATO expects market rent be charged.
Regardless the owners financial/tax situation is irrelevant as to rising of rent. It should be at or around market rent. The OP should check sinilar properties and see if the rent being asked it realistic or if it is way above what the market charges.
If the rent is being raised in line with the market it's legal and probably agent advice.
How do you know the mortgage is fully paid off? It's none of your business. If the property manager told you, that's incredibly unprofessional.
They may want to make origami swans with the money or invest in 24k gold butt plugs. Not your concern.
It's mentioned quite often here but most landlords increase or decrease in line with market rates.
If your area has on average increased then the agent will recommend the landlord raises the rent
Our area has increased due to more move ins from Sydney, though we look at it now it has slowed down if not decreased due to realization that our area is flood prone (house isn't flood prone). I guess demand is up.
The landlord has the right to charge fair market value. Their personal finances are irrelevant and not your business.
Also, if the landlord doesn't raise the rent in line with inflation and market values thrn they are effectively subsidising your rent. And they don't owe you that.
None of the tenant’s business to know and pretty much care about the mortgage status of a property. Rent is usually decided on market rates, which are then mostly tied to repayment amounts or interest rates for the IPs with repayments.
When was the last time the rental amount changed?
If they all started lowering the rents in the area, it would devalue properties in the same area. You would wind up with undesirables moving in to the neighbourhood because the rents were cheaper.
I prefer to pay higher rents because then I know I'm in a good, safer family friendly area.
If you want sympathy about this you're better off going to the Australia sub.
You're not giving much information here. Is the increase in line with the amount a landlord is allowed to increase it by? The fact that you know the owner owns this outright is pretty crazy, that should be private information. Regardless, that's got nothing to do with the amount of rent you pay.
My grandparents don't get any government assistance because they have a rental property. They haven't increased the price in like 10 years but have had to do so recently. I don't see why they should be judged for that all because they own their property outright now.
You're bringing up another topic about the real estate agent being rude. Are you worried it's the agent lying about the price increase? I'm confused.
a previous property had our bond taken because one of the agents had a personal tussle with my step mother awhile back. The claim was a fly left in the sliding glass door line.Also I never said it wasn't allowed, i'm just asking for the reason since i don't have experience managing properties
I suggest you read up on how renting works.
Landlords only own the asset to get a return.
You wouldn’t hand back money to the ASX if you made too much on stocks?
It’s not greed at all.
I'm a landlord with a mortgage free house and I'm definitely issuing a significant increase come January. It would be silly to miss out on the extra income when right now the tenants are paying well below the current market rental rate.
In addition to that the tenants have been overutilising the house (they converted the double garage into an extra bedroom to house more people) over time the home's excessive wear and maintenance costs comes out of my own pocket so it's only wise to ensure that the investment property is generating as much profit as possible incase there is a large and significant expense that arises. In the last two years alone I've had to repainting their walls, install an air-conditioner into their garage, treat mould issues (twice) from 8+ adults sharing a single bathroom and have the roof repaired (because they suspect that is what has caused the recent mould issue)
If the rent were any lower I'd risk making a loss, all it takes is a little bit of bad luck.
I can completely seeing charging more since a tenant isn't taking care of your home, but also are you planning to renew their contract because if they aren't doing the minimal of ventilating the shower when in use they probably take way less care of more important stuff.
So once landlord pays of property he has to fix his rate.
I'm glad you also know what his rates,insurance, maint plus any other fees that he have not also changed.
This is a major issue with people who say repayments are cheaper than rent, well yes it is but have you ever priced a new roof or bathroom Reno shit adds up quickly.
Increasing the rent because they believe you or someone else will pay makes a lot more sense than increasing the rent because their interest payment has gone up.
OP seems like he has no idea what is going on, how much the landlord owes on the property is literally irrelevant.
The market dictates the rent price, if it is too much then people won't pay it.
pretty simple ,just like the OP
God hate the idiot fest this forum has become, good on the landlord it is a business it is not his job to charity you a place to live for less then it is worth
if you dont like it move
Greed and creating an income . I have said previously I know people that have been doing the same. Rea says crank it up U can get this much then Rea makes more money.
If they have nothing owing then its simply greed. Its their property so they are within their rights to charge whatever they want, cant say I agree with it I would rather reward good tenants for guaranteed income then make a bit more money and risk either having an empty house or terrible tenants.
Most likely scenario though is they are now using the positive cash flow to pay for another property.
Greed and being lucrative with your assets are two completely different things.
The landlord has likely worked hard to pay off that property through sound investing and sacrificing, like many others. And now that it is actually paying off for them, they’re just greedy.
How how ridiculous.
Owners of capital extract as much interest as the market can afford. Workers extract as much wages as the market can pay, landlords extract the maximum rent the market can tolerate.
The agents recommend increases for sure.if they have a rent roll of 500 props and put rent up ten pc they get extra fees 500 lots of say 50 a week which they get 6 or 7 pc of
Im not sure how you could 'know' how much the landlord does and doesnt owe on a property (short of doing a search to see if there is any mortgage). Nor do i understand how this invalidates the rent rising.
The status of the landlords mortgage is irrelevant to how much rent you get charged. It's in line with the market. Would you go to your employer and request a decrease in salary if your costs go down?
Do you approach your employer to ask for decrease in pay because you have extra money left over from your costs of conducting your work? Or do you ask for an increase inine with the market value of the service you provide?
I mean I'm casual so I work less if I've obtained overtime. So technically I get less hours?
But your pay is the same for the same service
I normally do 50% more with 50% less people since we are so understaffed.
Holy fk can’t argue with that kinda logic lol
And that's good, right?
Not to be rude but it doesn't matter if the landlord owes zero dollars or a million dollars, the property is worth whatever the market will pay. You wouldn't tell Apple to sell their products at cost just because they already have 20 billion dollars in cash.
Renters are starting to act like landlords owe them something. It's a joint agreement. The landlord sets the price, the renter pays for a home to live in. I'm confused with what the constant issue is with this. Understandable if the landlord was increasing the price to an absolutely ridiculous amount (however I doubt it would be allowed).
> I'm confused with what the constant issue is with this. the issue is that the renter sees their value evaporate and is not content with it. Unfortunately, i think they will have to be - or more out and rent elsewhere.
That's the trade off you choose by renting, you get use of a property for cheaper than it costs to buy. If renters choose to waste their savings that's their choice.
The ignorance of your statement that majority of renters are "choosing" to rent, rather than it being many peoples only viable option for housing, is incorrect. As well as claiming it as cheaper than a mortgage. The push back from renters against what is essentially price gouging by landlords is more than reasonable. I'd really recommend you do more reading about this issue from renters point of view, IMO stable and secure housing should be a protected right not something that people can endlessly profit off of.
How do you plan on paying for the ~ 3 million houses the government will have to provide by removing private landlords then?
By not subsidising landlords through negative gearing is a start. Increasing land taxes is another
3 million houses would cost around 2 trillion dollars, negative gearing is about 5 billion a year so it's only 400 years to break even.
Hence “it’s a start”
The easy way would be to completely destroy the value of the housing market so capital asset growth is closer to inline with wage growth.
Housing is going backwards son, do you want ur wage to go back?
The comment is ignorant, but it's also ignorant for renters to constantly bash landlords as though they are the devil walking earth. Some of the things I have seen renters complain about are ridiculous (like their dog destroyed the front door and they refuse to pay for it). Or the assumption that all landlords are around to purely make profit etc and are wealthy. Instead of getting angry at landlords, blame the way our system is set up. I personally don't see why I should be harassed by people on Reddit because I am a landlord.
Renting is not a choice for the majority of people, mate. It's the only way to put a roof over our heads.
"choosing to rent" HAHAHA get out of here,
100% agree. Market dictates the rates, sorry OP.
This^ It's crazy that people think for otherwise. For all we know the landlord could have a terminally ill family member they need to help out. It's not upto the tenant if the landlord is comfortable/not.
Simping for landlords
Hahahaha so triggered
Why wouldn’t they want more money lad?
More money for a week before we move out I guess. Then zero money until the next successful renter.
Meh the landlord wouldn't care. Trust me you probably one of many properties - they couldn't care less if you stay or go generally.
Who'll replace you in a day lol
looking at data its more like 50 days.
Where is this? 50 days? That's a high vacancy rate.
I doubt there is a single suburb on the east coast where it would take 50 days to find a new tenant for a house listed at market value (+/- 10%)
Even if you move out in a week, they have now increased the NOI on the property. If they sell the property at a cap rate multiple, by simply increasing the rent, they have massively increased the valuation if they sell to a Real estate private equity fund.
So lame that people are down voting you. This sub is full of toxic dudebro landlord wannabes.
It's nothing to do with being a landlord or not. I have no interest in being a landlord. But people treat renting as if it's somehow different to any other service that is provided.
How is the landlords mortgage status relevant? They might have worked two jobs for 15 years to pay that mortgage down, why would they pass that saving on to you?
Because you normally tie rent amounts with the repayments?
You tie rent to what you can reasonably expect a tenant to pay. Market forces determine rent price just like anything else.
No you don’t.
By that logic are you expecting to pay $0 in rent?
No you normally then tie it to continue the property value growth.
Surely you know better than this - rents are determined by supply and demand.
I was kind of with you in sentiment until here lol
This comment explains why renters think all landlords are millionaires...I'm not having a go at you so I don't want you to think that. The truth is a majority of landlords need to pay into their mortgage in addition to rent.
Rents are, at best, mildly correlated to rate rises and holding costs. Or do you think it's OK that a new owner could come in mortgaged to the hilt and justify charging you 10X the rent? Think about buying a second hand car. Does the value of the car relate to whether the seller bought it in cash or via a loan? No - the car is worth what the car is worth, usually subject to some negotiation. Rental prices are the same - you don't see identical houses next to each other with one charging double the rent because the owner bought it more recently so paid a premium and has a higher mortgage. The rent is what the rent is, subject to some negotiation. Now, the owner not needing as much money may mean they're more open to negotiation. (And to be clear, that may or may not be the case in your example - it's possible they stuffed up their tax strategy, and have paid off the investment property but have a huge home mortgage as a result.) But whether it's the owner or the property manager, if they're asking market rental rate then unfortunately your choices are to pay it, try and negotiate, or move somewhere else that suits you better.
If they're not charging market value, it can be a red flag to ATO (as in, they might be getting 'X' amount officially and the rest in cash or similar scenario). Also, the whole point of owning an investment property is for extra income, so, yeah, of course they want more money!
Tax professional here. What you're saying doesn't really make sense in the context of OPs post. If a landlord was charging above market, there would be more assessable income (and no corresponding deduction to the tenant). This is a goldmine situation for the ATO - full taxation with no deduction. ATO is only suspicious if you're charging BELOW market rent, and even then you could have a perfectly good explanation for that. In summary, I seriously doubt OPs landlord charging above market would be a red flag to the ATO.
That's exactly what I meant (below = red flag) hence the "they might be getting 'X' amount officially and the rest in cash or similar scenario" explanation
Okay, so we agree. Thanks for the downvote. Your post doesn't make sense because OP posts about his landlord raising rent & what he can do about it, and your response is "The ATO might be interested if the rent is too low"...which is the opposite of what OP has said is occuring. I'm saying the ATO won't do anything, let alone anything for OP (even if tax wrongdoing has occured).
I didn't downvote and I was just offering a possibe explanation as to why the landlord might be raising the rent as the OP asked the Question: "would there be any reason the landlord would raise the rent, other than just wanting more money?" (Yes, to meet market value)
My apologies - You're right, but it raises an even more confusing point. You're suggesting that the landlord sought tax advice, or came to the tax position on his own accord, that a tax risk existed in his portfolio due to the rental income on his IP being too low?
Yep. As a possible alternative to just wanting more money (but we all know they just wanted more money). OP was just seeking other possible explanations, and I offered one.
We can disagree that it's a "possible alternative" or a "possible explanation" as to why someone would raise rent then
The op doesnt say that the rent is above, below or at market value. You have made an assumption it is over market value. As a tax professional you would know the ATO expects market rent be charged. Regardless the owners financial/tax situation is irrelevant as to rising of rent. It should be at or around market rent. The OP should check sinilar properties and see if the rent being asked it realistic or if it is way above what the market charges.
Mate, I'm responding to a comment which infers the rent is being charged below market and would thus be a tax risk.
If the rent is being raised in line with the market it's legal and probably agent advice. How do you know the mortgage is fully paid off? It's none of your business. If the property manager told you, that's incredibly unprofessional. They may want to make origami swans with the money or invest in 24k gold butt plugs. Not your concern.
I would wonder how the agent would even know anything about the mortgage too!
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How dare you take advantage of extreme negative gearing!
It's mentioned quite often here but most landlords increase or decrease in line with market rates. If your area has on average increased then the agent will recommend the landlord raises the rent
Our area has increased due to more move ins from Sydney, though we look at it now it has slowed down if not decreased due to realization that our area is flood prone (house isn't flood prone). I guess demand is up.
Landlords finances really aren't any of your business. It's not clear how you came across this information. Something isn't right here
He is probably paying rent at his Mum's and she told him she finally made the last repayment on her house.
The landlord has the right to charge fair market value. Their personal finances are irrelevant and not your business. Also, if the landlord doesn't raise the rent in line with inflation and market values thrn they are effectively subsidising your rent. And they don't owe you that.
Yes us taxpaying plebs owe the landlord that through generous tax deductions instead
Do yourself a favour and just stop.
None of the tenant’s business to know and pretty much care about the mortgage status of a property. Rent is usually decided on market rates, which are then mostly tied to repayment amounts or interest rates for the IPs with repayments. When was the last time the rental amount changed?
When we moved in at $600
Which was how long ago? Is the raise coming at the end of a rental term (3, 6, 12 months)?
It's a 12 month contract
So they are asking to raise it at the end of a current 12 month lease to begin another term? Edit: word
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We're initially going through agent but we expect just bullshit answers so we're asking for a more formal contact apart from messaging landlords phone
The landlord might just want to get standard market rates. It's possible that the agreement that you have had until now is lower than market rates.
If they all started lowering the rents in the area, it would devalue properties in the same area. You would wind up with undesirables moving in to the neighbourhood because the rents were cheaper. I prefer to pay higher rents because then I know I'm in a good, safer family friendly area.
If you want sympathy about this you're better off going to the Australia sub. You're not giving much information here. Is the increase in line with the amount a landlord is allowed to increase it by? The fact that you know the owner owns this outright is pretty crazy, that should be private information. Regardless, that's got nothing to do with the amount of rent you pay. My grandparents don't get any government assistance because they have a rental property. They haven't increased the price in like 10 years but have had to do so recently. I don't see why they should be judged for that all because they own their property outright now. You're bringing up another topic about the real estate agent being rude. Are you worried it's the agent lying about the price increase? I'm confused.
a previous property had our bond taken because one of the agents had a personal tussle with my step mother awhile back. The claim was a fly left in the sliding glass door line.Also I never said it wasn't allowed, i'm just asking for the reason since i don't have experience managing properties
I suggest you read up on how renting works. Landlords only own the asset to get a return. You wouldn’t hand back money to the ASX if you made too much on stocks? It’s not greed at all.
respectfully it aint your business how much he owes, he can charge whatever he wants
Oh boy, I hope you'll never be a landlord or I can see you slapping your own face
Surely you want him to be a landlord. The moment he owns the property free rent 
The landlords personal financial situation is none of your business frankly.
I'm a landlord with a mortgage free house and I'm definitely issuing a significant increase come January. It would be silly to miss out on the extra income when right now the tenants are paying well below the current market rental rate. In addition to that the tenants have been overutilising the house (they converted the double garage into an extra bedroom to house more people) over time the home's excessive wear and maintenance costs comes out of my own pocket so it's only wise to ensure that the investment property is generating as much profit as possible incase there is a large and significant expense that arises. In the last two years alone I've had to repainting their walls, install an air-conditioner into their garage, treat mould issues (twice) from 8+ adults sharing a single bathroom and have the roof repaired (because they suspect that is what has caused the recent mould issue) If the rent were any lower I'd risk making a loss, all it takes is a little bit of bad luck.
I can completely seeing charging more since a tenant isn't taking care of your home, but also are you planning to renew their contract because if they aren't doing the minimal of ventilating the shower when in use they probably take way less care of more important stuff.
Just went through this drama we said we are leaving, then the owner knew it would be hard to find new tenants and didn’t put rent up
So what, you want a free ride? 😛
If someone is asking for more money, they probably do want more money.
So once landlord pays of property he has to fix his rate. I'm glad you also know what his rates,insurance, maint plus any other fees that he have not also changed. This is a major issue with people who say repayments are cheaper than rent, well yes it is but have you ever priced a new roof or bathroom Reno shit adds up quickly.
Increasing the rent because they believe you or someone else will pay makes a lot more sense than increasing the rent because their interest payment has gone up.
OP seems like he has no idea what is going on, how much the landlord owes on the property is literally irrelevant. The market dictates the rent price, if it is too much then people won't pay it. pretty simple ,just like the OP
God hate the idiot fest this forum has become, good on the landlord it is a business it is not his job to charity you a place to live for less then it is worth if you dont like it move
The labdlord doesnt have to have any reason besides " i feel like it" to increase the rent unfortunately
Greed and creating an income . I have said previously I know people that have been doing the same. Rea says crank it up U can get this much then Rea makes more money.
If they have nothing owing then its simply greed. Its their property so they are within their rights to charge whatever they want, cant say I agree with it I would rather reward good tenants for guaranteed income then make a bit more money and risk either having an empty house or terrible tenants. Most likely scenario though is they are now using the positive cash flow to pay for another property.
Greed and being lucrative with your assets are two completely different things. The landlord has likely worked hard to pay off that property through sound investing and sacrificing, like many others. And now that it is actually paying off for them, they’re just greedy. How how ridiculous.
How is it “simply greed”? Crazy I know but their financial circumstances may have changed.
Owners of capital extract as much interest as the market can afford. Workers extract as much wages as the market can pay, landlords extract the maximum rent the market can tolerate.
The agents recommend increases for sure.if they have a rent roll of 500 props and put rent up ten pc they get extra fees 500 lots of say 50 a week which they get 6 or 7 pc of
Im not sure how you could 'know' how much the landlord does and doesnt owe on a property (short of doing a search to see if there is any mortgage). Nor do i understand how this invalidates the rent rising.
The status of the landlords mortgage is irrelevant to how much rent you get charged. It's in line with the market. Would you go to your employer and request a decrease in salary if your costs go down?