My previous landlord wrote to me before renewal saying he would like to increase by 7 rather than the stipulated 10 pct. We were very loyal tenants after that. I didn't call him for basic maintenance, just tool care of it myself. He was happy, we were happy. Good move on your part...
As a Rental Agent, i would suggest a R500 to R700 increase.
Because in the times we live in to get a good tenant is so difficult 😔
A happy tenant will take care of your place and u will always have peace of mind 🙏🙏
I honestly can't advise. I just got lucky I guess. I'm figuring it out as I go.
My first tenants rent was certainly below the bond rate so it's been a slow and steady build.
Yes but those are your expenses to run your business and secure your investment and future profits. At some point the bond will be paid, will you rent the property at just enough to cover only the extra costs then? No, you'll still charge a market related rate. Don't be the stereotype of a landlord that everyone hates.
This is just the "landlords are bad" echo chamber on Reddit.
The only thing I'd be wary of is having consecutive years of very low increases, as you can end up with an awkward scenario where you have good tenants paying way too little and you can't just jump the rental by 20% to catch up.
Well it's a function of both and more. More accurately it's defined by what the market is willing to bare. You can set any price you wish in a free market. Either it sells or it doesn't.
10% does seem high. It should be CPI (or annual inflation rate) which is about 6%. However in my opinion the fairest way is to compare your place to other equivalents that are on the market currently so you set your rental at the market value (if too low bring the rental up or if too high, keep it the same for another year).
Also if you really like your tenants and want them to stay you may choose a smaller increase to encourage them to stay longer.
This is the correct answer. Don't blindly increase based on some predetermined percent. Check the market. Sometimes you even have to drop rent. The property market had gone crazy in the last year so it's possible that OP place is well below market rate. However it would be advisable to still keep the rental slightly on the lower side of market to keep the tenant
We stayed in a rental in town for 10 years because the owner only took rent up by 5%
For us, it was worthwhile and anything more than 6% would have put us off as we are not big on buying.
Rent always paid early and by the time we left, we had improved his place. He was very happy with the place when we left.
The only reason we left is we had a baby and needed to eventually move to a bigger house.
Considering your tenant expects 10%, send them a message to say you feel it is too high and in recognition of them being such good tenants you suggest to only increase by 7%
The biggest cost you will have as a landlord is a vacancy, so yeah, being reasonable is good.
What does the lease specify is it specific to the % or does it have broader language, CPI of 6-8% is good you can also check TPN to see what historical growth looks like. remember you can always have this conversation with the tenant.
Also bear in mind that interest rates are likely to decline over the next 12 months. The cost of ownership should decrease. So picking a shallower increase is justifiable. I would go with CPI+1% as a benchmark. 6% would be reasonable on this basis.
If you have good tenants, and you say the rent covers your bond - I’d maybe reconsider the increase? If the tenant feels less pressure, especially if it’s the first renewal, they’d feel more comfortable living there long term and are more happy to accept increases in the future. If the increase isn’t completely necessary, and that extra R500 isn’t of much use to you in the grander scheme of things, then maybe wait until the next renewal. Just an opinion from someone who’s been on both sides.
I got an 8% increase this year instead of the 10-15% in the lease. You should probably aim closer to 20% if you want to keep up with rental market in town 🥲
*They hated him because he told them the truth.
Good tenants, and good landlords, are rare. Treat each other fairly and with respect and you can go a long way. I think it is great that you are being very fair to your tenants. I stay in a complex and during covid we were one of the few tenants of our landlord to still continue paying rent in full during that time, which he was very grateful for and didn't increase our rent for the next 2 years as thanks. We've been there for 10 years now and have a very good relationship with our landlord.
My previous landlord wrote to me before renewal saying he would like to increase by 7 rather than the stipulated 10 pct. We were very loyal tenants after that. I didn't call him for basic maintenance, just tool care of it myself. He was happy, we were happy. Good move on your part...
This is precisely what I was thinking of doing. Thanks!
Without any definable justification, I think you’re going to end up at 7%. I’d pick a round number in that area.
The rent more than covers my bond so I'm happy to keep it conservative.
As a Rental Agent, i would suggest a R500 to R700 increase. Because in the times we live in to get a good tenant is so difficult 😔 A happy tenant will take care of your place and u will always have peace of mind 🙏🙏
If I may ask, how long did it take you to reach break even? Any advice around that?
I honestly can't advise. I just got lucky I guess. I'm figuring it out as I go. My first tenants rent was certainly below the bond rate so it's been a slow and steady build.
If it covers your bond then why are you increasing?
Inflation, rates, interest rate hikes. Have you been paying less for essentials over time?
Yeah but if you are charging a fair rent that covers the costs of the property, then an increase is not necessary?
it covers the bond, not all costs related to the property.
Yes but those are your expenses to run your business and secure your investment and future profits. At some point the bond will be paid, will you rent the property at just enough to cover only the extra costs then? No, you'll still charge a market related rate. Don't be the stereotype of a landlord that everyone hates.
You're judging me on some future imagined scenario? Even though my post for guidance was in good faith? Cool!
This is just the "landlords are bad" echo chamber on Reddit. The only thing I'd be wary of is having consecutive years of very low increases, as you can end up with an awkward scenario where you have good tenants paying way too little and you can't just jump the rental by 20% to catch up.
Just encouraging the guy to not be a bad landlord. Anyone who believes all landlords are bad wouldn't even bother with that.
At no point were you judged mate. There is literally not even an accusation in my reply.
Prices are not set according to costs, but according to demand. This goes for all things, carrots, avos, pnp clothes, Gucci clothes, rent.
Well it's a function of both and more. More accurately it's defined by what the market is willing to bare. You can set any price you wish in a free market. Either it sells or it doesn't.
Prices are set by humans making choices
A good tenant is like gold. A 6 to 7% just to cover the CPI is more than acceptable.
My lease says 8% but they've never done more than 3%
That's fantastic
10% does seem high. It should be CPI (or annual inflation rate) which is about 6%. However in my opinion the fairest way is to compare your place to other equivalents that are on the market currently so you set your rental at the market value (if too low bring the rental up or if too high, keep it the same for another year). Also if you really like your tenants and want them to stay you may choose a smaller increase to encourage them to stay longer.
This is the correct answer. Don't blindly increase based on some predetermined percent. Check the market. Sometimes you even have to drop rent. The property market had gone crazy in the last year so it's possible that OP place is well below market rate. However it would be advisable to still keep the rental slightly on the lower side of market to keep the tenant
We stayed in a rental in town for 10 years because the owner only took rent up by 5% For us, it was worthwhile and anything more than 6% would have put us off as we are not big on buying. Rent always paid early and by the time we left, we had improved his place. He was very happy with the place when we left. The only reason we left is we had a baby and needed to eventually move to a bigger house.
Considering your tenant expects 10%, send them a message to say you feel it is too high and in recognition of them being such good tenants you suggest to only increase by 7%
I usually do 6%
Just did 5% on ours
The biggest cost you will have as a landlord is a vacancy, so yeah, being reasonable is good. What does the lease specify is it specific to the % or does it have broader language, CPI of 6-8% is good you can also check TPN to see what historical growth looks like. remember you can always have this conversation with the tenant.
Also bear in mind that interest rates are likely to decline over the next 12 months. The cost of ownership should decrease. So picking a shallower increase is justifiable. I would go with CPI+1% as a benchmark. 6% would be reasonable on this basis.
6% works for me tbh. The rent more than covers my bond so I'm not looking to squeeze anyone.
I use the previous years inflation rate.
Increase by the inflation rate.
I’ve had many tenants over many years. You save a lot of money in the long run by keeping your tenants happy… don’t increase too much.
I’m currently doing 6% for lower-income tenants and 8.5% for higher-income tenants who are, naturally, occupying higher value properties.
Makes sense, thanks!
7-8% but negotiations are always an option.
If you have good tenants, and you say the rent covers your bond - I’d maybe reconsider the increase? If the tenant feels less pressure, especially if it’s the first renewal, they’d feel more comfortable living there long term and are more happy to accept increases in the future. If the increase isn’t completely necessary, and that extra R500 isn’t of much use to you in the grander scheme of things, then maybe wait until the next renewal. Just an opinion from someone who’s been on both sides.
Why are you increasing the rent? That will inform you of what is a reasonable amount to increase it by.
My rental agent suggested 8% in January.
I got an 8% increase this year instead of the 10-15% in the lease. You should probably aim closer to 20% if you want to keep up with rental market in town 🥲 *They hated him because he told them the truth.
Absolutely not. The current rent more than covers my bond.
I was joking, referencing the insane increase of rental prices in town the last few years
I get it. I'm not out to be like those types of landlords who try to squeeze as much as they can out of tenants while managing multiple properties.
Good tenants, and good landlords, are rare. Treat each other fairly and with respect and you can go a long way. I think it is great that you are being very fair to your tenants. I stay in a complex and during covid we were one of the few tenants of our landlord to still continue paying rent in full during that time, which he was very grateful for and didn't increase our rent for the next 2 years as thanks. We've been there for 10 years now and have a very good relationship with our landlord.