The unit that we rent was recently sold, albeit slowly and after many frustrating rental viewings. We’re under a fixed term lease until the end of October, so, although we have a new landlord, our lease remains intact.
This week we received a note from the our new landlord; who I will refer to as The Man. He suprised us by saying that come lease renewal time (end of October – about five months away) he is going to increase the rent by $50 per week to, quote, “market value”. The Man is such a hungry hungry landlord.
I have a few issues with The Man’s actions, these being:
- He doesn’t know the value of having good tenants. The onsite manager said The Man would prefer to get more rent from 3-4 overseas students who will share the unit, than slightly less rent from us, a dual income couple, both with full time jobs, who have lived in the unit for the last 2.5 years and have always paid the rent on time and kept it immaculate. The students usually stay about 6-12 months whereas we will probably stay a few years.
- He doesn’t realise that his plan may backfire. If the apartment is empty for just a few weeks then his weekly rent increase has been entirely lost and he is no better financially off than if he didn’t raise the rent so dramatically in the first place. If he gets a bad tenant it takes a lot of time, and money, to evict the tenant and get another new tenant.
- He is doing Australian society no favour by investing in existing real estate. Unlike actually investing in real estate by building new housing, he is instead using negative gearing to speculate on future price increases of existing housing. This simply adds to real estate demand and increases housing prices. Struggling first home buyers are being gazumped by cashed up hungry hungry investors like The Man. It doesn’t help that the government encourages him to do this: he pays no land tax, can claim all his rental expenses and shortchange on tax, and then he receives a generous capital gains tax concession!
It is a sad day in Australia, as we are now at a point where current and future generations will not only find it increasingly difficult to buy a home, but to rent one as well! And it’s not at all being helped by the actions of my hungry hungry landlord, known as The Man.
Update (10 June): Here is a link to an excellent article that explains the difference between investment and speculation.
The rental market is doing that sort of thing, though.
Last year (july), we had a rent increase of $40/wk. This year, we were told, if we decided to renew our lease, the increase would be $50/wk. The new tenants (as discovered by watching realestsate.com.au) were asked for an extra $70/wk above what we were paying at the time.
We moved. To a slightly cheaper, older unit, in a different part of brisbane.
Rental prices are still crazy though
My parents get this shocked look when I tell them how much I pay in rent.
You should stick it to *The Man* by not renewing your lease – that’ll show him.
>>> The new tenants (as discovered by watching realestsate.com.au) were asked for an extra $70/wk above what we were paying at the time.
Doesn’t necessarily mean they got $70 p/w more. Also, real estate agents often charge one or two weeks rent to cover costs of changing tenants. Did you notice how long it took to get tenants in your old place?
>>> My parents get this shocked look when I tell them how much I pay in rent.
They would probably be even more shocked if you told them how much repayments would be on a loan for a similar property.
>>> The new tenants (as discovered by watching realestsate.com.au) were asked for an extra $70/wk above what we were paying at the time.
>>Doesn’t necessarily mean they got $70 p/w more. Also, real estate agents often charge one or two weeks >>rent to cover costs of changing tenants. Did you notice how long it took to get tenants in your old place?
About two weeks before we moved out, we had a viewing. I saw 10 applications (of 2-4 applicants each) handed to the agent that day. Multiple applications simultaneously are discouraged at present, with many real estate agents requiring one week’s rent as part of the application process. Our place was vacant for about a day. The place we moved into was vacant for a day. And the old agent charged us a fee (of one week’s rent) because we left the lease early. Vacancy rates in brisbane at present are horrifyingly low – it has become rare for places to stay vacant longer than the absolute minimum required for cleaning. Real estate agents and landlords don’t lose much for changing tenants – they just get to hike the rent sooner and more. There’s a maximum amount rent can be raised over the course of a year for a renewed lease – there’s no maximum as far as I know if it’s a new set of tenants.
>>> My parents get this shocked look when I tell them how much I pay in rent.
>>They would probably be even more shocked if you told them how much repayments would be on a >>loan for a similar property.
Yes, that was the ‘but why don’t you just buy a house if rent’s so expensive?’ part of the conversation.
That’s disgusting. I feel for you.
I’m in a very nice share house and the landlords are very flexible on leases, even to the point that you can break it without losing your bond, as long as you pay the $80 for advertising the room. They’ve been raising the rent, but nothing as sickening as $50. They understand the financial limits of their tenants and they’re willing to negotiate. e.g. Don’t raise my rent and I’ll stay for another year. They’re sane enough to keep it friendly.
The last place I lived in before was up for sale, with 3 different real estate agencies wanting 3-4 viewing times EACH per week. It took some serious effort to get them to back off. Unless you’re worth commission to them you get treated like absolute garbage.
But I must say, the new owners didn’t treat us badly, they upped the rent by $10 and put in air conditioning. Their tactic was to be greedy with subtly by gradually increasing it every 6 months.
I feel really sorry for students though. Especially if they want to live near UQ. There are absolute dumps over there going for disgusting prices.