Landlords Need to Raise Rents

rentA Tenant Advocacy group suggested Landlords would be foolish to raise rents too high and risk losing good tenants. No kidding! It costs the landlord to replace tenants so retaining good tenants on a long term basis is the desire of buy and hold property investor.

The raising of rents is usually done to cover increases in Landlord costs. These costs include rate increases, water charges and insurance. All have gone up a lot over the last few months and while more often that is acknowledged publicly Landlords take a lot of the increases ‘on the chin’ says Andrew King in a recent NZHerald article.

Landlords should be encouraged to raise rents to cover the increases in costs so their rental properties remain viable. It doesn’t make sense to suggest Landlords keep absorbing increases in costs and then they end up having to end the tenancy and sell the property. Where does that leave the tenants? Without a place to live.

In microeconomics it’s the supply and demand model that ultimately determines the maximum rental rate. Most Landlords adhere to it and the tenant is usually on the better side of the deal paying less rent than the absolute maximum.

It would be wise as a renter to expect up to a 3 percent increase in rent over the next 6 – 12 months. Landlords will be through their accounts and to keep the rental property viable will need to pass on some of the costs increases they have incurred.

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