It’s November. The time of year we catch up with our clients to set the rents for the year ahead - especially for those properties that have a fixed-term ending in January, February and March. Yes, the leasing season is almost upon us.
We use this time to catch up with our clients, discuss the property, what the tenants are looking at doing (staying or going) and what maintenance has been completed or is required. It’s a good time to chat about what the market is doing and what rent increase the property is likely to achieve. This is Stable’s approach to setting rents - one we think is consultative, fair and realistic.
Some property managers and private landlords, on the other hand, use a percentage increase per annum formula which does not take market conditions into consideration and can lead to tenants paying over the odds. This is bound to result in tenancy turnover, which is not in the best interests of either the landlord or the tenant. If the rent for an untenanted property is set too high, it’s likely to sit vacant.
Renters are smart people. They have tools at their finger tips, including the Trade Me and Real Estate websites plus multiple property-related blogs which shed light on where rents in various locations should be sitting. They know market value.
The worse thing is when you go to show a property and the person viewing asks, “How much!? I was looking on such and such a website and there’s one down the road for $20 less”. No person showing a property wants to be in this situation.
We think being realistic about pricing and responsive to market conditions is a sure way to secure great tenants and make sure all parties are comfortable with the rent they are either earning or paying.
Are property managers and private landlords increasing rents unrealistically?
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