Reviewing the rent is part of owning an investment property, but deciding how much to increase it by isn’t always straightforward.
While owners want their rental income to keep pace with the market, there is more to consider than simply matching the advertised rent of similar properties. The condition of your property, the current tenancy and the possibility of a vacancy all play a part.
Getting the balance right means looking at the bigger picture, not just the extra dollars each week.
What Are the Rules for Rent Increases in Queensland?
Queensland tenancy legislation sets out when and how rent can be increased.
For most residential tenancies, at least 12 months must have passed since the current rent became payable before another increase can take effect. This applies to the property, not just the tenancy, so a change of tenant or property manager doesn’t restart the 12-month period.
Generally, rent increases during an existing tenancy require at least two months’ written notice. For a fixed-term agreement, the agreement must also allow for the increase and specify the new rent or how it will be calculated.
Queensland legislation doesn’t prescribe a standard percentage or dollar amount for a rent increase. However, tenants can challenge an increase they consider excessive.
Before proceeding, it’s important to check the requirements that apply to your particular tenancy. The Residential Tenancies Authority (RTA) provides further information about rent increases in Queensland.
Understanding the Current Gold Coast Rental Market
A rental market appraisal is the starting point when deciding how much rent your property could realistically achieve.
This involves comparing your property with similar rentals in the area, considering location, size, condition, features and current market demand.
Rental prices can vary considerably across the Gold Coast, even between properties in the same suburb. Advertised rents are also not necessarily a reliable indication of what a property will ultimately achieve.
Local market knowledge and comparable rental evidence help establish a realistic figure. But the market appraisal is only part of the decision.
It’s also important to consider the existing tenant and whether the proposed increase makes sense for the property and tenancy.
Consider the Tenant, Not Just the Rent
A reliable tenant who pays rent consistently and looks after the property can be valuable to an owner.
If that tenant leaves following a rent increase, there may be advertising and letting costs, time spent arranging a new tenancy and a period without rental income. There is also the uncertainty of finding another suitable tenant.
This doesn’t mean rent shouldn’t be increased when it’s justified. If your property is significantly below market rent, an increase may be appropriate.
However, if the difference is relatively small, a more modest increase may be worth considering, particularly when the tenancy is running smoothly.
Every property and tenancy is different. The aim is to make a decision that considers both the rental return and the value of retaining a good tenant.
Weighing Up a Rent Increase Against a Vacancy
It’s easy to focus on the additional income a rent increase could generate without considering the cost of a potential vacancy.
For example, a $30 per week rent increase would provide an additional $1,560 over a full year, assuming the property remains occupied at that rate.
However, if the tenant leaves and the property sits vacant, even a short gap in rental income can reduce that benefit. Once the costs of finding a new tenant are included, the financial advantage may be smaller than expected.
Sometimes increasing the rent to match the market is the right decision. In other circumstances, accepting a smaller increase to retain a reliable tenant may deliver a better overall outcome.
There is no guarantee a tenant will stay, regardless of the increase. The important thing is to weigh up the potential return against the cost and risk of a vacancy before deciding how to proceed.
My Advice to Gold Coast Property Owners
I believe rent reviews should be based on evidence, not simply on what another property is advertised for or what an owner hopes to receive.
A rental market appraisal provides a starting point. From there, it’s about considering the individual property, current market conditions, the tenancy and the financial implications of a possible vacancy.
Sometimes a market-aligned increase will make sense. Sometimes a smaller increase, or even holding the rent steady, may be worth considering.
Good property management isn’t just about achieving the highest possible rent. It’s about making informed decisions that protect your investment, consider the tenancy and deliver a sound long-term outcome.