Today we explain what a rent review is and when it can be done to help Auckland landlords maximise their investment, while staying within the limits of the Tenancy Tribunal regulations.
As property managers, a rent review is a task we regularly perform for our clients. It’s also a task a landlord managing their own property can do if they have an understanding of the regulations around it and a handle on local rent prices. Today we’re going to explain what a rent review is, plus when and how it can be done.
What is a Rent Review?
A rental review is when the landlord or their agent analyses the current rent to check it is still correct. As time passes, property increases in value. Often this can be due to inflation, the popularity of the suburb or the improvements which have been made. The weekly rent for a residential rental property is based upon the consumer price index (CPI) or market rent.
When Can a Rent Review Be Done?
Under the Tenancy Act, a rent review can only take place in two circumstances:
- After 180 days of the commencement of the tenancy
- As long as it has been at least 180 days since the last review
There is a change in the pipeline where the current government wants to reduce this to only once per year, which looks like it may come into effect in the next year or so.
A landlord must give at least 60 days notice to their tenant that the rent will be increased. This must be in writing and explain what the new rent is. Information about the date of the rent increase must also be included. Both the tenant and the landlord must keep a copy of the notice.
The rent increase must be served by either hand delivering it to the person or property, sending it to the address for service which is listed on the tenancy agreement, or by email or fax. It’s also important to add extra time for the notice to be delivered, such as a few days for the post. You can find out more about serving notices to your tenants on the Tenancy Services website.
At each rent review, the rent can be increased by the landlord. It can also be increased by agreement outside of the 180 day period, because of property improvements, facility or service improvements or a change in the tenancy agreement for the benefit of the tenant.
The amount of the rent increase is left up to the landlord, but is usually based on market rent. If a tenant disagrees with the increase, they can apply to the Tenancy Tribunal which can be costly for the landlord. Your best decision would be to hire a local property manager who knows the area of Auckland where your rental is located well. That way you can rely upon their expert knowledge and judgement as to increasing the rent by the correct amount.
We’d be happy to give you a complimentary rental appraisal of your Auckland rental. Feel free to contact our team today for a chat about how we can make being a landlord stress-free and enjoyable.
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