When a tenant ends an agreement early, property owners often ask if it is possible to increase your rent for the next tenancy agreement. This is possible and the property owner can seek certain compensations as well.
According to the Residential Tenancies Authority, the property owner is actually able to seek compensation from the outgoing tenant because it is a mutual agreement to end the Fixed Term Tenancy Agreement early without grounds. Compensation costs for loss of rent and expenses such as for gardening, pool maintenance, cleaning and any other expenses incurred by the owner whilst the property is vacant, can be sought from the tenant.
Should you decide to increase your rent, it’s important for the Landlord or Property Manager to complete a Comparative Market Analysis (CMA) to determine what the market rent currently is for similar properties in the area. The weekly rent should reflect the current vacancy rates in the area and trends in the market.
It is also important to ensure the rent increase does not disadvantage the outgoing tenant who, because of ending the agreement early, is extending your rental property’s vacancy period outside the scope of the market trend. Remember the property needs to be advertised at market rent.
However, remember that as property owner, you also have obligations to mitigate a tenant’s loss in these situations. Particularly in situations where the tenant is wishing to end tenancy due to matters which may be considered reasonably as genuine hardship, consideration should be given to release the tenant with an agreed amount of compensation. Any compensation or payment options for the amount should be discussed between the tenant and the Landlord or Property Manager.
For your free investment property health check, please contact 07 3123 7373 or lauren@rentalresults.com.au
