Landlords Stressing about Mortgage Rises, Raising Property Rents May Help

SUMMARY KEYWORDS

tenants, landlords, increase, rent, property manager, mortgage, displaced, afford, awesome, option, luna, negotiate, months, pay, process, section, systematic process, long, michael gove, notifies

SPEAKERS

Brett Alegre-Wood , Luna Bell 

Brett Alegre-Wood

0:00

So I'm here with Luna. So Luna, have you been here for ages now? Yeah. Yeah, like so long? Obviously, yeah, almost three months. Awesome. So Luna is one of our property managers, who's obviously managing a portfolio just like Reagan is. And, yeah, so I guess the question we're gonna go through with you is with just a lot of landlords, you know, stressing about mortgage increases. You know, what can they do from there? How do they raise the rent, what options they got? So let's talk about that. Yeah. So

Luna Bell

0:28

recently, a lot of landlords are asking, what kind of increase index, obviously mortgage increase rates, things like that. So we've got a few options. So some people are in fixed term. Sometimes, obviously, we'll have to wait until that fixed terms over at that point, we can look at renewal offers, it all depends on how long

Brett Alegre-Wood

0:47

a fixed term is normally the first 12 months of the tenancy unless it's specifically says six months or something like that normally to 12, first of all months. So if they've gone over that into a periodic, which is a month to month thing, then obviously we're free to,

Luna Bell

1:01

yeah, that's when we can issue a section 13. But obviously, this really depends on

Brett Alegre-Wood

1:07

section 13. Section 13 is what? It's a written increase. Yeah. So it's basically it's a statutory document, if you like section 13, of the Housing Act 88. And effectively what it is under that it's the, it's the pre formatted letter that we send to them, we put it through the post, we email it to them, and that notifies them an increase. We don't have to have that permission to do that, which I think is important thing.

Luna Bell

1:29

Yeah, absolutely. Yeah. But it also depends, obviously, some tents live there, certainly, some a long time, and obviously can only afford a set amount. A lot of them, we've heard, cost of living prices, all that kind of thing, it does take into effect and does play into it. And we obviously do try to keep tenants and try to kind of negotiate where they can kind of settle, but also to make sure that we're not putting landlords short, because obviously, we're getting three times increase at the moment of with mortgage rates. So

Brett Alegre-Wood

2:01

it's interesting, yeah, because mortgages have gone up a lot. And rents are actually going up a lot. But the problem is, is you have this issue where you have a tenant who might have been paying 1000 a month, and all of a sudden, now the rents gone to 1500. But they can't afford 1500. So, and really, it's an interesting social problem. And this is not landlords or tenants problem, it's a social problem, which is that, can they now pay 50% increase in their rent, or for the most part, they can't, because they've also got the energy, they've got the you know, all the cost of living and all that stuff. So all of a sudden, their only option, if you want the 1500, which you need to cover your mortgage, is that you let them move out or you move them out. And so we're finding that a lot, a lot more than we're having to do that. You know, which is unfortunate, because this has been their home, and you know, the government wants all this, you know, keep them in their homes that just hasn't really worked. And and it's not, it's making it very hard. So we've got to really decide, do we increase a little bit? Or do we increase to the market rent? That sounds nice, isn't it? Yeah, some

Luna Bell

3:03

kind of marketing, I've learnt quite a lot recently McDonald's, it's difficult for them to make that decision, obviously to make. Okay, having said that section 21 Notice to get them out. Obviously, it's upsetting for tenants that have been there for a long time, like you said, but sometimes it's the case where if you have to, you have to, and you have got to look out for your own interests as well. And that's what we obviously want to consider as much as tenants are important and we want to look after them. We obviously want to look after landlords. And

Brett Alegre-Wood

3:30

I think the positive thing is that if a tenant moves out, there's another tenant ready to move back in? Yeah. So there's no problems finding new tenants that hasn't changed. And then you tend to you're fine will generally people will be able to afford the realistic market rent. So that's a positive thing. So really, from my perspective, I think a lot of it comes down to yes, there's an emotional side. I'm a numbers investor. So if the numbers look better for me to pay a finder's fee, but get the higher rent, if that looks better, then I'm going to do that, you know, unfortunately, if that displaces the tenant, then I have to make that decision. Because otherwise I'm going to be funding the tenant, which is not what I want to do as a landlord, you know, so yeah, it

Luna Bell

4:10

also then means they lose out on money, which is that's not what we want. We find that a lot of landlords have had to go that route, which is sad, but in the long run, it does benefit you because then we get that market. Right. And sometimes you just can't get the increase that that you need in that moment.

Brett Alegre-Wood

4:27

And, unfortunately, that that is the market that you know, it's a free market. This is how it operates. Supply and demand, you know, so yeah. And unfortunately people will do be displaced and that is the social issue, which if we had government leadership, they should be addressing that. But obviously we don't have leadership. So Rishi but you know, and Michael Gove as well, hello, a bunch of clowns. But yeah, anyway, let's not get into that. But yeah, awesome. Thank you very much. Yeah, so that's right. Okay, cool. Thanks, guys. So any questions, any comments, make sure you send them through, happy to answer it, otherwise have To see your learner you can call directly if she's your portfolio manager, your property manager, otherwise the rest of the team yet by you know, give them a call, get your questions answered, get comfortable. If you do want to take actions on new increases, we actually got two full time staff now that are just doing renewals and increases. So Ethan and Micah are really good. They really are. And it's, I mean, it's such a systematic process and it's such an emotional process because a lot of tendency saying this is a real estate market rent, and they're like, I can't afford that, you know, so the only option is really to move out. Because if the landlord can't afford it, that's the only option which is Yeah, so they have to deal with a lot of that sort of crap which

Luna Bell

5:39

they are great at negotiating now. They obviously caught me in the middle of it. So I do see a lot of the process and they are really thoughtful obviously with tenants and they do communicate well between them both on loads and tenants to make sure we get the best outcome we can.

Brett Alegre-Wood

5:53

Definitely awesome. Cheers, guys. Happy Day.