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I noticed on my bank statement that the amount of rent from my investment property had increased. When questioning the real estate agent about this, she stated she wanted to put the amount in line with what others in the area were charging. This was without my permission.
The only clause I can find in the agreement with the agent is that the agent can: “Review rent in accordance with any existing tenancy agreement, and respect to any new or renewed tenancy agreement.”
I told the tenants I would keep the rent at a certain level and am disappointed the agent has made me look like a liar.
Also, the increased amount has put me in a higher tax bracket.
Is there any legislation I can quote from that will let the real estate agent know this is not acceptable?
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It was refreshing to read your post that you as a landlord isn’t money grubbing and after an increase in rent when the lease is due for renewal. Restores ones faith in humanity. Usually, in my experience as a landlord, the tenant is asking for a drop in rent or they will go and rent elsewhere. I always agreed, as I didn’t want to go through the hassle and expense of advertising for and finding a new tenant, and then paying the agent their 110% commission on a weeks rent. I was just happy to have tenants who paid rent on time and didn’t trash the place.
Anyway, back to your question; while I am unaware of any legislation you can quote, it is unethical for the agent not to consult you on raising the rent. As the landlord, the ball is in your court since you own the property and what you want goes, and you can instruct her/him to reduce it back to the level it previously was, and that you require them to consult you on any issues concerning the property in future. If this causes dissonance in your relationship with the property manager then you can complain to their manager, or walk elsewhere and take your business to another agency to manage your property. Best to handle it diplomatically and request that the rent be restored to the previous rate, and you will consider an increase at the next lease renewal date but you need to be consulted first.
I suggest you google “Property and Stock Agents Act 2002” and “Residential Tenancies Act 2010” and see if what it says about relationships between landlord and managing agent.
When the tenant pays more rent, the manager’s commission increases with it. Have you instructed your property manager to restore the original rent?
There will be an agreement between you, the landlord and the agent which you both signed.
There may be a clause which permits the agent to act on your behalf in certain circumstances.
If not, then the agent must seek instructions from you and act on what you said.
Property manager has a conflict of interest in this – they get more fees if the rent goes up. But at the end of the day, you have the contract with the tenant, the property manager does not. So it should be up to you.
You’re probably aware of the pitfalls of not keeping up with market rent – you get further and further behind and then you realise you’re not covering your costs and it takes a massive jump to catch up (which is not really fair on the tenant, even if they have been paying under market rent for some time). So in some ways the property manager has valid reasons (beyond self-interest) to try and keep you up with market rent.
But if you want to carry that risk, that’s your decision, not the decision of the property manager, who works for you.
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