POW148

When interest rates go up, so does the rent, but what about when the interest rates come down.


Landlords:
With interest rates at their lowest point for many years, have you adjusted the rent you charge your tennants to reflect the interest rate that you pay on your rental property.

Tennants:
Are your landlords adjusting the rent you pay to reflect the low interest rates. Do they pass on the interest rate cuts as the landlords demand of the banks.

Not being a landlord or a tennant, I am very interested in your comments on this matter

Barney

kez81

Our rent went up $30 per week last year, it hasn't dropped at all since the rates went down.

The rents here in Perth are the highest ive seen them since being here there's not alot about so they can charge through the nose, your looking at $600 a week for a 4x2 with a pool in a nice area its crazy!! We are currently in 3x2 but will be looking again in July dreading it.

ABCDiamond

The majority of Landlords did not pass on the cost of rent rises when interest rates were rising, but began to do so more recently.

When I first became a landlord in Australia, people seemed to work on a rental rate of $1 per week for every $1,000 property value.

Therefore, a $400,000 property would rent for $400 pw.

From what I see, most rentals are still under that general figure, and still have to rise a bit more to get back to the normal rate.

Ifr you compare a $400,000 mortgage investment property, back when rates were 6%, the interest bill was $461 per week
When rates hit 9% that bill became $692 pw, an extra $231 pw cost to the landlord.
Very few of them passed on rent increases of such magnitude.

Ours was a $360k property in 2002, we increased the rent between 2002 and 2008 by $70 pw, (most of it in the last 2 years) even though our interest bill went up by $207pw.

It is clawback time now, to try to break even for the times when we had to pay out more than we had coming in.

Geelong Gent

It may have been yourself ABC that pointed out some landlords are locked in at fixed rates whereby there is nothing too pass on.

Also when people get payrises do they turn around and contribute a portion to the landlord?

Affect will only come on rent reviews now - who knows what will happen to rates in 6 months time or too landlords for that matter

Agree with catch up period - rents in my opinion have been low for too long due to negative gearing. This in turn has both kept people in rental (cheaper than buying) and encourgaged price growth via investors.

TMRE

Our UK mortgage is now £597 a month (less when the latest rate cut kicks in), tenants are paying £1150 per month. We will not be reducing the rent or putting it up for the time being.

hoofie2002

The landlord is under no obligation to lower the rent because his financing costs have dropped; the converse also applies that when his financing costs increase due to a rate rise, he cannot claw back by increasing the rent during a tenancy agreement.

It is also the law of supply and demand - if the number of rentals is less than the number of tenants, rents go up - too many rental properties makes prices come down [in theory anyway, prices always go up fast but come down slow].