How to avoid a big rental increase

Cape Town - Rent goes up each year, but this does not mean that tenants have no choice but to accept whatever percentage the landlord decides on.

Grant Rea, rental specialist at RE/MAX Living in Cape Town has some criteria for how to decide, firstly whether to agree to a renewal with a tenant and secondly what escalation will apply.

According to Rea, it is unlikely that the lease will be renewed with a tenant who:

- Has been tardy with rental payments;
- Has made an unnecessary number of unreasonable demands;
- Has been regularly uncooperative with access for contractors or inspections;
- Had complaints regarding their conduct in a Sectional Title Scheme or from neighbours;
- Been dishonest or disrespectful in reasonably maintaining the property;

Rea says that surprisingly there is no real science or guideline in how to establish the percentage of how much the rent will increase.

Some misconceptions about this include:

- The maximum is 10%;
- That it needs to be in line with inflation;
- An increase in rent obliges the landlord to make upgrades.

“For many landlords, escalations should reflect a fair return on their investment and should be market-related. An industry standard seems to be 10% per annum, but once again the landlord may at his discretion decide to forego the increase or to increase this in excess of 10% to ensure the rental is market-related. Tenants need to keep in mind that the increase in rental is influenced by supply and demand more than any other factor,” says Rea.

Ways to ensure less of an escalation or how to negotiate less of an increase:

- The most effective way to convey that you are an exceptional tenant is by paying on time and in full. This may mean consistently paying one day before the rent is due. This ensures that all utilities are paid promptly, which may give you leverage to negotiate a lower rental increase;

- Good communication is key and keeping the agent or landlord informed of any maintenance (necessary maintenance) and being flexible with access for repairs, will make you stand out as a reasonable tenant;

- Be reasonable and generally understanding that the agent or landlord cannot be obliged to attend to any and every small maintenance item. Sometimes fixing it yourself will aid your cause when negotiating less of an increase;

- Keeping the property neat, clean and presentable;

- Keep a record of items you have attended to or improved in the property. Remind the agent or landlord of these without trying to coerce a lower increase.

“At the time of the anniversary of the lease, you would confidently be able to request a lesser increase if you have been a great tenant,” concludes Rea.