Property rental has always seen as a safe way to bring in a steady income in a world of so many uncertainties, and while it can be a source of consistent income, it is not without its hiccups. The world hardly stays the same or on a projected path, and if you do not prepare correctly, it can leave you in serious trouble.
While you may be happy with the arrangement you have your tenant now making a healthy profit or servicing your bond on terms you see as favourable, it might not always be the case.
Situations that could change your cost of owning a home
Certain situations could lead to increased expenses for you as a landlord, such as:
- The municipality revalues your property, and the escalation means a dramatic increase in rates
- Insurance on your thatched investment property goes through the roof
- Increases in levies on your sectional title property
As a landlord, would you be prepared for the increase in costs? Do you charge a healthy market rate with a margin you can manage or will you need to seek out a new tenant arrangement or new tenants entirely?
Can you increase the rent?
A landlord may not increase the rent in any way during the lease period. A landlord will have to provide provision that the increase was agreed to and included in the lease before it was signed, if they are to increase a tenants cost of living.
Increasing rent isn’t immediate
A landlord facing increased costs might be tempted to increase the monthly rental at renewal time, but they are required to give the tenant no less than two months’ (40 business days’) notice of an increase. Which means you still need to have funds available to cover the shortfall even if your tenant agrees to the rise in rental costs.
Plan talks with your tenant
The best option is to be open with your tenant and let them know what the situation is since both your lives will be affected by the increase in costs. Let them know that you plan on increasing the price of rent come renewal time so that they can either prepare themselves for additional costs or look for cheaper accommodation.
Make sure your eviction process is legal
Evictions are never easy and should always be seen as a last resort, always try to come to terms with your tenant before moving into the legal process of eviction. If however, you feel like you have no choice, it is best t contact a professional eviction lawyer who can guide you through the process of a residential eviction.