In a recession, currency can lose it's value. In Russia for example, in less than a year the ruble lost more than a third of its value. Same thing can happen anywhere. Much as it might not be as bad here, continuous inflation demands that for one to balance the scales, the rent charged should be adjusted with inflation rates so landlord's aren't the ones to lose out as the value of currency constantly keeps dropping. Question: should the lease agreement take into account inflation so that the rent can gradually be increased as "things" get worse? Or is it better to modify the lease agreement every few months?
For renting purposes, I think it's best to have a set date (1st of January would be nice. Or exactly 1 year from the signing of the lease.) when the rent will be revised either based on inflation (official statistics) or just leave it up so that you are more free to change the rent as you see fit. If you bind it to the inflation statistics then it's a safe deal both ways, the other option gives you a bit more room to adjust for things such as average rent in the area etc on a yearly basis.
The first thing you need to do is check the regulations pertaining to the area where the rental property is located. It may well be the case that you are prevented from reviewing the lease agreement as frequently as every few months. The usual procedure is to revise the tenancy agreement either 6 or 12 months after the tenancy start date. Frequent rent rises will more than likely cause your tenants to move elsewhere so do try to be reasonable about this.
Anytime I have signed a lease agreement it has been for a one year term so that you know exactly what your rent will be for at least one year. I think most tenants around here do the same with either a six month or 12 month agreement. I don't think that you can keep long term tenants if you are raising prices every few months.
I do believe that it is a wonderful idea and totally helpful. It can be greatly helpful if the lease is increased bad is absolutely fair. People need to understand things when recession occur.
That is the one thing to consider. If you have a good long term tenant, then is it really worth it to raise the rent? You have someone who pays their rent on time, keeps the apartment in a good shape and overall causes you no trouble. Is the little extra $ per month worth risking it? Keep in mind that if the apartment stays empty for even 1 month in between, you will already lose much more than you will have gained with the rent increase.
That is why the better is to have a 1 year contract, after that time there can be readjustments according to the scenario of the country, it's the most fair deal I think.
You really have to take into account what inflation really means for you. If you are not spending money on petrol, or not spending money on rent, then you have to readjust official inflation figures for your own personal spending traits. Even with official inflation rising, you may find that you are spending slightly less due to what you spend your money on.
I do believe that inflation has it's effect on everything that surrounds us. I think it is best if we are well prepared for it. Also as the price of everything around us increase it is obvious that the rent would also increase.
Thanks for the insight in that regard Rainman...always provoking my thoughts with knowledge and more questions..i ought to have a sit down with my agents and discuss this at length ...thanks once again
