Lina Donelly rents out her Western Australian property for $350 per week and doesn’t plan to increase the rent. (Source: Supplied)
A Perth landlord has shared why she refuses to raise the rent for her tenants, despite her property manager urging her to do so. Rents have been skyrocketing across the country, driven by a major mismatch between supply and demand, along with some landlords passing on increased costs to renters.
Lina Donelly owns three properties, purchasing her first home in August 2024 when she was completing her electrical apprenticeship. The 21-year-old told Yahoo Finance she bought the property when it was already tenanted at $350 per week, and she doesn’t plan to ever increase the price.
“I’ve had the management company who manages and does inspections for me say, ‘you should raise your rent, you can get $450 for it’,” she said.
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The Narrogin house, southeast of Perth, is rented out by a young family, who Donelly said were great tenants and looked after the property.
Donelly said she’s had to push back on calls from the property management company, which is commission-based, to raise the rent.
“If I charge $450, they get 8 per cent of that $450, so they’ve been pushing to raise my rent, and I’ve had to be very firm and have had multiple phone calls going, No, I don’t want to raise it,” she said.
Donelly believes it is the landlord’s responsibility to cover their own interest rate and mortgage repayments.
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Donelly owns three properties, including one that’s rented out, one she lives in and one she is renovating. (Source: Supplied)
“You’re the one who wanted to buy the house, you’re the one who wanted to take a risk at investing. That risk is your responsibility,” she said.
“If your interest rate goes up, that’s on the landlord, that’s not on your poor tenants to cop the cost of your bad investing skills.”
When you find good tenants who are taking care of your property and paying their rent on time, Donelly said you also risk pushing them away by being “greedy over another $50 a week”.
There’s also the added risk of going months without rent while you are trying to find new tenants, she said, along with the risk of getting “dodgy” tenants who don’t look after your home.
Donelly said she grew up in rental properties with her family and saw her mum struggling firsthand with rent rises, and her family was forced to downsize to stay within budget.
She knows her view may be controversial, and she’s spoken to other landlords who have flat-out disagreed with her stance.
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“At the end of the day, the worst case scenario for a landlord is they sell their house, and they benefit from major capital gains,” she told Yahoo Finance.
“I feel like it’s just so greedy to raise rents. A lot of people are just raising rent, and their loans haven’t even changed.”
Holding costs, including mortgages, can play into the rental prices that investors set, along with factors like market conditions, current demand and vacancy rates.
Cotality’s latest Quarterly Rental Review revealed a 1.3 per cent increase in national rents in the December quarter, sending annual growth to 5.2 per cent.
The national median rent reached $681 per week, while vacancy rates have fallen to 1.7 per cent which is well below the pre-COVID decade average of 3.3 per cent.
“The ongoing growth in rental costs is bad news for renters, with Cotality’s national rental index surging 42.9 per cent over the past five years, adding approximately $204 per week to the median rental value,” Cotality research director Tim Lawless said.
Based on affordability metrics to September, the research house found households were now putting aside a record 33.4 per cent of their pre-tax income to pay rent.
“The reacceleration in rental values is also bad news for inflation and the cash rate outlook as rental costs hold a significant weight in the CPI calculation,” Lawless said.
Donelly and her partner are currently renovating a property and plan to rent it out later this year. (Source: Supplied)
There is growing speculation that the Reserve Bank could increase interest rates again this year. If this happens, Donelly said she will absorb the added cost.
“If interest rates rise, tough luck to me. I’m sure they’ll drop again one day,” she said.
Donelly purchased the Narrogin property for $220,000 with a $30,000 deposit, her repayments are currently $320 a week, however, she is paying double that at $650 to get ahead of the interest.
Donelly purchased a second property in March last year with her partner, who is a heavy diesel mechanic, with the money she received from a pay rise helping with her savings. The couple put down a $100,000 deposit for the $535,000 home where they live.
They recently purchased a third property, a one-bedroom apartment two weeks ago, which they will renovate themselves and then look at renting out later this year.
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