As long as you invest in real estate, you want to make a profit and operate it stably.And it would be even better if you could increase the profit margin on the property compared to when you bought it.In conclusion, it is not impossible to raise the rent.However, it is a fact that there are considerable hurdles to raise the rent.This time, I would like to introduce the rent increase of the owner change property.
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About owner change properties
Last time, I wrote about the advantages and disadvantages of ownership change properties.The advantage was that it was easy to make a profit because of the track record, and it was easy to make a repayment plan and get a loan.
Reference Article:A must-read for real estate investment beginners!Advantages and disadvantages of owner change property
It states that the tenant cannot be forced to raise the rent.The contents of the lease contract concluded by the previous owner will be inherited as it is by the new owner.
Is it possible to raise the rent of the owner change property?
The content of the lease contract signed by the previous owner will be carried over to the new owner as it is, so basically it is not possible to raise the rent during the general two-year lease contract.
As stipulated in Article 32 of the Land and Building Lease Law, if the tax burden on the land or building has increased, the value of the land or building has risen, or if the rent of the owned property is disproportionately low compared to the surrounding area, it is possible to raise the price. .However, this is only if the tenant agrees, and it is impossible if there is a special agreement that does not increase the rent.
If the rent for the building is unreasonable due to increases or decreases in taxes or other burdens on the land or buildings, increases or decreases in the price of the land or buildings, or changes in other economic circumstances, or is unreasonable compared to rents for similar buildings in the vicinity. When this occurs, regardless of the terms and conditions of the contract, the parties may request an increase or decrease in the amount of rent for the building in the future.However, if there is a special agreement not to increase the rent of the building for a certain period of time, that provision shall be followed.
Land and House Lease Law, Article 32, Paragraph XNUMX
Proof of legitimacy for rent increase required
In order to increase the rent, you must first express your intention in writing, such as by certified mail.It would be nice if it was accepted honestly, but it is often the case that they do not respond to the increase.Since they must have expressed their intentions with some legitimacy regarding the price increase, it may be resolved by a compromise plan through discussions between the parties (sometimes entrusted to the management company).However, if you cannot agree, you will have to apply to the court for mediation.
You will be persuaded through the court arbitration committee with documents that prove the legitimacy of the rent increase, such as rent market prices and rent trends in the neighborhood.If the dispute cannot be settled in mediation, it will become a lawsuit, and the court will decide the rent based on the evidence.This is done by a real estate appraiser selected by the court.
If the rent is significantly lower than the market price in the neighborhood, you may be allowed to increase the rent.
However, it is not guaranteed that the requested amount will be granted.There is no problem with setting the rent for vacant rooms because it is a new contract, but revisions to previous contracts are due to various considerations such as the situation at the time of the contract and the process up to the present day.
Realistically, it's better to leave it to an experienced management company than to handle it yourself.This is because real estate management companies that have been managing properties for many years have know-how in negotiating rents.
Reference Article:How to choose a management company that is important for real estate investment?Points to identify a reliable contractor
time to raise the rent
As mentioned above, it is quite difficult to ask for a revision of a contract that has already been made, so many owners negotiate a price increase when the contract is renewed.However, if it is still refused, there is no other way but to ask the court, which is not realistic at all considering the court costs.
Contract renewal is the perfect time to raise the rent, but it is not always possible to raise the rent.
However, even if it is difficult to raise the rent and common service fee, there is no way to collect it as a facility usage fee.
It is a method of making a contract for the usage fee of facilities, saying that convenience has been improved by installing delivery boxes, parking lots, and coin laundry.
In fact, the value of the property will increase, so it will be advantageous at the time of sale.
Upgrading the property, such as repair work, additional equipment work, renovation, etc., in anticipation of the time of sale, is also a measure against vacancy, so it is a common practice as a real estate investment strategy.
Summary
- Proof of legitimacy for rent increase is required to raise rent for owner change property
- Many owners negotiate the price increase at the time of contract renewal
- Contract renewal is a statutory renewal, and price increase negotiations may not always go well
- Even if you can't raise the price, it's a common practice to improve the value of the property in a real estate investment strategy that looks at the time of sale.
At Rich Road Co., Ltd., we will consistently support all aspects of investment real estate, from complete beginners to experienced people, from a wide range of real estate selection, loan consultations, post-purchase management, and renovations.
