Tenants ditch leases for better deals
There has been a spike in broken lease agreements as Perth renters risk thousands of dollars in penalties so they can take advantage of falling rents and low interest rates.
The Real Estate Institute of WA revealed the rental vacancy rate hit 3.8 per cent in the January quarter, the highest since mid-2010, helping drive weekly median rents down $15 over the past year to $460.
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REIWA co-chair of the property management network, Jenni Wood, said tenants were seeking "more bang for their buck" as better-value properties became available.
Interest rates, currently at 64-year lows, had also prompted some tenants to ditch the rental market for home ownership.
Ms Wood said these tenants preferred to pay the financial penalties for breaking their lease rather than miss the opportunity to own a home.
The volatility in the rental market is marked by the 5848 hits on REIWA's webpage about the penalties for breaking leases, about 10 times more hits than any other subject on the site.
But Ms Wood warned that those tenants who left their landlord in the lurch could end up worse off because breaking a lease could come with hefty penalties.
Periodic leases can be broken at no extra cost with 21 days notice, but fixed-term leases can incur a range of penalties depending on the landlord's discretion.
REIWA could not quantify the size of the increase in broken leases across the market, but real estate agent Kathryn Massey, from Michael Johnson & Co, said her agency had noticed a 20 per cent jump over the past year.
She said most of the trend was fuelled by first-homebuyers exiting the rental market.
Ms Massey said rising vacancy rates had given tenants greater choice, enabling some to renegotiate their rent down when fixed terms expired.
"Tenants have the upper hand right now and a lot are using it to shop around," she said.
RENT READY 4982 The number of Perth properties listed for rent by REIWA