Maximising Your Rental Return in WA: Why Market Rent Matters

Maximising Your Rental Return in WA: Why Market Rent Matters

Is your investment property achieving an appropriate market rent? For property owners in Perth and across Western Australia, regular rental reviews are an important part of protecting rental income and supporting long-term investment performance.

Discussion about a possible 2% annual rent cap in WA has brought this issue into focus. Although a 2% cap is not currently in force, understanding your property’s market rental value remains essential.

Is there a 2% rent cap in Western Australia?

Western Australia does not currently have a general 2% annual cap on residential rent increases. The WA Government has stated that it is not introducing rent caps at this time.

Under current WA tenancy rules, rent increases are generally limited to once every 12 months and require at least 60 days’ written notice using the prescribed form. Additional requirements apply to fixed-term agreements, and tenants can challenge excessive increases.

Property owners should distinguish between proposals for future reform and the rules that currently apply to their tenancy.

Why your property’s current rental income matters

A property rented below the level supported by comparable local properties can generate significantly less income over time.

For example, a property rented for $650 per week earns $2,600 less annually than an equivalent property rented for $700 per week, assuming both are occupied for 52 weeks.

If future legislation restricted increases by a fixed percentage, the starting rent could influence how that income gap develops. The actual effect would depend on the legislation introduced, including any exemptions or rent review provisions.

A hypothetical example: annual increases of 2%

If both properties received five annual increases of exactly 2%:

The annual income gap would grow from $2,600 to approximately $2,871.

This example illustrates compounding only. It is not a prediction of future WA legislation and assumes full occupancy, with no allowance for expenses or vacancy periods.

How to assess whether your rental property is achieving market rent

A rental assessment should consider more than advertised prices. Relevant factors include:

• Recent leasing results for comparable properties.
• Location, property size, condition and amenities.
• Current tenant demand and competing rental listings.
• The existing tenancy agreement and applicable legal requirements.
• Tenant retention, potential vacancy and reletting costs.

The aim is to establish a rent supported by the market while considering the property’s overall financial performance.

Why the highest weekly rent is not always the best return

A higher advertised rent does not automatically produce a stronger annual return.

For example, two weeks of vacancy at $700 per week represents $1,400 in lost rental income, before any reletting costs. Retaining a reliable tenant at an appropriate rent may therefore deliver a better result than pursuing an increase that leads to an extended vacancy.

Maintenance, insurance, council rates and management costs also affect net returns. An effective rental strategy considers both income and expenses.

Our approach at Peak Central Property Group

At Peak Central Property Group, we help property owners make informed decisions through proactive property management and regular rental assessments.

Our Property Managers review comparable properties, assess market conditions and consider opportunities to improve rental performance. We balance these findings with tenant retention, property condition, vacancy risk and legislative requirements.

Where a rental adjustment is justified, we help owners understand the evidence, timing and potential effect on their investment.

Review your property’s rental performance

Whether or not WA introduces further rental reforms, understanding your property’s current market position can help you plan ahead.

If you would like to discuss your rental income or request a rental appraisal, contact your Property Manager or fill out the form below.