In recent years, the city of Somersworth has experienced a significant increase in rental rates, much to the dismay of tenants. According to John Luckey, a rent researcher for Rent.com, the average rent has spiked by 24%, which is considered extreme by industry standards. Luckey attributes this surge in rental prices to various factors, including rising property taxes, inflation, and the influx of individuals moving from more expensive areas like Boston. Richard Keith, a property owner in the Manchester area, echoes these sentiments, highlighting the impact of inflation and changes in property tax on the housing market. This article will delve into the reasons behind the rising property taxes and inflation and their contribution to rent spikes in Somersworth.
1. The Impact of Rising Property Taxes
One of the primary reasons behind the rent spikes in Somersworth is the increase in property taxes. Richard Keith, a property owner with multiple multifamily apartment buildings, reveals that his property taxes rose significantly in December, adding an extra $35,000 to his property bill. These elevated property taxes place a heavy burden on property owners, making it challenging for them to cover their expenses and maintain affordable rental rates. To compensate for these increased costs, landlords often raise the rent to ensure they can still operate their businesses profitably.
- Effects of Inflation on Rent Prices
Inflation is another contributing factor to the skyrocketing rent prices in Somersworth. As the overall cost of goods and services increases due to inflation, landlords find themselves facing higher expenses for everyday supplies and utilities like heating and electricity. Landlords, such as Richard Keith, attest to the fact that the cost of needed supplies for everyday fixes has risen. Moreover, the increased costs for utilities further strain property owners, forcing them to adjust their rental rates accordingly. Landlords must pass on these additional expenses to tenants through higher rents to maintain profitability.
Steps to Mitigate Rising Rent Prices
While the upward trend in rent prices seems discouraging for tenants, property owners like Richard Keith emphasize their efforts to strike a balance between affordability for tenants and maintaining a profitable business. Here are steps that landlords can take to mitigate rent spikes:
Step 1: Seek Incremental Upgrades
To offset the impact of rising property taxes and inflation, landlords can focus on making small, incremental upgrades to their properties. While these upgrades may seem insignificant at first, cumulatively, they can help alleviate the financial strain caused by increased expenses. By continuously investing in their properties, landlords can provide tenants with improved living conditions without drastically inflating rent prices.
Step 2: Renovate During Turnovers
During tenant turnover, landlords can seize the opportunity to renovate and improve the building. Richard Keith emphasizes the importance of renovating wherever possible to attract new tenants and justify rent increases. By renovating during turnovers, landlords can maintain the overall quality of their properties while ensuring they can charge higher rents to cover their expenses.
Step 3: Efficient Budgeting and Expense Management
To navigate the challenges posed by rising property taxes and inflation, landlords must adopt efficient budgeting and expense management strategies. By closely monitoring expenses and seeking cost-effective solutions, landlords can minimize the impact on rental rates while still turning a profit. Implementing energy-saving measures and negotiating utility contracts can help reduce utility costs, thereby mitigating the need for rent hikes.
The rising property taxes and inflation in Somersworth have undoubtedly contributed to the spikes in rent prices experienced by tenants. Property owners, such as Richard Keith, are faced with the daunting task of balancing profitability and affordability. By understanding the challenges posed by rising expenses, landlords can adopt proactive measures to mitigate the impact on tenants. Incremental upgrades, renovations during turnovers, and efficient budgeting practices are just a few strategies landlords can employ to maintain affordable rental rates while still ensuring their businesses remain profitable. As Somersworth continues to grapple with these issues, finding a delicate equilibrium between landlords’ financial viability and tenants’ ability to afford housing remains a pressing concern.