A landlord’s guide to rent increases

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Rent – it’s the basis of the whole landlord-tenant relationship.

In the simplest of terms, tenants pay money to the property owner in exchange for being able to live in the place.

Rental Price Growth

Although the fundamentals are simple, when it comes to rent increases it can get a little combative.

Raising the rent is often a point of contention between landlords and tenants.

Knowing the rules can go a long way to avoiding argy-bargy.

Property owners set rents based on several factors, including market conditions and financial considerations (like paying the mortgage).

Tenants agree to pay the rent based on their own needs and financial circumstances.

Often it’s plain sailing… until the issue of raising the rent arises.

Landlords usually adjust the rent in response to changes in the factors that they used to set the rent in the first place.

As no one is ever particularly thrilled when they must pay more, tenants may balk at rent increases.

If tenants are especially peeved at the rent hike, there is a risk that relations between renters and landlords/agents could sour.

This, in turn, can lead to consequences that affect the rental – like unpaid rent or damage to the property.

And this is where landlord insurance comes into play and why we care about rent matters!

To help make rent setting fair for both parties, Australia’s states and territories include requirements for rental increases in each Residential Tenancies Act.

Landlords (and their agents) are required to meet these requirements if they want to increase the rent they charge for the property.

Back in March 2020, in addition to a moratorium on evictions due to COVID-related financial hardship, some jurisdictions also put a ban on landlords raising rents during the emergency response periods.

The prohibition on rent increases has now come to an end and it is “business as usual” when it comes to renting settings.

But before upping the rent, landlords and agents must make sure they know the rules.

Regulations about frequency are back in play and raising rents outside of the legislated parameters could see you at the tribunal, or in court.

State by state rules – here is an overview of the rules around rent increases in each state.

Western Australia

Unit Market PerthWhile the laws relating to rent increases vary, depending on the type of tenancy, rent cannot be increased more frequently than once every six months.

  • Periodic: Rent increases can occur at six-monthly intervals (but no sooner) and tenants must be given at least 60 days’ written notice, with details of the amount of the rise and the day it will take effect.
    The tenant only must pay the increase if proper notice has been given.
  • Fixed-term: Rent can only be increased if the written agreement specifies how much the rent increase will be or the method of calculating the rent increase is shown.
    If the rent can be increased, it cannot take effect any sooner than six months after the start of the new agreement and the date of the last increase.
    Landlords must give tenants at least 60 days’ notice of the increase.
  • New agreement: If any existing tenants continue to rent the same property on a new fixed-term agreement, a rent increase cannot take effect for the first 30 days of the new agreement.

Northern Territory

NauRent can only be increased during a tenancy if the right to do so has been written into the tenancy agreement.

The agreement must also state the amount of the increase or the method of calculation.

Landlords must give tenants at least 30 days’ written notice of the increase.

Rents cannot be increased more frequently than every six months.

If the original tenancy agreement does not provide for a rent increase and does not specify the amount of the increase or method of calculation, rent can be increased during the tenancy agreement or during any extension of the original term if landlord and tenant agree.

Queensland

Brisbane SuburbWhile the laws relating to rent increases vary, depending on the type of tenancy, rent cannot be increased more frequently than once every six months.

  • Periodic: Rent can be increased if the landlord gives the tenant at least two months’ notice in writing and it has been at least six months since the last rent increase, or since the tenancy started.
  • Fixed-term: Rent cannot be increased during a fixed term unless it is provided for in the tenancy agreement.
    The agreement must state the new amount or how it will be calculated.
    The landlord must give the tenant at least two months’ written notice of the increase and the increase cannot take effect for at least six months after the tenancy commences or since the last increase.
  • New agreement: Landlord and tenant can agree to a rent increase at the end of a fixed-term agreement by entering into a new agreement.
    Any increase cannot take effect for at least six months after the last increase.

New South Wales

The laws relating to rent increases vary, depending on the type of tenancy.

  • SydneyPeriodic: Rent can only be increased once in a 12-month period.
    The landlord must give the tenant at least 60 days’ written notice of the increase.
  • Fixed-term: For agreements with a fixed term of fewer than two years, rent can only be increased if the agreement sets out the increased amount or how the increase will be calculated.
    The landlord does not need to give the tenant written notice of the increase.
    For agreements with a fixed term of two years or more, the rent can only be increased once in a 12-month period.
    The landlord must give the tenant at least 60 days’ written notice of the increase (tenants can give 21 days’ written notice and vacate before the rent increase kicks in).
  • No written agreement: Rent cannot be increased during the first six months.

Australian Capital Territory

CanberraThe laws relating to rent increases vary, depending on the type of tenancy.

  • Periodic: Rent cannot be increased at intervals of less than 12 months.
    Landlords must give tenants at least eight weeks’ written notice of a rent increase.
  • Fixed-term: Rent cannot be increased unless the amount of the increase, or a method of calculating it, is set out in the agreement.
  • Prescribed amount: Rent increases are generally limited to the ‘prescribed amount’ (landlords can only increase the rent by 10 per cent more than the increase in Canberra CPI).

Victoria

MelbourneThe laws relating to rent increases vary, depending on the type of tenancy.

  • Periodic: Rent can only be increased once every 12 months.
    Rental providers must give renters 60 days’ notice of a rent increase.
  • Fixed-term: For agreements with a fixed term of less than five years, rents can only be increased if there is a provision in the rental agreement, otherwise the rent can only be increased at the end of the agreement.
    If an increase is permitted, the frequency is limited to once every six months for agreements started before 19 June 2019, or once every 12 months for agreements started on or after 19 June 2019.
    For agreements with a fixed term of more than five years, the rent cannot be increased more than once every 12 months, and only if the agreement states that the rent can be increased.
    Rental providers must give renters 60 days’ notice of a rent increase.
    The amount or way a rent increase will be calculated must be included in the rental agreement.

Tasmania

TasmaniaRent can only be increased if there is a written lease that allows for rent increases, or if the lease is not in writing.

Landlords must give tenants at least 60 days’ written notice of a rent increase and the notice must state the new amount and the date it applies from.

In most cases, rent cannot be increased mid-tenancy, and can only be increased at the beginning of the lease, or at lease renewal or extension.

If the lease is longer than 12 months, rent can be increased 12 months after the start of the lease.

If the lease is less than 12 months, rent can only be increased at least 12 months after the tenancy started, even if the lease is extended or renewed.

South Australia

AdelaideRent increases depend on when the agreement came into effect and the type of tenancy.

  • Start date: For agreements starting before 1 March 2014, rent can be increased once every six months.
    For agreements starting on or after 1 March 2014, rent can be increased after 12 months from the date of the last rent increase or from when the agreement started.
    Landlords must provide tenants with at least 60 days’ written notice of the increase.
  • Fixed-term: Rent can only be increased if a condition allowing for a rent increase is included in the agreement.
    The agreement must state how the increase will be calculated and state the specific amount and when it will take effect.
    At least 60 days’ written notice must be given.
    The increase cannot take effect until 12 months after the agreement commences or when the rent was last increased.

Rent increase disputes

If the tenant thinks the rent increase is unfair, they have the right to negotiate with their landlord/agent and, if negotiation fails, the tenant can apply to the tribunal/court to determine if the rent increase is fair and equitable.

The tribunal/court will consider matters such as:

  • if the rent remains comparable with other properties in the area
  • difference between the proposed and current rent
  • Tribunalsterm of the tenancy
  • the period since the last rent increase (if any)
  • the estimated value of the premises
  • the cost of upkeep of the property paid by the landlord
  • the cost of services provided by the landlord (or tenant)
  • the value of the contents provided by the landlord for the tenant’s use
  • the state of repair and general condition of the property
  • any other considerations (e.g. if the landlord is putting up the rent simply to force the tenant out).

Insurance note: It is important to amend the rental agreement to reflect the new rent, as the agreement will need to be submitted if the landlord needs to make a loss of rent claim and any payout is likely to be based on the documented figure.

Making sure you follow the rules when it comes to increasing the rent may not make you any more popular with your tenants, but it will ensure that you stay on the right side of the law.

Appearing in front of the tribunal when it could have easily been avoided is not an activity anyone – including your landlord insurance provider – wants you to experience.

Guest author: EBM Insurance. You can find the original article here.

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Apart from our regular team of experts, we frequently publish commentary from guest contributors who are authorities in their field.


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