In the simplest of terms, tenants pay money to the property owner in
exchange for being able to live in the place.
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
While 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
Rent 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
While 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.
- Periodic: 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
The laws relating to rent increases vary, depending on
the type of tenancy.
- Periodic: Rent cannot be increased at intervals of less than
12months.
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 percent
more than the increase in Canberra CPI).
Victoria
The 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
Rent 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
Rent 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
- term 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.
Author: EBM Insurance. You can find the original article here.
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Jason Gwerder
Tuesday, 19 October 2021
