Renters in Australia are dealing with a high level of uncertainty regarding housing affordability due to the high demand for rental property and the rising weekly cost of rent.
Renters are understandably concerned as we witness the possibility of rent increases due to the cost of living and Australia's rising cash rate. However, there are only two circumstances under which a rental provider may increase a tenant's rent.
The Rental Agreement has an end date
At Independent Estate Agents every member of our property management department is well-versed in the requirements for raising a renter's rent.
If your rental agreement has an expiration date, that is the first circumstance under which you might receive a notice of rent increase. This indicates that the contract is a fixed-term arrangement; most fixed-term arrangements last five years or less. Rental providers may only raise the rent if the agreement specifically permits it, and even then, they may only do so as frequently as the rules permit if the agreement has an end date.
Rent increases are limited to once every six months in cases where the rental agreement started before June 19, 2019.
The rent cannot be increased more than once every 12 months in cases where the rental agreement started after 19 June 2019.
Once again, the rules vary depending on whether the rental property is a rooming house or a caravan park.
If a rental agreement is a recurring or month-to-month agreement, the same rules above apply if a rental agreement is a periodical agreement Periodical contracts typically begin after a fixed-term lease expires.
The fixed-term Rental Agreement is longer than 5 years
The fact that the fixed-term rental agreement is longer than five years is the second justification for a rental provider raising the rent at their investment property. A long-term lease or rental agreement is what is used in this situation.
In a long-term rental agreement, the rent may not be increased more than once every 12 months, and this is only if the agreement states so.
Are rental increases legal?
Although it may seem unjust to the renter when a rental provider issues a rent increase, if they are served correctly under the Victorian Residential Tenancy ACT and in accordance with the above rules then they are in fact legal.
What happens when a Rental Provider increases a Renter's rent?
Three months before the rent increase is due, your property manager will start looking into a rent increase.
They will consult the rental company and give them appropriate advice. If an increase is required, your property manager will create a Rental Market Report containing data on recent price indexes and market trends before sending a notice to the tenant.
The notice is served no less than 60 days prior to the date the rental increase is due to begin.
How much can a Rental Provider raise a Renter's rent?
The Residential Tenancy Act does not state exactly how much a Rental Provider can raise their rent.
When raising a Renter's rent, a Rental Provider must provide evidence supporting their decision and how they have calculated the rent increase.
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