A Rental Provider’s guide to Rent Increases

By October 5, 2021 Rental Advice

Raising the rent is often a point of contention between rental provider–renter (landlord-tenant). Knowing the rules can go a long way to avoiding argy-bargy.

Rent – it’s the basis of the whole rental provider–renter (landlord-tenant) relationship. In the simplest of terms, the renter 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 prices, it can get a little combative.
 
Property owners set rents based on several factors, including market conditions and financial considerations (like paying the mortgage). Renters agree to pay the rent based on their own needs and financial circumstances. Often it is plain sailing… until the issue of raising the rent arises.

Rental providers usually adjusts 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, renters may baulk at rent increases.

If renters are especially peeved at the rent hike, there is a risk that relations between renters and rental providers/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. the rental provider (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 rental providers 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 rent setting.

But before upping the rent, rental providers 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.

Here is an overview of the rules around rent increases in 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 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.

Rent increase disputes

If the renter thinks the rent increase is unfair, they have the right to negotiate with their rental provider/agent and, if negotiation fails, the renter 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
  • period since last rent increase (if any)
  • the estimated value of the premises
  • the cost of upkeep of the property paid by the rental provider
  • the cost of services provided by the rental provider (or renter)
  • the value of the contents provided by the rental provider for the renter’s use
  • the state of repair and general condition of the property
  • any other considerations (e.g. if the rental provider is putting up the rent simply to force the renter 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 rental provider 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 renters, 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 rental provider insurance provider – wants you to experience.

 

About The Author
Emily Smart

Emily Smart

Emily began her career in Real Estate in 2006 and joined Hudson Bond as the Business Development Manager in 2016. Emily was awarded with “Business Development Manager of the Year" in 2017, 2019 and 2019 at the Australasian Real Estate Awards held in Sydney, Brisbane & Melbourne for her outstanding success and exceptional client care.

Appraise my property for FREE

  • This field is for validation purposes and should be left unchanged.