Rent Increases: What is Legal And What is Not?

While the landlord does have the right to increase rent, the tenant also has the right to refuse to pay it if the rent increase does not follow all the right regulations. In Australia, the landlord must give the tenant written notice that they are increasing the rent. In NSW, the minimum notice period is 60 days before the rent increase, whereas in the ACT it is 8 weeks (56 days).

In the ACT, a rent increase legally cannot exceed the increase in the Consumer Price Index (CPI) plus 10 percentage points (for example, if CPI has risen by 3%, rent cannot be increased by more than 13%). Additionally, in both NSW and the ACT rent can only be increased once every 12 months.

To find out if the rent increase is allowed, rent increase calculators can be used.

Reasons for Increasing Rent

There are some genuine reasons why rent needs to be increased. For fixed-term leases, the lease agreement itself must specify the amount of any rent increase or the method by which it will be calculated – without this, a rent increase during the fixed term will not be valid. For periodic leases, the landlord simply needs to provide proper written notice of the increase. The conditions for increasing rent include:

• Market changes – rent may need to be changed after CPI increases to ensure that the rent is in line with the cost of living.
• Outgoings: Where the lease agreement requires the tenant to contribute to utilities or other outgoings, increases in those costs may justify a corresponding rent adjustment. Landlords cannot charge tenants for outgoings unless this is expressly provided for in the lease.
• Renovations: contractually agreed-upon upgrades like renovations and added amenities justify an increase in rent.
• High demand: landlords can adjust rent to match surrounding properties, particularly if the area has become more developed and therefore in greater demand since the lease began.
• Inflation: if it has been a long time since the last increase, then landlords can adjust for market changes and inflation.
• Tenant Damages: if the tenant damages something during their tenancy, they may be liable for repair costs. This is typically resolved through the bond, direct agreement, or by making a claim at the relevant tribunal – it cannot be recovered through a rent increase.

What To Do if Disputes Arise

Sometimes, the landlord may raise the rent unfairly or without proper notice. A tenant may also refuse to pay the increased rent, even if the landlord had reasonable grounds to increase it and gave timely notice. When this happens, the first course of action is to address the other person in a courteous but assertive manner. When this does not work, then other organisations can get involved.

You can consult a lawyer, or reach out to the ACT Civil and Administrative Tribunal (ACAT) or NCAT if you are in NSW. These tribunals can decide whether a rent increase is justified, and if not, they can make an order substituting an increase they consider fair.

A tenant has the right to appeal their rent increase with their state authority. If a tenant refuses to pay a lawfully imposed rent increase and the increased amount becomes overdue, the landlord may have grounds to issue a termination notice – but this should only be pursued after the increase has been confirmed as valid, ideally through tribunal proceedings if disputed. The tenant may not agree to pay the new rent, and the landlord cannot force them to stay and pay it. Sometimes the tenant will voluntarily find somewhere else to live, and they are well within their rights to do so.

If you are a tenant or landlord with any questions about rent increase, please do not hesitate to contact us. We are here to help.

DISCLAIMER: This article is for informational purposes only and does not constitute legal advice.