Do you have a rent increase notice? Know your rental rights and how to negotiate a better deal | Inequality
An falling rental vacancy rates and continued rising interest rates, tenants are seeing their rents reach unaffordable levels. It has reinvigorated debates over rent reform in several jurisdictions, as Australia’s 7 million tenants try to push back.
If you are a tenant, here is what you need to know about your rights and how to enforce them.
What are your rights ?
“When a tenant gets a rent increase, they should check that they have received all the information that makes it valid,” said Jemima Mowbray, policy and advocacy manager at the NSW Tenants’ Union.
First, for tenants who see their rent increase for a fixed term, look for “a provision that allows your rent to increase for that fixed term,” said Dr. Future of the University of NSW City. Most jurisdictions restrict rent increases during a fixed-term tenancy.
Some jurisdictions limit the frequency of rent increases. In New South Wales, Tasmania, Victoria and South Australia, the rent can only be increased once every 12 months. In Western Australia and Queensland, the rent can be increased every six months.
“If you just got a rent increase and you get it three months later, that’s probably not OK,” Martin said.
The next thing to check is the notice period. In Victoria, NSW, SA, WA and Tasmania, tenants must be given 60 days written notice of a proposed rent increase. In Queensland it is four weeks; in the ACT, it is eight weeks; and in the NT it is 30 days.
If you are not within the fixed term of your lease, the notice period is correct, and it is within the frequency limits, your next option is to dispute the amount of the increase. In most jurisdictions, Martin said, “there’s really no limit to that.”
“Generally, all states and territories say rents can be increased as long as they are not excessive relative to the general market level of the comparable rental practice,” he said.
The ACT is an exception: rent increases are capped at Canberra’s rent inflation rate plus 10%. Landlords must go to civil and administrative court to raise the rent above this threshold.
In NSW, Newtown Green MP Jenny Leong has introduced a bill in NSW parliament that suggests a similar cap on rents in line with the Consumer Price Index.
Negotiate with a landlord
A tenant has the responsibility to prove to the civil and administrative court in his jurisdiction that a proposed rent increase is excessive. But before going to court, try to negotiate.
If a tenant who has never defaulted on their rent must consider moving, a landlord may end up with a vacant period during which they do not collect any rent.
“A good tenant is a valuable asset to a landlord,” Mowbray said. “It’s in their interest to keep you at home.”
Before negotiating with a landlord, it is useful to assess where the property was on the market before moving in.
“Look at that same percentile now,” he said. “If you see that the rent increase has propelled you to the top of the market, for example, it’s clear that the rent increase is out of whack.”
She also suggested that a tenant explain why he is unable to pay this rent. Like presenting the little increase in wages compared to the increase in rent.
“It can help a landlord understand the situation from your perspective.”
Take it to court
If the negotiation fails, a tenant can choose to challenge the increase in court.
Ben Cording, a solicitor for Tenants Victoria, said the court did not take into account the difficulties a tenant faced following a rent increase. Instead, it considers whether the increase is considered excessive based on a survey of similar properties, the state of repair of the property, the cost of associated services, and any malfunctions or alterations to the property since the last rent increase.
A tenant must provide evidence of the rent charged for similar properties. Martin suggested looking at property data sources like Domain and SQM Research.
However, he said he is wary of only looking at currently advertised properties, which have often undergone more recent repairs or renovations than those that have been rented long-term. “If you’ve been a tenant for five years, your property probably isn’t in the same mix,” he said.
Mowbray suggested talking to other tenants in your area. “It can be a lot of work, but go talk to your neighbors who are renting a property like yours to figure out what’s going on with the rent,” he said.
However, he warned that negotiating or contesting a rent increase can be “quite a business”.
“Many jurisdictions still have evictions without cause,” he said. “If you knock your landlord out, you could lose your house all together.”
The WA is facing pressure to abolish evictions without cause, in line with reforms in Victoria, Queensland and Tasmania, which only allow eviction without cause at the end of a fixed-term agreement. There is a similar push in NSW.
“Vacancy is really low, rents are really high,” said Alice Pennycott, senior tenancy solicitor at Circle Green community legal center in Perth. “You have situations where tenants are afraid to assert their rights.”