How much your landlord can increase your rent

Soaring rents are making it harder for Aussies to make ends meet, with some tenants finding themselves forced out before the end of their lease.

"Housing is eating up a substantial amount of people's income each week and it's making it really hard for people to cover off all the basic necessities in life," says policy and advocacy manager at the Tenants' Union of New South Wales, Jemima Mowbray.

In recent months Mowbray says the Union has been contacted by a number of people struggling with the cost of rent, many of whom have been whacked by significant rent increases.

In one case, a tenant's rent was hiked by $150 a week.

"We're seeing that instead of getting a rent increase letter, some people are just getting a notification that their landlord is wanting to end the tenancy.

"But after they've left, they've seen that the property has been listed at a significantly higher rent, so it's clear that the landlord evicted them so that they could take advantage of the market and increase rent significantly."

One Sydney renter, who asked to be identified as James, told Money that he was now looking for a new place for his young family to live after their landlord indicated that the rent on their current unit would be lifted by $30 a week ($1560 a year) if they wanted to sign a new lease.

While James says the proposed increase is not necessarily out of line with what he's seen in his area, he says it's hard to stomach when real wages aren't rising, but other living expenses are.

"The extra rent would be a strain on our budget, but I also just don't think it's worth paying that much more when our landlord hasn't been responsive in terms of maintaining and upgrading the place.

"It just seems kind of greedy - that the landlord just wanted more money."

Why are rent prices rising?

A major contributor is that the number of properties available for lease across the country has dropped to its lowest level in over a decade which has helped fuel competition among renters and, in turn, given landlords more scope to increase the price being charged for rent.

According to SQM Research, 39,616 rental properties were vacant in Australia during April compared to 66,424 at the same time last year.

That's helped push the national vacancy rate down to just 1.1% which, aside from March, is the lowest it's been since December 2006. In some capital cities the rental market is even tighter, including in both Adelaide and Hobart where vacancy rates are currently sitting at just 0.4%.

Naturally, rental prices have risen as a result, with SQM Research noting that asking rents in capital cities are up 13.8% compared to May 2021.

Rent rise restrictions (and lack thereof)

So how often can landlords raise a tenant's rent, and is there any cap on the amount they can lift it by? The answer ultimately depends on where you live and on the type of lease you have.

In most states, including New South Wales, Queensland and Victoria, rent can't be raised during a fixed lease period unless it's actually specified in the lease at the outset. South Australia is a little different where rent can be raised every 12 months, even with a fixed-term lease.

Typically, there's greater room for rent increases with a periodic lease though. For example, in New South Wales, South Australia and Victoria rent can be raised once every 12 months (at most), while it can be increased once every six months during a periodic lease in Queensland and Western Australia.

Joel Dignam, executive director of tenant advocacy group Better Renting, says that the real issue is the lack of protection afforded to renters around the actual scale of increases.

"People think that there might be a fixed percentage limit or a dollar limit, but these things don't exist. It's basically whatever goes," he says.

"Most jurisdictions have a process where you can appeal against an excessive increase, but that definition doesn't take into account what your income is or, really, the quality of the property. It's all about what's happening in the rental market more broadly.

"So, if prices are going up all over it's very hard to oppose a rent increase, which means you have to take it on the chin."

Can tenants challenge a rent increase?

While there's a consensus among advocates that the odds are generally stacked against tenants who are looking to avoid a rent increase, there are options. According to Mowbray, the first step renters should take is to contact their landlord to try and find a middle ground.

"We'd really encourage renters to start a conversation with their landlord and have a negotiation around what that rent increase should look like. Part of that conversation is talking about what is a reasonable rent rise could be, or why you think it might be unreasonable to raise the rent at the moment.

"One of the things that you can do to arm yourself as a renter is to collect together information about what is happening in your local area, because even though rents are generally increasing, that can look different depending on where you live and your property type."

Failing that, the second route tenants can go down is to appeal an excessive rent increase at tribunal - generally within 30 days of receiving the increase notice. Mowbray concedes that it can be difficult for renters to prove that a rent rise is excessive though, especially if rent prices are on the rise.

"There are a few factors that can determine the fairness and size of a rent increase, but the primary factor is really the market. And because we're seeing the price of rent increase across the market, that's really what the tribunal will generally take as a priority consideration."

Calls for reform

In Anglicare Australia's latest Rental Affordability Snapshot, the organisation found that just 1.6% of the 45,992 properties listed as available for rent across Australia on March 19 were affordable for a single person working full-time on the minimum wage. Options are even more limited for those on the Age Pension or receiving government support.

Unsurprisingly, given this level of rental stress being experienced by many Australians, and the fact that rents are on the rise in many parts the country, advocates are calling for change.

"In the short-term, governments should be looking at protection against excessive increases and moving towards a framework where what's actually affordable is taken into account," says Dignam. "That would mean so much to help people stay in their homes and actually promote stable communities for people to have some security.

"In the longer term, these increases are happening because of the market and what has happened with supply and demand, so we do need to see more supply of affordable housing for people who might be on lower incomes."

Dignam is optimistic that the $10 billion Housing Australia Future Fund proposed by Labor in the lead up to the recent federal election - which would fund up to 30,000 new social and affordable homes - is at least one policy that could some way to ease the issue of affordability.

"That's a step in the right direction, but it's a small step. We certainly need to see much more ambition from the Commonwealth and from state and territory governments to make sure people can afford somewhere to make their home."

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