How much your landlord can increase your rent

By

Published on

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.

how much can landlord increase rent

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."

Get stories like this in our newsletters.

Related Stories

TAGS

Tom Watson is a senior journalist at Money magazine, and one of the hosts of the Friends With Money podcast. He's previously worked as a journalist covering everything from property and consumer banking to financial technology. Tom has a Bachelor of Communication (Journalism) from the University of Technology, Sydney.
Comments
Val Young
May 28, 2022 8.41am

Don't forget that many landlords are retired people who depend on the rental income for their living expenses. All retired people have been living on reduced income for the last few years because of low interest rates. A number of landlords may have been out of pocket because tenants couldn't pay rent during covid. I wouldn't be surprised if there were small increases in rent.

Bart Te
May 28, 2022 11.38am

Hey I think it's about time that the constant landlord bashing stops.Most landlords are not the picture that is constantly painted. How quick all the covid pressure and costs landlords had to bear and are still paying for are forgotten how about giving and taking not just taking. Ever heard of a Tennant offering to pay a little more because they can and appreciate the landlord?

david horton
May 28, 2022 12.21pm

Just quickly looking at interest rates over last 6 months for investment loans and mortgages are the biggest cost to a landlord.

2 year fixed rate loans have gone up 60%

interest only loans up 35%

So if a landlord has refinanced recently, they have seen huge increase in their costs and what is being asked of the tenant is in the 5-10% range is not huge in comparison.

On affordable housing the NRAS scheme actually delivered on the goals of getting people into affordable housing at a reasonable cost to the government, but there were some rorters who abused the scheme to give it a bad name. Both labour and liberal plans coming into the election were policy on the run and will make matters worse not better.

Gary Linnegar
May 29, 2022 7.28am

It appears all proposed solutions to the availability of rental accommodation center around increasing supply. Basic economics suggests another approach is to reduce demand (population growth). Growing a population faster than infrastructure is a sure way to increase price pressure and demand.

Pulse J
May 29, 2022 11.38am

Totally agree with Gary!!!

Learn from the populated countries and revise polices.

Rodd Wells
May 30, 2022 1.49am

I have a rental property with my wife

We own it. The lady who rents it is lovely and for four years she has rented from us. She's clean and caring, last two years I've dropped the rent $60 a week and free no rent for two weeks at Christmas. I've been treated like a second class person because I rented as a young man, it's brutal what landlords do especially to the elder people.

Arwin Hurwitz
May 31, 2022 2.06pm

My wife and I rent a property. We have very reasonable rent and the tenant has been with us for 15+ years. We fix any problems that arise straight away. After GST, Land Tax, Insurance rates, and maintenance there is very little left. Landlord bashing is based on misinformation and should not be politicized.

Marie Tz
June 2, 2022 11.31am

We rented with my parents and had some demanding landlords, others were ok. Now that we own our home outright we get bullied by the tenants next door everytime their landlord raises their rent. Can't win.

Mike Smith
June 17, 2022 11.51pm

I've got quite a few rentals (12off) and the recent rise has been a long time coming, rents haven't gone up much in the past 10 years, expenses have gone up a lot - land tax, council rates, maintenance/repair costs and I've never won a tribunal hearing for tenant reckless damage the judge would always consider as 'wear and tear'. Also unfair regulations - sometimes even stating water usage is landlords cost, why? Finally landlords being compensated for all the govt cash grabs through land tax (which are ridiculously high), unfair regulations and tribunal hearings that always favour the tenants and leave the landlord out of pocket.