What to do if your rent goes up

Rental prices are going up, but there are steps you can take to make it fair.

Three months before the end of my lease in Sydney, I asked my estate agent if he was willing to extend the lease and if there would be a price increase. I kept asking every week, always getting the same answer: “the owners haven’t told me yet”.

After my lease ended, exactly 21 days before the end of the extra month I had paid (so I couldn’t get any money back), the real estate said they would be asking for a $100 raise. Dodgy and frustrating, yes. Unexpected? No.

With rental prices rising across the country, along with a shortage of homes available to rent, many people are stuck between a rock and a hard place. So what are your rights as a tenant?

Why is the rent going up?

While rent increases aren’t new, if you’re wondering why it seems so prevalent right now, PropTrack director of economic research Cameron Kusher says it’s because of supply and request.

“Rents ultimately rise because demand for rental stock outstrips supply,” he told news.com.au.

“As investors have returned to the market, they have outnumbered the number of investors selling their properties, largely to owner-occupiers, reducing the overall stock of rentals available for rent.

“Rental prices fell dramatically at the start of the pandemic in Sydney and Melbourne and with people working from home on lockdown, many tenants living in shared homes moved into their own rental property for more space, reducing the overall supply of available rentals.

“Additionally, with the reopening of national and international borders, an increasing number of investors are looking to use short-term rentals instead of long-term leases, further reducing the supply of rental stock.”

What is a reasonable increase?

Unfortunately, there’s no national definition of what a reasonable rent increase looks like, but you can get a good idea by looking at the median rental prices of similar properties in your neighborhood.

So if everything around you increases by 5%, it makes sense that yours will too (if it’s in good shape, of course). If there is nothing comparable in your area, unfortunately, your real estate may have more bargaining power.

How often can the rent increase?

It really depends on your state, but in general, it usually can’t happen for the duration of your lease.

Speaking to realestate.com.au, PRD chief economist Dr Diaswati Mardiasmo said there were some exceptions.

“There may be instances where landlords can increase the rent for a specific period of time, but this will need to be stated in the tenancy agreement from the start,” she said.

How much notice is required?

Again, laws on this vary from state to state. For New South Wales, Victoria, Western Australia, South Australia and Tasmania, the law generally requires 60 days’ notice of a rent increase. Queensland is basically the same, requiring two months, the ACT only requires eight weeks and only 30 days are required in the Northern Territory.

It is never legal to backdate increased payments.

Can you negotiate?

You can try, but you’ll need to be much more prepared than I was. Kasey McDonald, leasing manager at the property management agency: Different, said real estate.com.au that you will need a good knowledge of other property prices in your market and that you will be able to justify why you think the rent increase is not fair.

You can try to negotiate the price or find other ways to compromise, such as offering to sign a longer lease at a lower rental price, or offering to do renovations out of your own pocket in exchange for keeping the rent.

Whatever you try, McDonald’s recommends that you stay calm and polite.

Where to find help

If you think your rent increase is unfair but your landlord won’t budge, there are resources available to you.

Most states and territories have a civil and administrative court that tenants can go to for an order that the new rent is excessive. In Western Australia, tenants can apply for this order in the Magistrate’s Court.

In Victoria, tenants can turn to Consumer Affairs for a rent assessment within 30 days and Tasmania can request a review from the Residential Tenancy Commissioner.

If those sources come back with a statement saying the rent is unreasonable, you have a much stronger argument to negotiate.

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