With inflation pushing up interest rates and mortgage costs, many tenants are anxious that their landlord wants to raise the rent. It's important for both landlords and tenants to know the law regarding rental increases.
When can a landlord raise the rent?
The landlord can't raise the rent for tenants who are on a fixed-term lease during the lease period, but can raise it as soon as the lease expires if the tenants have been given the required 60 days' notice.
Landlords can insert a clause into a long-term lease that specifically allows an increase during the lease period, but only once every 12 months. It is important for tenants to check their lease carefully before they sign.
When landlords can raise the rent differs between states
If tenants are on a month-to-month lease there are limits to the permitted frequency of rental increases. This differs from state to state. In Queensland it is every six months. In NSW, the ACT and Victoria it is every 12 months.
In NSW landlords have to give 60 days' notice of a rent increase for month-to-month tenants. It has to be in writing and has to use certain terms, such as the starting date, and be signed.
If the landlord does not give this required notice, tenants are not obliged to pay the increased amount of the rent.
Landlords do not have to give a reason for increasing the rent, and in NSW there is no limit to how much they can raise the rent.
The ACT government has limited rent increases to 10 per cent above inflation, but there is no sign the NSW government will follow that example.
Over the past 12 months the median rent across NSW increased by 10.6 per cent. Regional areas such as the Central Coast, Central West, Murray and Richmond/Tweed saw increases of 13 per cent or more. Rents went up almost 15 per cent in parts of Sydney.
Negotiating or objecting if a landlord wants to raise the rent
If a tenant believes a rent increase is unreasonable, they can negotiate with the landlord or apply to the NSW Civil and Administrative Tribunal (NCAT) for an order that the new rent is excessive.
The tenant needs to make the application to NCAT within 30 days of receiving a rent increase notice.
The landlord does not have to explain the reason for the rent increase and it is up to the tenant to convince NCAT the increase is excessive.
Tenants could argue the rent increase is much higher than the average for their area, or they could argue the condition of the property has deteriorated.
NCAT does not have to consider a tenant's ability to pay the higher rent, but in negotiation it might help to explain the impact the higher rent would have on the tenant and their family.
Can I be evicted for challenging a rental increase?
The danger for the tenant is that a landlord can simply evict a tenant who challenges a rent increase.
Under the NSW Residential Tenancies Act landlords can evict a tenant for "no grounds". They only have to give notice before eviction. (Please see Landlord ends agreement, Tenants' Union of NSW, September 2022.)
If the landlord is selling the property, 30 days' notice is required for tenants to leave. Tenants who breach a lease agreement can be given 14 days' notice to leave.
A tenant who does not leave after the required notice can be evicted by order of NCAT. It is illegal for a landlord or agent to lock a tenant out of the property without applying to NCAT for a termination order to have the tenant evicted. (Please see If you are evicted, NSW Government, November 2022.)
Sue Steel
Conveyancing
Stacks Law Firm
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
