Sell with Confidence
Read More

How much can your landlord increase your rent by and can you negotiate?

By George Hadgelias

Hearing that the rent might be going up is news no tenant wants to hear, nonetheless it’s a fact of life for many renters.

But how much can a landlord increase the rent by exactly? And when can they do it? Do tenants have a right to negotiate or complain? Here’s everything you need to know.

What’s a reasonable rent increase?

Unsure what reasonable rent is? Dr Diaswati Mardiasmo, chief economist for PRD, explained that the trick is to look at comparable properties and compare what they charge in rent. If your rent is considerably lower than the median rent then you may be in the position of being asked for more.

The overall rental market in a particular area – and where a property sits within it – is the “comparative market”. For example, if a suburb’s median rent has gone up by 5% on average and a property is well situated and in good condition, it’s logical for it to rise too, Dr Mardiasmo explained.

Unfortunately, however, according to Dr Mardiasmo there isn’t a nationwide definition of a “reasonable” rent increase.

She said rent increases are generally influenced by supply and demand, comparative markets and the availability of a substitute. When there is more demand than supply, landlords have more power when it comes to rent negotiations.

The availability – or not – of an exact comparison also has a big influence; that is to what extent can a tenant find an equivalent, suitable property? If there aren’t many options, again the landlord has more negotiation power.

Lisa Adaway, a property manager at Queensland-based Hugo Alexander Property Group, said what is deemed “reasonable” can change case-by-case. It’s influenced by a number of factors.

“Typically in Queensland, over the past couple of years, if a property is going to see an increase, we would normally see an increase of between 2% and 10%,” she said.

“We have had an increase on nearly every property in our portfolio over the past 12 months. The largest increase we have had was 25%.”

How often can a landlord increase your rent by and how much notice is required?

How often a landlord can increase a tenant’s rent by and how much notice is required differs between states, but generally speaking, it can’t be done during the tenancy, unless it’s by agreement or the lease allows for it. If a landlord wants to increase the rent, it’s usually done at the end of a lease, before a new one is signed.

Dr Mardiasmo said the rent amount stated on the lease agreement usually remains the same for the life of the lease, whether that’s six or 12 months.

“There can be some instances where landlords can increase rent during a fixed term, however this will need to be stated within the tenancy agreement from the beginning,” she said.

Kasey McDonald, the head of leasing at property management agency :Different said when it comes to notice, the rules also differ state-to-state.

In Victoria, for example, if the agreement allows for an increase, the landlord has to give 60 days’ notice in writing, she said. The rules in New South Wales and Queensland are similar.

Can a landlord backdate a rent increase?

No, a rent increase cannot be backdated, Ms McDonald said. That’s because in every state, the landlord has to provide notice of some kind.

How to negotiate rental increases

Tenants can go into negotiations with their landlord when a rent increase is proposed, but they should be prepared, Ms McDonald said.

Here are some steps to take during a rental increase negotiation according to Ms McDonald:

  • Keep abreast of what is happening in your local rental market
  • Provide links to properties that are currently advertised to justify why you believe the rent increase suggested might not be fair
  • Weigh up the pros and cons of potentially moving house if you’re not happy to pay more each week in rent
  • If the landlord persists with the request then consider negotiating on price, for example, the landlord may have requested a rise of $20 per week, but you might be happy to pay $10 per week.
  • Consider other ways to compromise, like offering to sign a longer lease at the existing rent
  • Always have evidence ready, remain calm and be polite when approaching and negotiating with your property manager

What can you do if you think your rent increase isn’t reasonable?

No one wants to have to pay more money for something they already get, but if you’re convinced the request is unfair then you should speak to your landlord or property manager.

If you don’t have luck pushing back on the request there are official channels open to tenants too, Dr Mardiasmo said, including state government civil and administrative tribunal bodies.

In determining whether or not the increased cost is unfair these bodies look at the range of market rents usually charged for comparable properties; the difference between the proposed and current rent; the state of repair of the property; term of the tenancy and the period since the last rent increase, if any.

CLICK HERE for more information.

Up to Date

Latest News

  • How to maximise renting before buying

    So how can you get into your own place as quickly as possible while still paying the rent? We asked a financial adviser for his tips on what renters can do to increase their chances of buying. Click here to read more.

    Read Full Post