Tenancy law changes - Rent increase case studies
On 18 April 2023, the Deputy Premier verbally introduced amendments to the Local Government Electoral and Other Legislation (Expenditure Caps) Amendment Bill 2022 to amend the Residential Tenancies and Rooming Accommodation Act 2008 (RTRA Act) and Regulation.
Despite no stakeholder, industry, or committee consultation, the Bill passed on the same date. The changes to the law introduced will affect rent increase provisions as well as amending other provisions in the RTRA Act.
The REIQ has developed this FAQ – Tenancy Law Changes for REIQ members which sets out frequently asked questions and guidance. Keep an eye on this document as it will continue to be updated to include new information.
The REIQ’s Property Management Support Service has received many inquiries about how the rent increase provisions will impact their clients and tenancies. Below are some example case studies to assist property managers.
SCENARIO A – TENANCIES ALREADY RENEWED
You manage a property with a tenant on a fixed term tenancy for 6 months that commenced on 10 January 2023 and expires on 9 July 2023. Rent for this period was $540.00 per week.
Following your usual processes, you have contacted the client three months out from expiry (9 April 2023) and confirmed instructions to offer to renew the tenant’s agreement for a further 12 months. You are instructed to increase the rent for this period by $20 per week, to align with market value. The tenant agrees to this rent increase and accepts the renewal for a further 12 months. The new Form 18a is signed by both parties.
Will this rent increase become invalid?
Yes. Even though the agreement is ‘new’, the tenant is the same so the 12 month rule applies. The earliest date that a rent increase can be imposed would be 10 January 2024 because the original tenancy started on 10 January 2023 and at least 12 months must pass before a rent increase is permitted.
SCENARIO B – CO-TENANCY
You manage a three-bedroom townhouse with three tenants renting the property in a co-tenancy arrangement. Two of the tenants first moved into the property on 18 February 2021.
The third tenant moved in and was named as a tenant on the lease during a renewal on 18 February 2023. The current tenancy agreement is for 6 months expiring on 17 August 2023. Rent is currently $420.00 per week and was increased from $390.00 per week on 18 February 2023. The tenants have a falling out and decide they do not wish to renew the tenancy.
What if 1 (or more) of the co-tenants stayed on at the property?
Rent could not be increased until 12 months from when the renewing tenant first paid the rent amount. In this case, rent would remain at $420.00 per week until 18 February 2024.
If you have a question about the rent increase provisions and you are an REIQ Member, you can contact the Property Management Support Service for bespoke best practice advice.
Contact 1300 697 347 or [email protected].
REIQ Accredited Agencies also have access to the Legal Advisory Service whereby the REIQ can refer you to Carter Newell Lawyers for 30 minutes of free legal advice for eligible agency practice matters.
Find out how to become a Member.
Upgrade your membership to Accredited Agency.
DISCLAIMER: This article is provided for information purposes only and does not constitute legal advice and should not be used as such. Formal and independent legal advice should be sought in particular matters. REIQ cannot and does not warrant and nor does it represent in any way that the information contained herein is current and/or will remain current beyond the time and date of release.
Read our article on How the new tenancy laws affect pets in rentals.
Explore our entire range of property management articles here.
10th May 2023 By Casey Cossu
https://www.reiq.com/articles/property-management/tenancy-law-changes-rent-increase-case-studies
