Have you ever wondered how much you could increase your rent by under Victorian law? And how often you can ask your renters for an increase?
Charging rent isn’t as easy as naming a price and expecting a renter to pay. There are numerous laws in place to protect renters from rogue rental providers, and all property owners and managers must adhere to the guidelines under Victoria’s Residential Tenancies Act 1997 or face crippling penalties.
It can be overwhelming to remember if you’re ticking all the boxes, so we’ve made it simple by outlining all your obligations around what you can charge, how often you can increase your rent and how much notice you need to give. But suppose you hire a trusted property management team like Dynamic Residential. In that case, we work with you to manage your responsibilities under Victoria’s strict property and consumer laws and facilitate each step for your peace of mind.
Rent Increases Under The Act
What are the minimum and maximum rent increases allowed?
- There is no specific minimum or maximum amount you can increase your rent by. However, the Act suggests rent is raised in alignment with the property’s current market value.
- Suppose a renter believes the rent increase is above the market value. In that case, they can request Consumer Affairs Victoria complete an independent property valuation to determine the market value.
- Consumer Affairs Victoria will ask between two (2) and three (3) other property agents to attend and complete an independent rental appraisal on the property to determine the market value.
- If the valuation comes under the rent increase amount, Consumer Affairs Victoria can notify the property agent or owner to reduce the increase.
How often can you increase your rent?
According to the Residential Tenancies Act 1997 and its’ recent reforms during 2019 and 2021, a rental provider may only increase rent once every 12 months. In addition:
- A rent increase cannot take effect during a fixed-term lease period.
- The rental provider must provide a minimum of 60 days notice in writing for any rent increase. If the renter requests written correspondence only, the rental provider must allow for the additional days it takes for the written statement to arrive by post.
- You cannot increase rent to penalise a renter. If you’re unhappy with your renters, you need your property manager to step in and help you manage the situation and abide by the tenant rights in your state.
- You may request additional bond amounts ONLY when a long-term rental of 5 years or more is under negotiation. A bond top-up must be requested within writing in 120 days via a Notice requesting additional bond form and can only be asked for once every five years.
Dynamic Residential’s Approach To Managing Rent Increases For Our Clients
The property managers at Dynamic Residential will complete a market review three months before any fixed-term agreement expires within their remit. We will then contact our client, the property owner, to discuss options to increase the rent if supported by the market results. This opens the potential to offer the renter a lease renewal.
In cases of periodic leases, we will conduct a review nine (9) months after the latest rent increase took effect.
If the previous rent review resulted in no rent increase, then we will work with the owner to set a new review date when the market is more likely to support an increase.
How we calculate a rent increase at Dynamic Residential
We do this by harnessing research, our years of experience in the Melbourne market and the robust historical data we have access to, including:
- Looking at comparable properties currently available for lease. This helps us to determine a range the property would likely lease for if the current renter vacated.
- Using data from recent results we have achieved in the area or the same building.
- Accessing an online property database to obtain comparable recent leasing results in the area.
- Reviewing the tenancy and condition of the property for any factors that may impact the value of the property
- Taking into account property and suburb-specific data such as:
- Location and proximity to amenities—how close is it to public transport, schools, freeways, shops and parkland?
- The presentation of the property—is it modern, well-maintained or dated and in need of repair?
- The size of the property.
Things to remember when it comes to rent increases
- These rules apply to rental agreements within Victoria. Please refer to the government websites in your jurisdiction for other states and territories.
- These laws apply to all rooming houses and caravan parks within Victoria, although there are different rules for rent increases in a site agreement.
For further information on your obligations as a rental provider, head to Consumer Affairs Victoria’s Rent section on their website or chat with the friendly team of experts at Dynamic Residential today on +61 3 8600 1200.