Rental Law Reforms – Rent Increase Restrictions
On 1 July, 2023, new legislation was enacted to limit the frequency that a landlord can increase the rent payable under a lease to not more than once every 12 months.
This means that if you have a Residential Tenancy Agreement in place for a six (6) month term and the tenant renews for a further six (6) months, you are unable to increase the rent for the second six-month term. You will only be able to increase the rent payable after that tenant has paid the same rent for a 12-month period.
For Fixed Term Agreements - the rent can only increase during the term of that agreement if:
A rent increase is specifically written into the Tenancy Agreement (including how it is to be calculated and when the date the increase applies – i.e., by a 5% increase or by $50 per week from a certain date), and
The landlord or property manager gives the tenant at least two months’ notice in writing of the rent increase.
This means that any rent increase does not automatically occur even if it is written into the tenancy agreement. The notice, which is also required before the increase takes effect, must include the increased amount and the day it takes effect.
Important: If you forget to issue the Notice of increase in rent, you cannot enforce the increased rent be paid until two (2) months’ after you have served the Notice on the tenant.
For Periodic Tenancies (those that roll over and have no specified end date) – the rent can increase only if there has been no increase in the last 12 months and the landlord or property manager gives the tenant two months’ notice in writing of the rent increase.
For a New Tenancy Agreement – the landlord does not need to give the tenant notice of the rent increase. They simply provide the tenant with a new Tenancy Agreement (Form 18a – General Tenancy Agreement) with the new rent set out therein and if the tenant agrees to the terms, they sign and return it to the landlord. However, if it is a new tenancy agreement for an existing tenant, the landlord cannot include a rent increase until 12-months since the last rent increase.
Even if some of the tenants to a tenancy agreement change in that 12-month period, you cannot increase the rent more than once every 12-months.
Example: Joe, Julie and Jimmy sign a new tenancy agreement with Lyle (the landlord). Joe and Julie move out six months later, leaving Jimmy in the residence. Jimmy renews the lease agreement by a further six months with Lyle. Because Jimmy was on the original tenancy agreement, the rent cannot increase for a further fix (6) months when he signs a new lease with Lyle.
If Jimmy also vacated at the end of that first six-month period and Lyle entered into a new lease agreement with Frank and Freda, Lyle could increase the rent for that new lease agreement with Frank and Freda but would be unable to increase it again for the next 12-months if Frank and Freda remained as tenants.
It is important to note, that even where you have not signed a Residential Tenancy Agreement once a tenant occupies a property for a period of more than 28 days the Residential Tenancies and Rooming Accommodation Act 2008 applies and therefore these increased protections will apply.
It is an offence under the Residential and Rooming Accommodation Act 2008 to increase the rent more frequently than once every 12 months and fines of up to $3,000.00 can be issued.
What if the Tenant says the Rent Increase is Excessive?
If a rent increase is excessive, the tenant can dispute the increase within 30 days of receiving the notice or entering into the Agreement. The tenant can apply to the Queensland Civil and Administration Tribunal (QCAT) or request for a Dispute Resolution to occur between the parties to have the matter resolved.
QCAT will take the following facts into consideration when determining if there is an excessive rent increase:
What the market rent is for similar premises
The difference between the proposed rent and current rent
The state of repair of the property
The term of the tenancy
The period since the last rent increase
Anything else QCAT considers relevant
Don’t forget about the Bond!
The bond is an amount of money paid to the Residential Tenancies Authority (RTA) by the tenant and is designed to compensate a landlord if the tenant breaches the lease, including vacating without cleaning the premises, damaging the premises, or not paying rent.
If the rent increases, you are also able to request an increase in the bond amount payable. A written notice must be provided to the tenant requesting the additional bond be paid. The tenant must pay the increase to the RTA by the date specified in the notice. The landlord must give the tenant at least one month after the notice has been received to make payment of the bond.
Further information on Rental Law Changes and the rules to follow regarding rent increases, can be found by visiting the RTA website.
The content of this column is to provide a general guide on this topic. Professional advice should be sought about your specific circumstances.
If you need further advice or guidance, please call one of our experienced Property lawyers.