When and how can I increase the rent?

Increasing the rent can be a murky territory, especially for landlords who are relatively new to the game. There are lots of questions to be answered.

  • When? 
  • How?
  • How much? 
  • What happens if my tenant doesn't agree?
  • What are the legalities? 

Why should I increase the rent?

The most obvious reason is to get a higher rental return on your investment property by staying aligned with the market but there are also other reasons you should consider a rent increase. For example, small rent increases each year are better received and much easier to budget for than larger jumps every 2-3 years. Doing smaller consistent yearly increases will help keep your good tenants rather than prompt them to move.

When can I increase the rent?

Rent can only be increased outside of a fixed term lease agreement unless it has been written into the lease. Usually, a landlord would provide written notice to the tenants towards the end of a lease that they intend to increase the rent at the end of the fixed term lease. The rent increase typically aligns with a new lease starting but it may take affect after the fact, depending on when notice was given and state requirements.

How much?

At the end of the day you want to make sure you're getting what your property is currently worth. This means finding out what the current market rate is for properties like yours. Use a listing website like realestate.co m.au to look for similar size and style properties in your area. A handy tip is to keep your property just under market rate. This will make it more competitively priced and good tenants will be less likely to move.

What if my tenant doesn't agree?

The processes around negotiating/challenging rent terms vary per state but all tenants have the right to negotiate for fair rent terms and are able to apply to tribunal if they feel the rent is excessive compared to the market rate or facilities supplied in the property. Check the details for your state at the bottom of the article.

Owners should weigh up whether raising the rent too much could prompt a reliable tenant to move out and try to find a balance.

What are the legalities

Where money is involved, so is the law and this is to ensure that no one is left at a disadvantage. Rent increases are governed by each state and territories Residential Tenancy Act so the details vary considerably. The main rules that tend to apply across most states:

  • You can't increase the rent during a fixed term agreement (unless it is written into the lease)
  • You need to provide written notice in advance (usually 60 days)
  • There are limits as to how often and how much you can increase the rent.
  • Tenants have the right to negotiate a fair rent increase and further apply to tribunal to challenge a rent increase that is excessive.
  • In some states tenants can give notice to move out after a rent increase notice is received, even during a fixed term lease. 

For more detailed information click on the state below: