Renters are spending more money to keep a roof over their head, with strong competition for fewer available homes pushing prices to new heights.
Tenants are increasingly facing rental hikes both during and between leases, with rents at record highs in many regions and vacancy rates at crisis-level lows. Add rising mortgage rates for landlords and reopened borders into the mix, and there are fears they could be set to rise further.
People are facing rent increases at a magnitude that we have not been seeing before, says Joel Dignam, executive director of tenant advocacy group Better Renting.
Increases of 10 to 20 per cent that are blowing a hole in household budgets.
While it’s a highly competitive market, there are steps renters can take when facing a rent rise. However, experts warn many are being forced to cop an increase or move on in the current market.
Check the rent rise is legal
The first step is checking the landlord or agent has given the required written notice, and is not seeking to increase rent more frequently than allowed, Dignam says.
Check the basic legal situation, get in touch with your local tenants’ advice service. There’s not much limiting the size of increase, but has it been the right amount of time since the last increase, has there been enough notice? You can challenge [if not], he says.
Tenants in NSW, Victoria, Western Australia, South Australia and Tasmania typically need at least 60 days’ notice of a rent rise. Two months’ notice is required in Queensland, eight weeks in the ACT and 30 days in the Northern Territory.
Rents nationwide generally cannot be increased during a fixed-term lease, unless it was previously agreed to, with the specific amount or method of calculating it included. Such rises are still limited to six or 12 months, and a notice period is still required in some regions.
There are exceptions, though, such as in NSW, where those on fixed terms longer than two years can see rent rises once every 12 months, with notice.
For those on periodic or month-to-month leases, the rent can increase once every 12 months for tenants in NSW, Victoria, Tasmania, South Australia and the ACT. It can increase once every six months for renters in Queensland, Western Australia, the Northern Territory, and for South Australian renters on leases in place since pre-March 2014.
There are largely no set caps on how much a landlord can increase rent, except for in the ACT where there is a prescribed amount, tied to the Consumer Price Index. Simply put, landlords can only increase rent by the rate of inflation for Canberra rentals, plus 10 per cent.
For a greater increase, landlords need to get the agreement of the tenant, or go to the ACT Civil and Administrative Tribunal.
Research the market
Tenants should research rental prices for similar properties in their area, says Tenants’ Union of NSW chief executive Leo Patterson Ross.
While market rents are rising fast, some landlords’ price hopes are rising faster, he says. In one recent example, a renter paying $500 per week in Sydney’s northern suburbs, was notified of a $130 increase, when a $30 increase would have been in line with market growth.
When there is a lot of hype about increased rent, that can prompt landlords and agents to start testing a bit more. Sometimes we see increases that are really overreaching, Patterson Ross says.
Renters should check advertised prices, but also, if possible, find out what their neighbours pay in rent, he suggests.
Try to negotiate
Research is key to negotiating a smaller rent rise, or no increase, says Nancy Navarrete, a property management business development executive at Ray White NSW.
Tenants could ask agents or landlords for their comparable rentals if the rent hike seemed unjustified, but Navarrete also encourages renters do their own research and attend open inspections for similar properties to see the level of competition.
Renters with a good history have a greater chance of negotiating, as it could be more beneficial for landlords to keep a good tenant, paying lower rent, than to take on the risk of a new tenant and pay for the cost of re-advertising the property, Navarrete says.
Offering to sign a longer lease could also help in negotiations, as it gives landlords more peace of mind. However, it can be difficult to secure a lease longer than 18 months.
Outstanding repairs or improvements can also be key to negotiations, both Navarrete and Dignam say. Tenants happy to live without upgrades, assuming they were not a safety issue, could use this to push back against a rent rise, or request that a rent hike be conditional on making improvements.
Some renters have even been offering to improve a property themselves, as a trade-off to keep rent lower, says Ben Cording, Tenants Victoria’s lead community education lawyer.
People can make all sort of agreements but make sure they are clear, and you get it in writing, he says.
Another option for tenants, Dignam says, is to contact their landlord to explain how a rent rise would affect them, and try to get them to empathise, while making a lower counter offer. This was best for tenants who have direct contact with landlords.
However, both Dignam and Patterson Ross warn the lack of available rentals could make tenants wary of negotiating, and reduce their power to do so. With no-grounds evictions allowed across much of the country, tenants may fear a retaliatory eviction if they pushed back, which could leave them struggling to find a new home.
Need help convincing your landlord?
Tenants in Victoria can ask Consumer Affairs for a rent assessment, while those in Tasmania can apply to the Residential Tenancy Commissioner for a review. In most other states and territories tenants can go to their Civil and Administrative Tribunal for an order that the new rent is excessive, while those in Western Australia can apply to the Magistrate’s Court for an order.
Cording encourages renters in Victoria to challenge excessive rent hikes. Applications need to be lodged within 30 days, and Consumer Affairs then sends someone to inspect the property. He suggests tenants show inspectors outstanding repairs, property issues, flag previous rent increases and also do their research.
With landlords in the state no longer able to evict a tenant without a reason, tenants should feel safer challenging a rent increase, Cording says.
If they get a report that says the rent is excessive, they’re certainly in a stronger position to negotiate, and if the [tenant and landlord] don’t agree, the tenant can still head off to [the Victorian Civil and Administrative Tribunal], he says.