This Factsheet can also be downloaded as a PDF file:Rent Increases and Reductions
Rent increases are limited to once every 12 months
…and 8 weeks notice in writing is required.
Excessive rent increases can be disallowed
…and rent reductions can be ordered.
The law in the ACT
Rent increases are covered by the Residential Tenancies Act 1997 (‘RTA’). The terms of every tenancy are set out in the RTA and Standard Lease and are known as the ‘standard terms’. Regarding rent increases, the standard terms specify that:
- The rent may only be increased at intervals of at least 12 months from either the beginning of the agreement for the first increase, or after that, from the date of the last increase (cl 35);
- The landlord (or agent) must give the tenant 8 weeks notice in writing of their intention to increase the rent. The notice must include the amount of the increase, and the date on which the increase will occur (cl 38);
- If the tenant believes the increase is excessive they may apply to the ACT Civil and Administrative Tribunal (ACAT) for a rental rate review (this process is detailed below);
- If the tenant remains in the premises without applying for a review, the increase takes effect from the date specified in the notice (cl 40); and
- The restriction on increases applies provided that at least one of the tenants remains in occupation from the time of the last increase (cl 37).
If you don’t receive proper notice
If the landlord doesn’t give you proper notice, then you may not be obliged to pay the increased rent (cl 34 states that the amount of rent will not vary except as provided by the RTA and the tenancy agreement).
You should write to the landlord before the date of the increase stating that you do not intend to pay the increase and giving the reason. Be sure to keep a copy of the letter as evidence in case there are legal proceedings at a later stage. The landlord may try to assert you are in arrears if you don’t pay the increase.
If you have already paid the higher rent you can make an application to ACAT for the difference to be repaid. Note that ACAT could decide to correct a defect and change the date that the increase takes effect.
Can the bond be increased as well?
No. Standard term cl 15 says that only one bond is payable on any one tenancy agreement.
RTA section 20 specifies that a landlord may only require or accept as bond an amount not exceeding the first 4 weeks of rent payable under the tenancy agreement.
This means that the original amount of bond cannot be increased during the tenancy.
However, if you enter into a new fixed term agreement for the same premises and the
original bond is released, then you could be asked to pay a new bond at the increased amount.
Are there any limits on the amount of a rent increase?
Not in the first instance, a landlord can propose any increase HOWEVER a tenant can attempt to negotiate a different amount or have the increase reviewed by ACAT. ACAT can reduce or even disallow the increase.
If you receive a notice of a rent increase and you believe the increase is excessive, you should write to the landlord advising him or her that you think the increase is excessive, giving your reasons, and asking that the increase be lowered or withdrawn.
If there is no satisfactory response you should apply to ACAT to have the increase reviewed. This application should be made at least 14 days before the increase is due to take effect. ACAT will only hear a late application if there are ‘special circumstances’ – so apply promptly.
At ACAT a formula linked to a CPI figure is applied to determine the onus of proof. If the proposed amount is greater than the calculated figure the landlord must satisfy the tribunal that the increase is justified. If the increase is less, the onus is on the tenant to satisfy the Tribunal that the increase is unreasonable (s67).
Before you challenge a rent increase you should apply the formula to determine a starting point for negotiations. For more details – the formula, the CPI figures and examples, see Tenancy Factsheet: Rent Increases: Is my increase excessive?
Under s68 RTA, in deciding on whether an increase is excessive, the Tribunal will consider:
(a) The rent before the proposed increase;
(b) Whether it has been increased previously in the tenancy and if so, the amount of that increase, and the period since that increase;
(c) Costs of the landlord in relation to the premises;
(d) Services provided by the landlord to the tenant;
(e) The value of fixtures and goods supplied as part of the tenancy;
(f) The state of repair of the premises;
(g) Rental rates for comparable premises;
(h) The value of any work performed or improvements made by the tenant, with landlord’s consent; and
(i) Any other matter the Tribunal considers relevant
NOTE: ACAT may allow an increase that brings the premises in line with rents for comparable premises. However you can still challenge the evidence presented by the landlord, and produce your own evidence about rental rates for comparable premises.
NOTE: If you have valid notice of an increase and don’t pay the increased amount in accordance with that notice you will be in rent arrears. See Tenancy Factsheet: Rent Arrears.
What about GST and rent?
Tenants cannot be charged GST on rent. If your landlord claims GST on rent you can make a complaint with the Australian Competition and Consumer Commission, or the Office of Fair Trading.
Can you have the rent reduced?
As a tenant you pay full rent in return for full use and enjoyment of the premises you live in. However, there are occasions where through no fault of yours, this use and enjoyment may be diminished. You should not be paying for something you aren’t getting.
If this occurs, you should write to the landlord/agent, advising them of the problem (eg the need for repairs). Request that it be rectified within an appropriate timeframe and that you be compensated in the form of a rent reduction. Keep a copy of the letter. See Tenancy Factsheet: Repairs.
If you don’t receive a satisfactory response you can apply to ACAT for a rent reduction. Under s71 RTA, ACAT may order a reduction if it considers your use or enjoyment of the premises has significantly diminished as a result of:
(a) the loss of any appliance, furniture, facility or service supplied by the landlord as a result of:
(i) withdrawal of the service etc;
(ii) failure to do repairs and maintenance;
(iii) failure to provide/maintain locks and security devices.
(b) the loss of the use of part of or all of the premises; or
(c) interference by the landlord/agent with your quiet enjoyment of the property. This includes your right to use the property in reasonable peace, comfort and privacy.
ACAT may order that the reduction take effect from the day on which your use and enjoyment diminished. The reduction may remain in force for up to 12 months (RTA s 71(3)). The order can also be ‘retrospective’, meaning you will receive the difference between the full rent you have already paid, and the reduced amount (s 71(4)).
There are no rules or formulas to determine how much you should be compensated. As each case is different, you should show how you have calculated your claim, i.e. proportion of rent vs impact of loss. You may wish to research previous decisions the ACAT has made about rent reductions in similar cases. A factsheet on searching for decisions can be found here.