You have been given the correct notice but the increase is way too high…
There is something you can do…
Apply the formula… try negotiation or have it reviewed
Start with the Factsheet Rent Increases and Reductions to see whether your landlord has followed the correct process and is allowed to increase the rent. If they have, this factsheet helps you work out whether the size of the increase is excessive or not, whether the landlord can increase by that much and gives you a starting point to negotiate if you want a smaller amount, or to have the increase reviewed.
If you were given notice of a rent increase before 1 November 2019 and you believe your increase is excessive the old process applies, you can apply to ACAT for it to be reviewed. Call TAS for advice if you want to have it reviewed.
A landlord can only increase the rent by more than the amount set by the RTA if:
- the landlord has been to ACAT and has approval for the amount;
- the tenancy agreement permits a set increase after 12 months; or
- the tenant agrees in writing to the increase.
From ACT Government factsheet – Generally, a rental rate increase is presumed to be excessive if it is more than the amount set under the legislation: the ‘prescribed amount.’ There is a formula for calculating the prescribed amount based on the CPI (see below)
The Tribunal has the power to review rental rate increases upon an application by a tenant. If the increase is permitted under the tenancy agreement, then the Tribunal must allow it as long as it is not ‘excessive.’ If a rental increase is less than this prescribed amount, the tenant must satisfy the Tribunal that the increase is excessive. If a rental increase is more than this prescribed amount, the landlord must satisfy the Tribunal that the increase is not excessive…………… a landlord can increase the rent on a property by ten percent more than the increase in the CPI.”
The figures below are sourced from the Consumer Price Index Report, produced quarterly by the Australian Bureau of Statistics. The figure is not the general CPI figure, it is for rents only.
To find the figures, the complete list of CPI figures for Canberra dwelling rents can be found in ABS CPI Downloads TABLE 9. CPI: Group, Sub-group and Expenditure Class, Index Numbers by Capital City the worksheet is – Index Numbers: Rents; Canberra. You then need to scroll down through all of the figures in the index until you reach “rents Canberra” (down to table (1129)
Alternatively, the following link will search Google and display the latest CPI quarter, as well as when the next release is expected: SEARCH »
Explanation of Quarters
Quarters relate to the 3 preceding months, as follows:
|March Quarter||1 January—31 March|
|June Quarter||1 April—30 June|
|September Quarter||1 July—30 September|
|December Quarter||1 October—31 December|
NOTE: The figures are released by the ABS at the end of the month after the end of the quarter, eg April figures (in the June quarter) are not available until the end of July.
An Example Calculation –
The onus of proof is determined by applying the formula in Section 5A: The prescribed amount is the amount worked as follows: PI + PI/10
NOTE – THIS EXAMPLE IS OUT OF DATE AND SOON TO BE UPDATED Your tenancy agreement started in April 2015 at a rent of $450/week. At the end of April 2016, you received notice of a rent increase to take effect at the end of June 2016.
The most recent CPI figure available when you receive the notice is for the March 2016 quarter. Because you have not had an increase you compare the March 2016 CPI figure (99.9) to the figure at the start of your tenancy, in April 2015 (100.3).
The change is actually a decrease. As there is no increase in the CPI, if you challenged it the Tribunal the landlord or agent must be able to convince the Tribunal why it should be permitted.
To demonstrate the formula being used where there has been an increase in the CPI the example below uses previous CPI figures:
The most recent CPI figure available when you receive the notice is for the December 2010 quarter. Because the increase is after 12 months, you compare the December 2010 CPI figure (202.1) to the figure 12 months earlier, in December 2009 (192.9).
Calculate the difference in CPI figures:
202.1 – 192.9 = 9.2
Express the difference as a % of the initial CPI:
(9.2 ÷ 192.9) x 100 = 4.76%
Apply this to the current rent:
(4.76 ÷ 100) x $400 = $19.04
Work out 20% of that increase:
(20 ÷ 100) x $19.04 = $3.80.
Add both dollar amounts together:
$19.04 + $3.80 = $22.84
If the proposed increase is more than $22.84 (or the new rent is more than $422.84) the landlord or agent must be able to convince the Tribunal why it should be permitted. The formula increase is a useful starting point for negotiations.
Note that the Tribunal must also consider the issues listed in section 68 such as rent for comparable premises and the state of repair of the property.
Rent Increase Calculator
We have an Excel Rent Increase Calculator that you can use to double check your calculations – rent-increase-calculator