This Factsheet can also be downloaded as a PDF file: Rent Increases – Is my Increase Excessive
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, and gives you a starting point to negotiate for a fairer amount.
Section 68 of the Residential Tenancies Act 1997 provides a formula to determine who bears the onus of proof when an increase is being reviewed by the Tribunal – ie, whether the landlord has to prove that the increase is not excessive, or whether you have to prove it is excessive.
It also gives a list of factors that the Tribunal must consider when deciding whether an increase is fair, such as the state of repair of the premises and the rent for comparable premises (see section 68(3) below).
The law does not set a limit for increases. It does provide you with a figure to use in negotiations with your landlord/agent, and factors for the Tribunal to look at if negotiations are unsuccessful and you apply for a rent review.
The formula increase is what your new rent would be if your property was average*, and it tells you whether your landlord is seeking a larger or smaller percentage increase than the average landlord in Canberra. However, your property may not be average. The factors under section 68(3) may mean that your rent should increase by less or more than the average figure.
*Actually, the formula adds 20% to the average percentage increase in rents, so if rents go up 5% the formula allows an increase of 6%.
Section 68 Factors
(3) If a tenant or lessor proposes that a rental rate increase is or is not excessive, the tribunal, in considering whether it is satisfied about the proposal, must consider the following matters:
(a) the rental rate before the proposed increase;
(b) if the lessor previously increased the rental rate while the relevant tenant was tenant—
(i) the amount of the last increase before the proposed increase; and
(ii) the period since that increase;
(c) outgoings or costs of the lessor in relation to the premises;
(d) services provided by the lessor to the tenant;
(e) the value of fixtures and goods supplied by the lessor 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 carried out by the tenant with the lessor’s consent;
(i) any other matter the tribunal considers relevant.
A relevant factor under section 68(3)(i) is whether you are forced to pay rent through a rent-card that charges you a fee.
Also, see whether there are any reasons for you to have the rent reduced under section 71 (See Factsheet Rent Increases and Reductions).
Apply the Section 68 Formula
(1) The tribunal must allow a rental rate increase that is in accordance with the standard residential tenancy terms unless the increase is excessive.
(2) For subsection (1)—
(a) unless the tenant satisfies the tribunal otherwise, a rental rate increase is not excessive if it is less than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later); and
(b) unless the lessor satisfies the tribunal otherwise, a rental rate increase is excessive if it is more than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later).
(4) If the tribunal considers a proposed rental rate increase is excessive but a lesser increase would not be, it may disallow so much of the increase as is excessive.
(5) In subsection (2):
index number means the rents component of the housing group of the Consumer Price Index for Canberra published from time to time by the Australian statistician.
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”
Alternatively, the following link will search Google and display results for recent quarters: 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 68(2):
…unless the lessor satisfies the Tribunal otherwise, a rental rate increase is excessive if it is more than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later)…
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
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