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How do rent increases work

How do rent increases work?

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The apartment rental market is red hot and owners and renters are all talking about rent increases. They have lots of questions and are asking what the rent increase rules are.

Owners and renters are asking…

  • How much can the rent be increased?
  • When can it be increased?
  • Can the rent go up during a lease? 
  • What is the process of increasing the rent? 
  • Can the rent go up without signing a new lease?
  • Can a renter object or not pay the increase?

We are experiencing the most volatile apartment rent cycle ever. During covid, apartment rents dropped by 20% – 30%. Now they are rising beyond pre covid highs The apartment rental market is red hot with vacancies at record lows and rents are at record highs. 

Normally the apartment rental market ticks up in summer, before taking a breather in winter. This year however, it looks like Melbourne’s Winter will not be freezing rents at all. 

In normal markets, an annual apartment rent increase might be $5 or $10 per week. In the current market most increases are $50 per week with some increases well over $100 per week. Especially if it is still catching up from the Covid low rent. That can be a big shock to a renter, especially with other cost of living presures. However, in those cases renters usually had a good deal for the last few years.  

Answers to the above questions vary in each state but here they are for Victoria. 

Rent increase rules

  1. An owner can only increase the rent once a year even if the lease is month to month. 
  2. The rent can’t go up during a fixed term lease unless the increases have been agreed in the lease.  
  3. The renter needs to be given at least 60 days’ notice of the increase.  
  4. There is no maximum on how much the rent can go up. 
  5. The rent can be increased without a new lease being signed.
  6. If a renter thinks the increase is unreasonable, they can try to negotiate. Otherwise, they can ask Consumer Affairs to assess it. Their other option is to move out to something in their price range. 
  7. The bond can’t be increased in line with the increased rent unless the lease is for more than 5 years. 
  8. It’s important the increase is issued correctly. 
  9. There are other provisions to support renters experiencing hardship. 

After a rent increase notice is sent an owner may want to know if the renter agreed to it or not. However, a renter does not need to respond or formally accept a rent increase. Once the increase is issued then it is up to the renter to do one of four things. 

Renters options when given a rent increase.

  1. Pay the new rent when it starts. 
  2. Negotiate.
  3. Suggest it is unreasonable and ask CAV to assess the market rent.
  4. Relocate to a new home in their price range.

It is important to get the right advice so the rent increase is fair and at the market rate.  

If you have any questions about rent increases, please let us know. 

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