Renters sign on to an agreed rental figure at the commencement of a rental agreement, but this is usually with the understanding that the agreed rental amount may change over time in line with inflation, market fluctuations, and as a reflection of renovations or upgrades made to the property.
Rental Providers (landlords) do have the right to increase rent, but there are strict guidelines around how this increase should be implemented, including how often it can go up, how much notice must be provided before it is increased and how much it can be increased by each time. These details are most often included in the rental agreements (lease) themselves.
There may also be a clause that states no increase can be made within a certain period. If rent increases are an important part of your budget, you should talk to your property manager before commencing a rental agreement.
When increasing the rent, there are a few rules a Rental Provider must follow. In a fixed term lease, rent cannot be increased usless it is stated in the agreement and the correct amount of notice has been given. The renter must be advised in writing that their rent will increase at least 60 days in advance. The letter must state the day the rental increase will commence, how much the rent will increase by and what the new rental amount will be. The current Victorian legislation (as of 2022) does not allow the rent to be increased more than once every 12 months, whether a fixed term agreement is in place or not.
In the event that such notice is not provided, a renter can refuse to pay. They can also dispute an excessive increase in rent if they believe the new amount to be unreasonable. Their justification of this can reference rental properties similar to them locally and they may draw on your history as a not-so-great Rental Provider, if relevant.
If cheap repairs are made, nothing has been upgraded and no maintenance or care is applied to the property over a considerable time, the renter could by rights question the validity of the rent increase.
When deciding to increase rent, it’s important to weigh up the possibilities – incremental increases over the years in line with market rates will mean your renter is not put into hardship trying to cover excessive rent increases.
Frequently, holding onto a great renter is worth much more than a few hundred dollars a year in extra rent. You should talk to your property manager in detail about increasing the rent and follow their guidance on the subject. They will be advising their other Rental Providers similarly so this will keep your decisions in line with the market and ensure you’re maintaining a fair and reasonable situation for your renter.