Higher mortgage rates, insurance premiums and maintenance costs are likely contributing to reasons for raising the rent on one or more of your investment properties at the moment.
If that’s the case, you’d not be alone. Rents are increasing across Australia by more than 10% year-on-year in every capital city and many regional areas.
An outlook showing continued favourable rental property returns has renewed buyer interest in the investment market.
Whether you’re a long-time investor or not, you should be aware you cannot simply hike the rent without following state-based laws that protect your tenant’s rights. In other words, there’s a right and wrong way of doing things.
Here are some examples:
- Each state and territory can limit how often you can increase rents.
- You can increase the rent by as much as you wish unless you’re in the ACT, which has capped hikes to 10% plus inflation. Currently, that limit stands at 16.1%.
- You can’t hike the rent if your tenants are on a fixed-term lease unless the contract specifically allows it.
- There’s no need to explain your reasons for increasing the rent.
- You must give your tenants plenty of notice, inform them in writing, and use specific forms to do so, where required. Your property manager will guide you on the details in each state.
- A tenant can appeal a rent rise to a court or tribunal, depending on which state your investment property is located in and they may use a tenant advisory council to help enforce their rights.
- No enshrined benchmark, rule or law specifies what constitutes an unfair rent increase.
- To avoid a lengthy arbitration process, however, it’s wise to ensure a rise is fair; otherwise, you open yourself up to an unfavourable ruling.