Rules around when and how to increase the rent
If you’re a Mount Isa landlord, it’s important to understand your legal obligations when it comes to increasing tenant rent. The Residential Tenancies Authority in Queensland has specific regulations in place. These regulations vary based on the type of rental agreement.
Rent increases during fixed term agreements
You can only increase the rent on a fixed term agreement if all of the following conditions are met:
- the agreement specifically allows for a rent increase.
- the agreement outlines how any rent increase will be calculated.
- the agreement has been in place for at least 6 months.
- it has been at least 6 months since the last rent increase.
- you provide your tenant with at least 2 months’ written notice of the increased amount.
Rent increases at the end of fixed term agreements
You can negotiate a rent increase with your tenant to take effect from the end of their current fixed term agreement by entering into a new agreement. However, you can’t increase the rent if you have already increased it within the previous 6 months.
There is no required notice period for increasing the rent if a new agreement will come into place. But if you do want to negotiate an increase, it’s in your best interests to give your tenant as much notice as possible. If they don’t want to sign a new agreement for the increased amount, you or your property manager needs to have the time to find new tenants.
Rent increases on periodic agreements
A periodic agreement has no fixed term, such as a month by month lease. You can only increase the rent on a periodic agreement if all of the following conditions are met:
- you provide your tenant with at least 2 months’ written notice.
- the agreement has been in place for at least 6 months.
- it has been at least 6 months since the last rent increase.
Can a tenant dispute a rent increase amount?
A tenant can formally dispute a rent increase that they believe is excessive by applying for a dispute resolution service provided by the Residential Tenancies Authority.
A good way to avoid this scenario is to have formal rent review periods and associated calculations written into your tenant’s rental agreements. That way, tenants can’t claim that they have been ‘blindsided’ by any increases. A good property manager can ensure you have these bases covered in your rental agreement with your tenant.
What is a reasonable rent increase?
Many residential rental agreements tie rent increases to a periodic review of rent rates in the local market for comparable properties, or to movements in the consumer price index.
A review of local market rent rates can be done on your behalf by a local Mount Isa property manager like one of our team at Jays Real Estate.
The bottom line
Regardless of your legal obligations and the type of rental agreement you have, it’s a courtesy to give your tenants as much notice as possible of any reasonable rent increases. This contributes to a healthy landlord/tenant relationship.
Once again, a property manager can do this communication on your behalf.
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