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Anyone with experiences with rental increases related to s35 and 37 of the standard tenancy agreement?

By redcorella - 18 January 2009 18

Hi all

I am seeking clarification about the application of clauses 35 and 37 of the Standard Residential Tenancy Agreement. They state:

    35.        The rent may not be increased at intervals of less than 12 months from either the beginning of the Tenancy Agreement for the first increase, or after that, from the date of the last increase.

    37.        The restriction on increase in rent applies provided the identity of at least 1 of the tenants who occupy the premises remains the same as at the time of the last increase.

Has anyone ever explored these sections and had rental increases considered (or not) under these terms?

I see that there is a wide spectrum of potential effects from applying 37. At one end of the spectrum, if leases are broken frequently with an individual leaving and a new individual coming in, in theory, there may be long periods of time where the rent cannot go up as there is always an individual the same since the last increase. At the other end of the spectrum, if in fact this section is not applied, doesn’t it mean that every time a lease is broken, the rent can be put up, meaning that a property with frequent changes might (in theory) increase in rent every few months, whenever there is a change to the lease?

Any thoughts?

Thanks

What’s Your opinion?


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18 Responses to
Anyone with experiences with rental increases related to s35 and 37 of the standard tenancy agreement?
aidan 12:07 pm 19 Jan 09

We took our landlord to the tenancy tribunal over an excessive rental increase. The magistrate asked us what we thought was a fair rise, took the landlords requested rise and split the difference (set the rent to be in the middle of our respective positions).

The landlord was represented by the Real Estate agent and he wasn’t that bothered about going to the tribunal and didn’t seem pissed off at us.

redcorella 11:08 pm 18 Jan 09

Ruby Wednesday said :

I would suggest there’s a perception, fair or otherwise, that a share house of students is probably the least effective way to get guaranteed rent each month.

Not all share houses are students! What about professionals of a range of ages, for example?
But yes, I understand what you’re saying 🙂

Ruby Wednesday 10:45 pm 18 Jan 09

“Surely having the guaranteed rent each month is more important to a landlord than worrying about who the actual individuals are.”

I would suggest there’s a perception, fair or otherwise, that a share house of students is probably the least effective way to get guaranteed rent each month. The rental situation in Canberra (which I have only just escaped!) means that landlords can be very picky.

redcorella 10:41 pm 18 Jan 09

thanks all for your comments. I did receive a comment (off-forum) that if point 37 is upheld then potentially landlords might not want to rent to ‘share-houses’ due to (potentially) more frequent turnover. Surely having the guaranteed rent each month is more important to a landlord than worrying about who the actual individuals are. I see that possibly the 12mth rule can be applied more to the property and that share-house tenants are notified when they move in that the rent might go up every year in August (for example) irrespective of when an individual moves in… Anyway, these questions about these sections have been forwarded to the RTT as I think it’s a strange point of law that isn’t clear to tenants or agents/landlords.

YapYapYap 10:09 pm 18 Jan 09

I can’t believe that this Govt, after 7+ years, hasn’t revised the current law (Residential Tenancies Act) – introduced by Carnell to replace the tenants’ rights focus of the old Landlord and Tenant Act.

The RTA is too heavily weighted in favour of the landlord, something Carnell never dared to do to commercial tenants’ rights. (Before someone demands I prove this, read the Act at this link http://www.legislation.act.gov.au/a/1997-84/default.asp.) and tell me where tenants have any reasonable rights.

Rusted-on Lib voters as residential landlords (or more likely their agents) on one hand, vs. rusted-on landlords and rusted-on tenants in commercial tenancies on the other. No surprise she balked at doing-over comercial tenants in the same way she did residential tenants.

Mind you, could be worse. In Qld it is legal to evict a residential tenant solely on the grounds that a tenant loses their employment.

Enny 8:37 pm 18 Jan 09

We’ve been very lucky that in the last three years our rent has gone from 210 to 235 to 250 to 290. The last increase seemed pretty steep, but it seemed to be allowed in the rules and we’re still paying a good price for a good quality three bedroom townhouse.

Part of the reason we got it so good was that we took over the lease from some friends who had bought, and a rule was that they couldn’t increase it from what it was until we had been in there for at least 12 months? Not sure how that worked though, as it seems to be the opposite of what clause 37 is saying.

Vic Bitterman 7:16 pm 18 Jan 09

Bah, next = nest above. Bring on the ‘Edit’ button in these silly wordpress style forums. 🙂

Vic Bitterman 7:14 pm 18 Jan 09

deye said :

Good landlords with decent long term renters will prefer to keep them rather than try the pot luck draw of new tenants for a bit more money.

That’s my strategy. I have quite a few IP’s (more than 10), and to be honest, a decent reliable tenant gets the roof over their heads. I don’t necessarily increase the rents each 12 months by the verbatim bank increase either, as I value honesty and reliability. Whoever puts their head down in my IP’s each night is effectively looking after my retirement next eggs. Compared to how my super funds are performing, this is cheap insurance!

madmad 6:24 pm 18 Jan 09

This was what just determined our new rent. After 12 months in our current house, we’ve just signed a new lease. The property manager told us that if we stayed on the rent would only go up $10 a week, but if they had to get new people in then it would go up $60 a week.

Of the 3 ‘original’ tenants, 2 of us are staying on, so we were able to get the $10 increase.

Felix the Cat 6:05 pm 18 Jan 09

Quite a topical subject for me at the moment. The real estate agent has just sent me a letter saying the lease on my (Qld) investment property is due for renewal in March and they recommend the rent go up to $390/week, from $375/week. I think this is too much as the tenant seems to be good, pays the rent on time and looks after the place and plans to renew for another 12 months so I think a $5 increase is fairer.

VYBerlinaV8_the_one_ 2:18 pm 18 Jan 09

Usually, depending on the situation. Perfectly good tenants sometimes get evicted when a property changes owners, simply so the new landlord can get market rent on their investment. For properties that have been owned a while, the landlord has had a few increases anyway, and is less concerned about getting a few extra bucks than having tenants who look after the place.

Once, when buying a property, I actually had the real estate agent (who also managed the property) tell me that the tenants weren’t much chop, and that I should call for vacant possession so as to get better (paying) tenants in.

deye 2:14 pm 18 Jan 09

VYBerlinaV8_the_one_they_all_copy said :

Of course in times of massive shortages, landlords will find ways to evict tenants so they can substantially increase the rent.

Good landlords with decent long term renters will prefer to keep them rather than try the pot luck draw of new tenants for a bit more money.

VYBerlinaV8_the_one_ 2:01 pm 18 Jan 09

What it’s saying is that rent can’t be increased more than once per year if at least one tenant remains the same.

Each time the property is put on the market for rent, the rent value can be set to whatever the landlord wants, thus letting the market decide it’s value. There’s also a rule about the maximum percentage that the rent can be increased by if at least one tenant remains the same.

Seems to me to be reasonably fair, in that tenants only receive yearly increases, and then only the lesser of either the maximum percentage allowed (which isn’t that much) or market value.

Of course in times of massive shortages, landlords will find ways to evict tenants so they can substantially increase the rent. In times of oversupply, landlords need to reduce real rent values and/or provide other incentives to tenants.

caf 2:00 pm 18 Jan 09

I’ve found most real estate agents are pretty good about keeping to this clause – only one increase every 12 months. However, they don’t tend to be so good about keeping to the other part of it – where rent increases more than 20% above the relevant CPI increase are considered “excessive”.

Ruby Wednesday 1:09 pm 18 Jan 09

I haven’t had any personal experience with it, but I have read it as they can only increase rent once a year, providing there is at least one continuing tenant. A complete change of tenants from the previous increase resets the clock. A complete vacation of the premises at the end of a tenant’s lease means it can be rented out for whatever price the market will give them.

Or, as the renting book puts it:

Rent cannot be increased in the first 12 months of a tenancy and, for an existing tenant, may only be increased once each year thereafter.

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