Common Pitfalls in Rent Increase Notices
This blog only focuses on Notice of Rent Increases in Victoria.
Rent increase notices are a critical tool in property management, allowing residential rental providers (RRP) to adjust rent in line with market conditions. However, issuing these notices incorrectly can lead to costly disputes, renter dissatisfaction and even invalidation of the rent increase. At Castellan Consulting, we’ve seen firsthand how small errors in rent increase notices can spiral into major issues. This blog will highlight the most common pitfalls in rent increase notices and provide practical tips on how to avoid them.
1. Failing to Provide Adequate Notice Period
One of the most common errors is not giving tenants the required notice period before a rent increase takes effect. In Victoria, the Residential Tenancies Act 1997 (Vic) (RTA) mandates that residential rental providers must give renters at least 60 days’ written notice of a rent increase. The notice period starts from the day the renter receives the notice, not the day it was sent. For example, if you are issuing a rent increase via registered mail, you must account for the time it will take for Australia Post to deliver the notice to the renter. If you have served the notice by registered mail, then it is critical that you retain the delivery tracking number which shows when the notice was delivered.
2. Incorrect Calculation of Rent Increase
Another common issue is errors in calculating the new rent amount. Property managers must ensure that the rent increase aligns with the rental market or show a method of calculation. Miscalculating or failing to clearly explain how the increase was determined can lead to disputes or invalidation of the notice. For example, if a notice is being issued on the bases of comparable market conditions, then a report detailing those comparable properties must be attached to the notice when it is served on the renter.
For example, in Boyce v Mariella Nominees Pty Ltd ATF Lorusso Family Trust (Residential Tenancies) [2023] VCAT 89, the real estate agent failed to include a comparable market report with the notice that cited “Comparative Market Analysis” as its method of calculation. The notice was considered invalid.
3. Failing to Use the Correct Notice Format
The section 44 of the RTA requires rent increase notices to be issued in a prescribed format. Property managers who fail to adhere to this format, will render the notice invalid. The notice must include specific details such as the current rent amount, the new rent amount, the date the increase will take effect, and the method of calculating the increase.
For example, in Gregorio v Gregorio (Residential Tenancies) [2022] VCAT 680, the Tribunal found that a private residential rental provider issuing rent increase notices via text message was invalid.
4. Issuing Increases Too Frequently
In Victoria, rent can only be increased once every 12 months. Some property managers mistakenly attempt to increase the rent multiple times within a 12-month period or during a fixed-term residential agreement, which contravenes section 44 of the RTA.
Make sure you keep careful records of when rent increases were last issued. Set reminders to ensure you do not issue another increase until at least 12 months have passed.
5. Serving the Notice Incorrectly
How a notice is served is just as important as its content. Notices must comply with the RTA, which sets out specific delivery methods such as hand-delivery or registered post. Serving the notice incorrectly can result in delays or disputes over whether the renter received the notice on time. Notices of rent increases can be served by electronic communication (provided consent has been given), registered or ordinary post, or served personally on the renter.
Conclusion: Getting it Right Every Time
Issuing a rent increase notice that complies with the law and respects renters’ rights is crucial to maintaining a smooth and dispute-free property management practice. The common pitfalls mentioned above can lead to costly delays, legal challenges and potentially back pay of rent to the renter, but with proper preparation and attention to detail, they can easily be avoided.
At Castellan, we specialise in guiding property managers through every step of the rent increase process, from drafting compliant notices to dealing with disputes. If you’re unsure about the legality of your rent increase notice or need help navigating the RTA or any aspect of the VCAT process, contact us today for expert advice and support.
