Rent regulation around Australia

This is the first post in a new series looking at rent control. In this post we will look at rent control in Australia. We will give an overview of what rent regulation is, what currently exists in each jurisdiction, and our reflections on what is needed.

What is rent control?

Rent control is a type of regulation limiting how much landlords can increase rents. Technically, rent control is used when restrictions apply within tenancies but also between tenancies - a practice known as 'vacancy control'. "Rent stabilisation" is the terminology used to refer to regulations that apply only within, but not across tenancies. And we can use "rent regulation" to refer to regulations that, in general, seek to limit or restraint rent increases. Note that the emphasis is on increases, not on rents as such. Rent control is a normal and common practice around the world, and even Australia has rent regulation in some form across different jurisdictions.

Rent regulation in Australia

Rent regulation around Australia is fairly consistent, and fairly weak:

The minimum time between rent increases, whether permitted by the terms of a fixed term lease or during a periodic lease, is either 6 or 12 months.
There is general uniformity in the notice requirement for rent increase, being 2 months/60 days (the NT is the outlier).
There are no price controls (also known as vacancy control) on rent increases between tenancies, although WA tenants can challenge rent increase at renewal/extension of a fixed term lease and QLD tenants can challenge the rent charged in a new agreement.
In all jurisdictions apart from the ACT, there is no regulation on maximum rental increases.
In all jurisdictions apart from the ACT, the onus is on the tenant to challenge an increase they believe to be excessive.

Below, we present an overview of the situation in each jurisdiction. But before that — what do we think the system should look like?

How can we do rent regulation better?

We can improve rent regulation by looking at the frequency of increases, the allowable amount for increases, and what happens to rents between tenancies.

Frequency and notice of rent increases

People deserve security relating to their financial obligations. Where rent increases are allowed too often and with less notice, rental stress is the likely outcome. Rent increases should be allowed at most once per 12 months. Notice periods should be longer to allow tenants more time to respond to a threatened increase, including the option of challenging it.

Amount of rent increases

Landlords should not be permitted to increase rents by huge amounts simply because rental properties have become relatively more scarce and other landlords are increasing rents. This sort of price gouging leads to displacement and makes renting less affordable, uprooting communities and also leading to economic homogenity. Governments should introduce straightforward default limits for allowable rent increases, although they could potentially allow higher increases on application where the quality of the property has been improved. Rent increases could be tied to inflation or to wages or simply set at a simple percentage rate — or some weighted combination. A simple percentage rate has the advantage of being easier to understand and communicate, which is very important in this area. The current paradigm, where a rent increase is allowable because renting is becoming more expensive in general, is antithetical to helping people make stable and affordable homes.

Vacancy controls

Without rent controls, landords can charge as much as they can get away with when starting a new tenancy. This pushes up prices in an area. It also gives landlords a perverse incentive to try to force out incumbent tenants — unfortunately, a common practice in jurisdictions with rent regulation that nonetheless allow increases between tenancies. Limiting rent increases between tenancies helps to ensure there are affordable housing options in communities, while disincentivising landords from trying to eject tenants.

The current situation around Australia

Below is an overview of current rent regulation in each jurisdiction around Australia.

ACT

Increases during fixed term: only if there is a clause in the lease which allows for this.
Increase frequency: limited to 12 months
Notice requirements: 8 weeks written notice
Ability to dispute increase: The ACT specifies a threshold of CPI+10%. Below this threshold a tenant who wishes to dispute has the onus to appeal to the Tribunal. Above this threshold, unless a tenant agrees to an increase, the lessor has the onus to go to the Tribunal.

NSW

Increases during fixed term: if the lease is longer than two years, increases during the fixed term are allowed. If the lease is for less than two years, increases are only allowed if there is a provision within the lease that allows for an increase.
Increase frequency: limited to 12 months.
Notice requirements: 60 days written notice.
Ability to dispute increase: If the tenant believes that the rent increase is excessive, they have 30 days from receiving the notice to take the landlord to NCAT. In deciding whether the rent is excessive and setting future rents if that is the case, the Tribunal will consider comparable rents for similar properties in the same area, the state of repair and amenities provided in the property, and the landlord’s expenses.

VIC

Increases during fixed term: only if there is a clause in the lease which allows for this.
Increase frequency: limited to 12 months.
Notice requirements: 60 days written notice.
Ability to dispute increase: If the tenant believes that the rent increase is excessive, they must apply to Consumer Affairs Victoria to conduct a rent assessment. This has to happen within 30 days of receiving the increase notice. If Consumer Affairs find the increase to be excessive and the landlord does not agree to reduce the rent on this basis, the tenant must then apply to VCAT for an order to set the maximum rent.

QLD

Increases during fixed term: only if there is a clause in the lease which allows for this.
Increase frequency: limited to 6 months.
Notice requirements: 2 months written notice.
Ability to dispute increase: In the case of an existing agreement, the tenant can apply for dispute resolution and also to QCAT for a determination within 30 days of receiving the notice. If the existing agreement is a fixed term lease, they have until the agreement ends to challenge. For new agreements, the tenant can only challenge the increase if the tenant signs the agreement and goes to QCAT within 30 days of entering into the new agreement.

Increases during fixed term: only if there is a clause in the lease which allows for this.
Increase frequency: limited to 12 months.
Notice requirements: 60 days written notice.
Ability to dispute increase: tenants must apply to SACAT and the onus is on them to prove the increase is excessive.

Increases during fixed term: only if there is a clause in the lease which allows for this.
Increase frequency: limited to 6 months.
Notice requirements: 60 days written notice.
Ability to dispute increase: tenants must apply to the Magistrates Court to challenge the increase and can do so upon signing a new lease. The Court will consider a number of factors: if the rent remains comparable with other properties in the area, the cost of upkeep, the cost of services provided by the lessor or tenants, the value of the contents provided by the lessor for the tenant, the state of repair and condition of the property, other considerations such as whether the rent increase is retaliatory or to churn the tenants. Importantly, the Court will also consider the estimated value of the premises meaning that increases in house prices - a factor divorced from the reality of the quality of the home - can lead to huge increases in rents without any material change.

TAS

Increases during fixed term: only if there is a clause in the lease which allows for this.
Increase frequency: limited to 12 months.
Notice requirements: 60 days written notice.
Ability to dispute increase: if the tenant believes the increase is excessive, they can apply to the Residential Tenancy Commissioner for a determination. When applying the tenant must provide information that relates to the reasonableness of the rent such as any outstanding maintenance and how much other similar properties in the area are being rented for.

Increases during fixed term: only if there is a clause in the lease which allows for this.
Increase frequency: limited to 6 months.
Notice requirements: 30 days written notice.
Ability to dispute increase: tenants may engage the Commissioner of Tenancies for a review of the increase.