Valid Rent Increase Notices - Are your increases invalid?

Agencies and Residential Rental Providers who fail to complete rent increase notices correctly may be at risk of having to reimburse any increased amounts to renters in the future by determination at VCAT. We urge all property management teams and administration staff to review their processes and practices in issuing notices of proposed rent increases to ensure alignment and compliance with the Victorian Residential Tenancies Act (Section 44) together with the Residential Tenancies Regulations (Regulation 21 & Form 5).

Most importantly, the notice of proposed rent increase to the renter must document in detail the method by which the rent increase was calculated together with any calculations and/or comparable properties that were used by the agency or RRP to arrive at the proposed rental increase amount. Provide details of the process and calculation used to reach new rent amount. The rent increase cannot be greater than the amount calculated using the nominated method. Failure to include sufficient information is likely to deem the notice invalid.

There are many cases being brought to VCAT for determination. VCAT sitting Members are making it very clear in as many as three (3) known cases where rent increase notices have been deemed invalid and orders to reinstate the former rent and directions to the RRP to return and rents paid in excess back to the renter.

In the VCAT cases of, i). Asif v Jian Ding Property Pty Ltd (VCAT 1042), ii). Boyce v Mariella Nominees Pty Ltd (VCAT 89) and, iii). Kennedy v Pan (VCAT 529), it has consistently concurred and handed down similar determinations. The key points are:

• Ensure that the notice of rent increase includes sufficient information to enable the renters to not only answer the question as to why it is given, but also to determine whether the proposed rent is excessive and should be challenged.

• VCAT considers that a simple reference to a “Comparative Market Analysis” without further information about the properties that were used, their location or features, fails to satisfy the requirements of s 44(3)(b) that the method of calculation be provided, or the requirements of the prescribed form 5 (increase notice) by providing details of the process used for that method of calculation.

• VCAT considers that a simple reference to “CPI” with an absence of any calculating formula, adequate data and calculations does not enable the renters to make a proper assessment about the “reasonableness” of the increase.

In the spirit of transparency, full disclosure, and mitigation of risk to any proposed rent increase notices being declared invalid, we urge all agencies and agents to provide much more information in all future notices. Agencies who feel that some of their recent notices issued to renters may be lite-on the detail may wish to consider retracting such notices and issuing new ones with the relevant information necessary to justify the rent increase.