Increasing Rent NSW

[redwing]

Speaking with the Property Manager (NSW) the other day I queried the ability to have a twelve (12) month lease with an increase written in for rent at the six (6) month period.

I was told this was not possible in NSW, it would have to be a six month lease, then a new six month lease at the increase?

Having previously done the first scenarion in WA by writing in the increase in $ amount in the lease I am wondering if th PM is right, initial investigations reveal I may be able to do so, but would appreciate feedback from others

I have spoken to two (2) other PM's at the Real Estate company and received the same feedback (cannot be done).

LegislationNSW

45 Increase of rent

(1) The rent payable by a tenant under a residential tenancy agreement shall not be increased except by notice in writing given to the tenant specifying the amount of the increased rent and the day from which the increased rent is payable.
(2) A day specified as the day from which increased rent is payable shall not be earlier than 60 days after the day on which notice of the increase was given under this section.
(2A) A notice given under this section may be cancelled by a later notice or a later notice may provide for a lesser increase than that specified in the earlier notice.
(2B) A later notice has effect instead of the earlier notice and takes effect from the date on which the earlier notice was to take effect.
(3) A notice of increase of rent given in accordance with this section (and not cancelled by a later notice or affected by any order of the Tribunal) varies the residential tenancy agreement so that the increased rent specified in the notice is payable under the agreement from the day specified in the notice.
(4) The rent payable by a tenant under a residential tenancy agreement that creates a tenancy for a fixed term shall not be increased during the currency of the term unless the amount of the increase, or a method for calculating the amount of the increase, is set out in the agreement.
(5) A rent increase (including a rent increase permitted under subsection (4) or provided for in any other residential tenancy agreement) is not payable by a tenant under a residential tenancy agreement unless the rent is increased in accordance with this section or by an order of the Tribunal.
(6) A landlord shall not contravene or fail to comply with this section.

Fair Trading

How can rent be increased?

Rent may be increased after the fixed term period of the agreement has expired. Before a landlord (other than the Department of Housing) can increase the rent the tenant must be given at least 60 days notice in writing. The notice must show the amount of the increased rent and the day from which the increased rent is to be paid. This also applies where an existing agreement is to be renewed.

If the notice is sent by post at least four working days should be added to the amount of notice, to allow time for the notice to be delivered.

For rent to increase during a fixed term tenancy the agreement must have an additional term showing the amount of the increase or the method of calculating it. A 60 days rent increase notice must still be given.

Not sure why they are arguing the point, I will send the above through in the a.m. and see what response I get

[Propertunity]

Hi redwing,

I'm in NSW and have 9 tenancies. One of my PMs writes 12 moth leases with 6 monthly rental reviews in them - which I have exercised midway thru the 12 months to increase the rent (with the 60 day notice period).

If they still hold that belief - they need retraining

6+6 month leases look to extract extra lease fees from you - good for the REA not for you tho.

[mjinwa]

I had the same response from my PM for my property in Melton that recently had new tennants. I asked to do a 12 mth lease with review at 6mths and was told that this was not possible and I had to do a 6 mth lease.
Can any one advise if it is possible in Victoria to do what I want?

regards
Mike

[BV]

Originally Posted by redwing

I have spoken to two (2) other PM's at the Real Estate company and received the same feedback (cannot be done).

It can be done by adding an extra sentence to the standard form.
I don't know if it's legal though.

IMO a long lease in the current environment might not be in your best interest because rents are likely to increase at rates above CPI and because some people (particularly some good tenants) will be hessitant to sign a lease with a rental increase in it.

I do the shortest leases possible because after they expire I have the ability to increase rents as often as the market allows and currently rental increases are well above CPI.

[redwing]

Originally Posted by BV

It can be done by adding an extra sentence to the standard form.

I don't know if it's legal though.

IMO a long lease in the current environment might not be in your best interest because rents are likely to increase at rates above CPI and because some people (particularly some good tenants) will be hessitant to sign a lease with a rental increase in it.

I do the shortest leases possible because after they expire I have the ability to increase rents as often as the market allows and currently rental increases are well above CPI.

Why illegal BV?

The reason I ask is one of the PM's mentioned the same thing, searches on the net (excerpts above) seem to state contrary to that?

[Collector]

Can be done - have done plenty!


The way it is done:

Clause added to Additional Terms (page 6 of lease) - clause reads: The rent is to be increased to $xxxxx per week from xx/xx/xxxx

A notice of rent increase (seperate to lease) must be sent to the tenant giving the tenant "at least" 60 days written notice - i would normally attach copy to lease on signing and get tenant to sign receipt.


Its that simple

[BV]

Originally Posted by redwing

Why illegal BV?

I am not saying that it is.
I just don't know the legal aspect on the addition of such a clause.
It should be ok, and since the tenant agrees and signs it,
it's unlikely that he will challenge it.

[buzzlightyear]

Originally Posted by mjinwa

I had the same response from my PM for my property in Melton that recently had new tennants. I asked to do a 12 mth lease with review at 6mths and was told that this was not possible and I had to do a 6 mth lease.
Can any one advise if it is possible in Victoria to do what I want?

regards
Mike

Very possible and legal Mike. Maybe your PM (aside from being a bit slow) has misinterpreted your comment of rent reviews. Its not a rent review as such, it is simply an agreed increase in the rent at a specified date.

As long as the rents and effective dates are indicated on the schedule, there is no issue, subject to minimum 6 month time between rental increases. Have done it twice on one IP for the previous 2 one year leases to the same tenant. Once was with a PM, the other whilst I was self-managing.

[Propertunity]

Originally Posted by BV

because some people (particularly some good tenants) will be hessitant to sign a lease with a rental increase in it.....I do the shortest leases possible because after they expire I have the ability to increase rents as often as the market allows

Hi Bill,
Interestingly enough, in my own particular situation, one of my best tenants keeps asking for a 12 month lease - I guess they like the house & don't want to have to be forced to move. They probably also want to lock in a good rent in what they see as a rising interest rate environment (thank goodness one of their first requests was for permission for a Pay TV dish that way the media can keep softening them up for me).

Last year I had a clause in the lease that allowed for a rental review and an increase, if the review was indicating that an increase was justified. If it was, then it was capped at $x's. I did exercise this clause btw. So there are things you can do to cover you & your tenant - win-win.

[redwing]

Originally Posted by Propertunity

Hi redwing,

I'm in NSW and have 9 tenancies. One of my PMs writes 12 moth leases with 6 monthly rental reviews in them - which I have exercised midway thru the 12 months to increase the rent (with the 60 day notice period).

If they still hold that belief - they need retraining

6+6 month leases look to extract extra lease fees from you - good for the REA not for you tho.

Thanks Propertunity

Agree as well that it probably better serves them than me

Originally Posted by Collector

Can be done - have done plenty!


The way it is done:

Clause added to Additional Terms (page 6 of lease) - clause reads: The rent is to be increased to $xxxxx per week from xx/xx/xxxx

A notice of rent increase (seperate to lease) must be sent to the tenant giving the tenant "at least" 60 days written notice - i would normally attach copy to lease on signing and get tenant to sign receipt.


Its that simple

Thanks also Collector, great tip there

[mjinwa]

Thanks all for advice and clarification.
Seems there are 2 options, build in a predetermine rise at 6 months within a 12 month lease or do a 6 mth lease and then re-lease at market rates. All this is tempered by retention of good tennants.

regards
Mike