You need to keep in mind that if challenged by the tenant a tribunal can rule against the increase especially if it is mid term so it needs to be backed up by statistical evidence.
We just experienced this.
Some business people requested to rent our very modest 3x1 IP (worst house in best street type). Not ordinary people either. He owned and managed a 100M meatworks processing facility. She built (project managed) multi-million dollar homes in our street as a hobby. She had just finished the place next door and sold off to wealthy Chinese investors for a 5m profit, and decided to do it all again.
They were building their mansion 2 doors down and she wanted desparately to be close to the building site to monitor progress - hence the reason for leasing our IP.
They signed a 2 year lease with us at a modest rent initially, rising to 5% in the second year. The Lease went full term and no problems. Why would there be - she was paying us less than 1% yield. No maintenance calls, no calls at all.
Due to building delays, she requested and was granted a new 2 month Lease (not an extension, but a fresh new Lease). Due to the short term nature and the large general market increase we asked for a significant jump in rent which she agreed to and signed off the Lease. Yield jumped up to 1.75%.
The 2 months came and went and she requested a further extension of 2 weeks, which we also granted. At that point, and this is critical - she had a chat with her female lawyer friend, who advised her that because she didn't complain about any maintenance issues, she'd be liable for any repair bill that came along when she eventually left. The complaints then came thick and fast, at least 4 per day via email for the next 2 weeks solid.
Amazingly, in the thick of all those, she requested a further 4 weeks Lease due to further delays on her building site prior to handover stage. We eventually said no, no more extensions, and insisted she move out.
Two weeks after the Lease finished and she moved out, (Bond signed off and released) she wrote a one page letter to the authorities, complaining of my husband and I charging excessive rent.
She demanded via her lawyer that she wanted the extra rent money back, which was paid by her on the 1st of every month in advance ??
We were forced to defend our position, and hence wrote back to the authority with the position described as above, supplying copies of the executed Lease and bank statements. We questioned her ability / right to question the rent level after the Lease had been signed, the Lease term had expired, they had paid the rent level asked, and they had moved out, an inspection been done and bond returned and everything signed off and parties went their separate ways.
The authorities deemed that the law was totally on her side, and she had every right to complain and have her case heard, although we had done an amiable job defending our position. The signed Lease at the higher rental rate didn't offer us much protection at all in their eyes.
In the end, they finally agreed we had no case to answer, and based their decision solely on her wealth creation activities next door, and hence her ability to pay rent, the fact we received the higher rent payments consistently on the 1st of every month, and also that she continually requested further extensions at the higher rate. It also helped that because of the location, the "general market rent level" didn't apply as she specifically wanted to be in our IP to oversee her multi-million dollar construction.
If it had of been just the signed Lease, I think we would have lost the case and had to repay the tenant the extra rent charged.
Our confidence is now dented.
