Victorian Rental Increase

Good morning everyone,
I need to have something clarified, my property manager does not really answer my questions, and I have had a feeling for some time that she personally knows my tenant, so I need an independent opinion, hence I found my way here.
I have a property managed by an agency in Victoria. First time it was leased for 6 months, 3 months before the lease ended, she sent me a new lease agreement for a further fixed 12 months. There was no rent increase, as I did not think it was needed at that time and she recommended keeping it the same.
There was nothing written in the lease about rent increase besides the clause just above the part that I signed on the lease agreement it reads:

'Changing the rent. Unless this tenancy agreement provides otherwise, during the term of the tenancy agreement the landlord may increase the rent by giving the tenant 60 days notice required by RTR 2008. The landlord must not increase the rent more than once in every 6 months.'

It was my interpretation that this meant I would be able to increase the rent, should the need arise.
However, after recently emailing the property manager she said,
'In terms of a rental increase, we are also required to give sixty days notice, however we are restricted to the current terms of the lease and cannot increase the rent until the current term has expired.'

I then mentioned what the lease agreement that I signed had read, regarding Changing rent.

She then replied,
'In accordance with the Victorian RTA 1997, Section 44 (4) states that a 'A landlord under a fixed term tenancy agreement, must not increase the rent before the term ends unless the agreement provides for a rent increase within the fixed term'.

I responded, with a presumptive approach;
" As you have previously stated -
'In accordance with the Victorian RTA 1997, Section 44 (4) states that a 'A landlord under a fixed term tenancy agreement, must not increase the rent before the term ends unless the agreement provides for a rent increase within the fixed term'.

And as the fixed term lease agreement states -
'Changing the rent. Unless this tenancy agreement provides otherwise, during the term of the tenancy agreement the landlord may increase the rent by giving the tenant 60 days notice required by RTR 2008. The landlord must not increase the rent more than once in every 6 months.'

Please show me where the agreement provides for a rent increase within the fixed term? "

She has now replied saying,..
'We agree that the wording of Clause 36.1 of the updated REIV lease is not clear, however the interpretation of 'unless this tenancy agreement provides otherwise', refers to the fixed term and subsequent conditions set out in the Victorian RTA 1997.

The lease unfortunately, does not incorporate a rent increase and therefore we are restricted to the current terms of the lease until the end of the agreement.'

I am confused and tired of all the back and forth without any clarity. It makes me wonder if she is working for me at all? To myself, the lease agreement says one thing - and the RTA 1997 (Vic) she has quoted says the other, both are conflicting.
The lease will not expire until Jan 2011, why did my PM not tell me rent changes cannot be made before I signed?
Sorry for writing so much on my first post, I would like to hear some constructive opinions of others out there,.

Regards,
Glenda
 
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Hi Glenda
Having read your post I am not in a possition to answer your question
however I thought as you state that you give 60 days notice you can increase rent.
Is the rent to low?
And you can run the risk of having the IP empty if they move out that is my biggest concern I would rather be a little short than having empty for a few months.
good luck with this one hope you get the answers you want
 
Glenda,

You can't increase the rent on a fixed term lease unless it's specified clearly that the rent will increase to a certain amount.

Eg,

Lease Start: 1/1/10
Lease end : 31/12/10
Rent: $1500pcm
Rental increase: $1650pcm from 1/6/10.

There's no need for 60 days notice in this case because it's already stated in the lease the rent will go increase on 1/6/10.

The 60 days clause applies when the lease is no longer on fixed term.

Things you can do:
1) 60 days prior to lease end, send a notice to increase rent, keep it on periodic lease, increase again 6 months later
2) Send in a Notice to Vacate (60/90 days - depending). Negotiate new rental amount before lease end, then get tenant to sign new fixed term lease (can have optional rent increase clause in new lease contract). Otherwise, get new tenant on higher rent.
 
Glenda,

You can't increase the rent on a fixed term lease unless it's specified clearly that the rent will increase to a certain amount.


Thanks badcliq, why then was clause 36 (Changing the rent) in the lease agreement, if it is invalid? The most recent agreement was different to the last one I signed with this agency...
 
'Changing the rent. Unless this tenancy agreement provides otherwise, during the term of the tenancy agreement the landlord may increase the rent by giving the tenant 60 days notice required by RTR 2008. The landlord must not increase the rent more than once in every 6 months.'

I'm not a law expert but i guess it means as per what your agent told you (refering to fixed term). I guess the key point would be the "requirement" by the RTA.

One of the requirements for 60 days notice to increase rent would be that the lease is not under a fixed term agreement. RTA Sect 44(4)
 
Hi Glenda

unfortunately you are stuck as they have signed a 12 month lease at a fixed rent. As mentioned above, you can increase the rent during this period, only if it is already written into the lease. My understanding is that even with this, you still need to give 60 days notice in writing.


Perhaps a more proactive PM who knows these details and would suggest writing a rent increase into a 12 month lease would be the go???
 
There is nothing stopping you from changing PM's while the lease is still in place, if you were unhappy with their service/advice.
 
Tobe - i am indeed reviewing the authority to see if this is an option. Obviously due to current events I am not happy with my PM, more thinking of the tenants best interests than my own.
Thank you all who have contributed so far. Life is a lesson. cheers
 
My reaction on reading this is that I would call a recommended local agent and ask the question of them. Or call the government body who looks after this and ask the question as it seems the clauses mean two things, on my quick reading of them anyway.

As it seems that members who know the legislation in your state are saying you are locked in to this rent until the end of the lease, and seeing that you think your agent may have a personal connection with the tenant, I would consider changing agents, but try to have a good one recommended.

If you cannot increase the rent now, at least you can assure the new PM knows the score and ensure the rent can be put up to market rate before the new lease is due.
 
Glenda70, while the laws relating to tenancy do vary some what from state to state, I also find that the official documents and forms are not always easy to understand. Remember, they are designed by bureauocrats. From my reading of the terms, you have to remember, what the form means by the terms. Ther are essentialy 2 terms. " the tenancy" or duration therof or the "fixed term"
When refering to the tenancy, there is a start date, and essentially no end date. The end date is when the tenant leaves. Where there is a fixed term component, then that just means there is a minimum period, being the fixed term, and the the tenancy can continue, under a new agreed fixed term, or an "ongoing" basis.
Once that is understood, the rent cannot be increased during the "fixed term" portion, unless expressly agreed, ie on the 1st of .... the rent will be. Outside the fixed term component of the tenancy, then the 60 day notice, and only once every 6 month provisions apply. I think that the poor wording, may have given you the view that you could increase during the 12 month fixed term, and the PM obviously did not make that clear, when she recommended teh 12 month term.
I hope I have assisted, as I have typed this quickly..
 
Basically you can't increase rent during a fixed term lease. This is because a fixed term lease almost always involves break fees for a tenant leaving early (e.g. 5% of remaining amount + costs to advertise and re-lease). Its a two-sided contract.

All it means is that come Jan 2011 you put the rent up. If its a small amount you've lost out on don't worry learn from it. If its a large amount, learn from it.
 
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