When you rent a place to live, you are required to pay the rent on time in accordance with the agreement. You may also need to pay some other charges related to the property.
You are required to pay your rent on time, as detailed in your tenancy agreement (if there are no details in your agreement or you don’t have a written agreement, you can rely on whatever has been the accepted practice and period of payment). Generally the agreement will say how much rent is paid, how it will be paid, and when it is due. You are required to pay your rent to the landlord/agent prior to the next rental period starting (see Rent in Advance below).
The landlord/agent must provide receipts for rent payments, unless the payment is made directly into a bank account.
Keep receipts in a safe place.
If your rent is not paid by hte due date you are in arrears with your rent. The landlord/agent is then able to use the ACT to recover the rent due, and if not paid may lead to your eviction.
Rent arrears processes are set out in the Residential Tenancies Act 1997 (RTA). The terms of your tenancy are set out in the RTA and Standard Lease, and are known as the ‘standard terms’. Clauses referred to here are from the standard terms.
Rent is generally paid in advance.
This means that you pay a set amount of rent up front on or before the day you move into the premises.
For example, your tenancy begins on 2 March and you pay 4 weeks rent on that day.
Your agreement says rent is to be paid fortnightly. Having paid 2 fortnights in advance, you might not expect to pay rent again until 30 March; however your agreement may say that the next payment is due on 16 March to keep your rent account always a clear fortnight in advance.
It is important to take this into account when you give notice to end your tenancy or you may find you have paid too much. The landlord/agent cannot ask for more than 1 calendar month’s rent in advance (cl 28).
Rent increases are limited to once every 12 months and 8 weeks notice in writing is required.
Excessive rent increases can be disallowed and rent reductions can be ordered.
The law in the ACT
Rent increases are covered by the Residential Tenancies Act 1997 (‘RTA’). The terms of every tenancy are set out in the RTA and Standard Lease and are known as the ‘standard terms’. Regarding rent increases, the standard terms specify that:
- The rent may only be increased at intervals of at least 12 months from either the beginning of the agreement for the first increase, or after that, from the date of the last increase (cl 35);
- The landlord (or agent) must give the tenant 8 weeks notice in writing of their intention to increase the rent. The notice must include the amount of the increase, and the date on which the increase will occur (cl 38);
- If the tenant believes the increase is excessive they may apply to the ACT Civil and Administrative Tribunal (ACAT) for a rental rate review (this process is detailed below);
- If the tenant remains in the premises without applying for a review, the increase takes effect from the date specified in the notice (cl 40); and
- The restriction on increases applies provided that at least one of the tenants remains in occupation from the time of the last increase (cl 37).
Are there any limits on the amount of a rent increase? Not in the first instance, a landlord can propose any increase HOWEVER a tenant can attempt to negotiate a different amount or have the increase reviewed by ACAT. ACAT can reduce or even disallow the increase.
If you receive a notice of a rent increase and you believe the increase is excessive, you should write to the landlord advising him or her that you think the increase is excessive, giving your reasons, and asking that the increase be lowered or withdrawn. If there is no satisfactory response you should apply to ACAT to have the increase reviewed. This application should be made at least 14 days before the increase is due to take effect. ACAT will only hear a late application if there are ‘special circumstances’ – so apply promptly.
At ACAT a formula linked to a CPI figure is applied to determine the onus of proof. If the proposed amount is greater than the calculated figure the landlord must
satisfy the tribunal that the increase is justified. If the increase is less, the onus is on the tenant to satisfy the Tribunal that the increase is unreasonable (s67).
Before you challenge a rent increase you should apply the formula to determine a starting point for negotiations. For more details – the formula, the CPI figures and examples, see Tenancy Factsheet: Rent Increases: Is my increase excessive? Under s68 RTA, in deciding on whether an increase is excessive, the
Tribunal will consider:
(a) The rent before the proposed increase;
(b) Whether it has been increased previously in the tenancy and if so, the amount of that increase, and the period since that increase;
(c) Costs of the landlord in relation to the premises;
(d) Services provided by the landlord to the tenant;
(e) The value of fixtures and goods supplied as part of the tenancy;
(f) The state of repair of the premises;
(g) Rental rates for comparable premises;
(h) The value of any work performed or improvements made by the tenant, with landlord’s consent; and
(i) Any other matter the Tribunal considers relevant
NOTE: ACAT may allow an increase that brings the premises in line with rents for comparable premises. However you can still challenge the evidence presented by the landlord, and produce your own evidence about rental rates for comparable premises.
NOTE: If you have valid notice of an increase and don’t pay the increased amount in accordance with that notice you will be in rent arrears.
No. Standard term cl 15 says that only one bond is payable on any one tenancy agreement. RTA section 20 specifies that a landlord may only require or accept as bond an amount not exceeding the first 4 weeks of rent payable under the tenancy agreement.
This means that the original amount of bond cannot be increased during the tenancy. However, if you enter into a new fixed term agreement for the same premises and the original bond is released, then you could be asked to pay a new bond at the increased amount.
If the landlord doesn’t give you proper notice, then you may not be obliged to pay the increased rent (cl 34 states that the amoun of rent will not vary except as provided by the RTA and the tenancy agreement).
You should write to the landlord before the date of the increase stating that you do not intend to pay the increase and giving the reason. Be sure to keep a copy of the letter as evidence in case there are legal proceedings at a later stage. The landlord may try to assert you are in arrears if you don’t pay the increase. If you have already paid the higher rent you can make an application to ACAT for the difference to be repaid.
Note that ACAT could decide to correct a defect and change the date that the increase takes effect.
Can you have the rent reduced?
As a tenant you pay full rent in return for full use and enjoyment of the premises you live in. However, there are occasions where through no fault of yours, this
use and enjoyment may be diminished. You should not be paying for something you aren’t getting.
If this occurs, you should write to the landlord/agent, advising them of the problem (eg the need for repairs). Request that it be rectified within an appropriate timeframe and that you be compensated in the form of a rent reduction. Keep a copy of the letter.
See also: Repairs.
If you don’t receive a satisfactory response you can apply to ACAT for a rent reduction. Under s71 RTA, ACAT may order a reduction if it considers your use or enjoyment of the premises has significantly diminished as a result of:
(a) the loss of any appliance, furniture, facility or service supplied by the landlord as a result of:
(i) withdrawal of the service etc;
(ii) failure to do repairs and maintenance;
(iii) failure to provide/maintain locks and security devices.
(b) the loss of the use of part of or all of the premises; or
(c) interference by the landlord/agent with your quiet enjoyment of the property.
This includes your right to use the property in reasonable peace, comfort and privacy. ACAT may order that the reduction take effect from the day on which your use and enjoyment diminished. The order can be ‘retrospective’, meaning you will receive the difference between the full rent you have already paid, and the reduced amount (s 71(4)). The reduction can remain in force until the problem is
fixed or for up to 12 months (RTA s 71(3)).
There are no rules or formulas to determine how much you should be compensated. As each case is different, you should show how you have calculated your claim, i.e. proportion of rent vs impact of loss.
You were given the correct notice but the increase is way too high. There is something you can do, apply the formula try negotiation or have it reviewed.
Start with our Factsheet Rent Increases and Reductions to see whether your landlord has followed the correct process and is allowed to increase the rent. If they have, this factsheet helps you work out whether the size of the increase is excessive or not, and gives you a starting point to negotiate for a fairer amount.
Section 68 of the Residential Tenancies Act 1997 provides a formula to determine who bears the onus of proof when an increase is being reviewed by the Tribunal – ie, whether the landlord has to prove that the increase is not excessive, or whether you have to prove it is excessive.
It also gives a list of factors that the Tribunal must consider when deciding whether an increase is fair, such as the state of repair of the premises and the rent for comparable premises (see section 68(3) below).
The law does not set a limit for rent increases. It does provide you with a figure to use in negotiations with your landlord/agent, and factors for the Tribunal to look at if negotiations are unsuccessful and you apply for a rent review. The formula increase is what your new rent would be if your property was average*, and it
tells you whether your landlord is seeking a larger or smaller percentage increase than the average landlord in Canberra. However, your property may not be average. The factors under section 68(3) may mean that your rent should increase by less or more than the average figure.
Section 68 Factors 68
(3) If a tenant or lessor proposes that a rental rate increase is or is not excessive, the tribunal, in considering whether it is satisfied about the proposal, must consider the following matters:
(a) the rental rate before the proposed increase;
(b) if the lessor previously increased the rental rate while the relevant tenant was tenant—
(i) the amount of the last increase before the proposed increase; and
(ii) the period since that increase;
(c) outgoings or costs of the lessor in relation to the premises;
(d) services provided by the lessor to the tenant;
(e) the value of fixtures and goods supplied by the lessor as part of the tenancy;
(f) the state of repair of the premises;
(g) rental rates for comparable premises;
(h) the value of any work performed or improvements carried out by the tenant with the lessor’s consent;
(i) any other matter the tribunal considers relevant.
A relevant factor under section 68(3)(i) is whether you are forced to pay rent through a rent-card that charges you a fee. Also, see whether there are any reasons for you to have the rent reduced under section 71 (See Factsheet Rent Increases and Reductions).
Section 68 Formula
Our website has a Rent Increase Calculator which applies the section 68 formula automatically. It is in the online version of this Tenancy Factsheet. Go to Renting Advice at www.tenantsact.org.au
Apply the Section 68 Formula Manually
68 Guidelines for orders
(1) The tribunal must allow a rental rate increase that is in accordance with the standard residential tenancy terms unless the increase is excessive.
(2) For subsection (1)—
(a) unless the tenant satisfies the tribunal otherwise, a rental rate increase is not excessive if it is less than 20% greater than any increase in the index number
over the period since the last rental rate increase or since the beginning of the lease (whichever is later); and
(b) unless the lessor satisfies the tribunal otherwise, a rental rate increase is excessive if it is more than 20% greater than any increase in the index number
over the period since the last rental rate increase or since the beginning of the lease (whichever is later).
(4) If the tribunal considers a proposed rental rate increase is excessive but a lesser increase would not be, it may disallow so much of the increase as is excessive.
(5) In subsection (2): index number means the rents component of the housing group of the Consumer Price Index for Canberra published from time to time by the Australian statistician.