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How Much Can a Landlord Increase Rent in NSW

Sydney has made a strong recovery from the rental decrease it experienced during the COVID-19 pandemic. The memories of landlords discounting rents by 20-30% to avoid having empty apartments are still fresh in our minds. However, fast-forward to 2023, and the rental market is entirely different. Property managers are seeing a market they have not witnessed in years, with long lines for rental inspections and eager tenant inquiries no longer a thing of the past. 

Given this shift and the frequent interest rate increases, landlords are wondering about the best approach to increasing their rent to maximise their investment return. 

It’s essential to remember that while there is no cap on the Reserve Bank of Australia increasing interest rates, landlords can only increase rent once per 12-month period.

In New South Wales, there are specific rules that landlords must follow when increasing rent for residential properties. These rules are designed to protect tenants from excessive and unjustifiable rent increases. In this article, we will explore how much a landlord can increase rent in NSW and the legal requirements that must be followed.

Under the Residential Tenancies Act 2010 (NSW), a landlord cannot increase rent more than once in 12 months. The landlord must also give the tenant at least 60 days written notice of the increase, which must be reasonable and justifiable.

In a nutshell: 

• Landlord can increase rent once per 12-month period

• Landlord must give minimum of 60 days’ notice

• The increase must be up to market and justifiable – however, there is no cap on the increase. 

• If the tenant’s lease is fixed – the landlord cannot increase the rent.

• The landlord can demonstrate that the proposed rent increase is justified by factors such as renovations, improvements to the property, and market changes. 

What rent increase letter must include: 

• The amount of the rent increase

• The date on which the rent increase will take effect

Once the rent increase notice has been served to the tenants, the increase will take effect from the effective date. The landlord does not need the tenant’s acknowledgment or acceptance of the rise to take effect. However, the tenant is welcome to negotiate the increased amount with the landlord. 

It’s also notable, tenants have the right to dispute the rent increase if they believe it is excessive or unjustified and can seek resolution through their landlord or the NCAT.

What if rent has already been increased but is still not up to market: 

In the scenario where the tenant’s lease is periodic, and the rent has already been increased within the last 12 months, and yet the market has gone up significantly – there are two options available:

Option 1: Wait for the next 12-month period when the rent can be increased again.

Option 2: If Option 1 is not practical, there is always the option to terminate the periodic tenancy and search for a new tenant at the market rate. However, there are several variables to consider with this option:

• The landlord must give the tenant 90 days’ notice to terminate a periodic tenancy.

• During those 90 days, the existing tenant can leave at any point without notice, making it difficult for the landlord to know the exact date the property will be available for the new tenant.

• The landlord must also consider potential vacancy and leasing costs when considering this option.

In summary, Sydney has made a strong recovery from the rental decrease it experienced during the COVID-19 pandemic. Many landlords are currently reviewing their rents with the market shift and the interest rate increases. When reviewing rents, it’s important to remember that landlords can only increase rent once per 12-month period, with 60 days’ notice. 

Please consult with our award-winning property management team to help you review your rent and develop a strategy that maximises your investment return while following the appropriate regulations. Contact us today to learn more.

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