Rent Increases

Understanding rent increases  

Rent increases are covered under s 44 of the Residential Tenancies Act.  

A residential rental provider (RRP) can only increase rent by providing a renter with a notice of proposed rent increase form from Consumer Affairs Victoria (CAV).  A rental provider cannot increase rent verbally, by text message, or in an email without the correct form. 

If your client has received a notice of proposed rent increase, there are options available to them to ensure any increase in rent is valid and fair. For example, a renter can receive a free rental assessment from Consumer Affairs Victoria, negotiate with the rental provider, seek dispute resolution through the Rental Disputes Resolution Victoria (RDRV), or challenge the increase at VCAT. 

Valid rent increases 

Rental providers can only increase rent if they issue a valid notice of rent increase.  

There are many reasons why a rent increase notice may not be valid, including: 

• the rental provider issued the notice during a fixed term agreement, where it was not stated in the terms of the rental agreement;  

• the rental agreement increased the rent more than once within a twelve-month period, (or more than once within a six-month period if the renter is on a periodic lease beginning before 19 June 2019);  

• the rental provider issues a rent increase notice during a fixed term rental agreement but there is nothing in the agreement allowing them to do so;  

• the new rent is ‘excessive’. Whether the new rent is excessive will depend on how the proposed rent increase compares with similar properties in the area, taking into account the facilities and features in the property, and the condition and state of repair of the property; 

• the rent increase notice is not in the right form. The rental provider must use the ‘Notice of proposed rent increase’ form from CAV;  

• the rent increase notice does not contain sufficient information about how the rental provider calculated the increased rent. For example, rent increase notices may be invalid if they simply refer to ‘Consumer Price Index’, ‘market review’, an ‘increase by a fixed percentage’ or an ‘increase by $20 per week’, but do not show details of the calculation; or 

• the rental provider did not give the renter at least 90 days’ notice before the rent increase is set to begin.   

Challenging an invalid notice  

Consumer Affairs Victoria (CAV)  

If a renter believes the new rent is excessive, a renter can request a free rental assessment from CAV within 30 days of receiving a rent increase notice. The CAV rental assessment helps a renter challenge a rent increase notice. 

CAV will undertake a rental assessment of the property. This may involve CAV inspecting the property.  Following the rental assessment, CAV will send the renter and the RRP a written report with the outcome of their assessment. If the RRP does not want to negotiate or withdraw the increase notice after receiving the CAV assessment, or if the renter does not agree with the CAV assessment, the renter can apply to the RDRV.   

If the renter believes the rent increase notice is invalid for any other reason, the mechanism to challenge the notice is unclear. We recommend following the process for excessive rent in most cases. 

RDRV  

All applications for bond, compensation, urgent and non-urgent repairs, and excessive rent increases must now be made to RDRV. Applications regarding rental increases can no longer be made directly to VCAT. 

After a renter has received a rental assessment from CAV, they can apply to the RDRV to help resolve disputes relating to excessive rental increases. This application must be made within 30 days of getting the rent assessment report. If renters miss the 30-day timeframe to seek an assessment from CAV, it is unclear whether RDRV will still be able to manage the dispute. It’s likely that the renter will have to seek leave to apply outside of the 30-day timeframe. The RDRV has not confirmed whether there is a timeframe after receiving the rent increase notice that an application to RDRV must be made. 

Renters’ inability to afford the rental increase will not be a valid reason to challenge the rent increase.  

If the matter cannot be resolved at RDRV, then it will be referred to a VCAT Member for decision on the matter. If the matter is referred to a Member, a new application will not be required, however, an application fee will be payable as per usual VCAT applications.  

At this stage, renters need to access RDRV via the myRDRV portal. If a renter is unable to use the online portal, we recommend contacting RDRV on 1300 01 7378 for further guidance.  

If the renter has concerns regarding family violence, they should apply using this form, instead of the myRDRV portal. 

Advocates representing a renter at RDRV will be able to receive correspondence and notifications regarding the matter by signing up to the case using the renters allocated case number via the myRDRV portal. Alternatively, advocates can be joined as an interested party so that both the party and organisation will continue to receive correspondence, this can be done by emailing cases@courts.vic.gov.au. 

VCAT  

If the excessive rental increase matter cannot be resolved at the RDRV, the matter will be referred to a VCAT Member for decision.  

VCAT can make the following orders about a rent increase:  

• • the proposed rent increase is excessive, and the rent cannot be higher than a certain amount for a period of time,    

• • the rent increase is allowed, and the renter must pay the new amount from the date the increase comes into effect, 

• • the rent increase is invalid, for example because it does not include the required information about how the rent increase was calculated or the RRP was not allowed to issue the notice, and 

• • the rental provider must refund any extra rent that the renter has already paid. 

When choosing to challenge a rent increase at VCAT, there are two options available to the renter for payment of rent. Firstly, they can choose to pay the rental increase and be refunded the difference if successful at VCAT. Secondly, the renter can choose not to pay the increase on the grounds they are challenging the increase. The risk with the second option is that if VCAT finds the increase to be valid, the renter will be in arrears for the difference in rent paid with the increased amount.

Relevant case law on invalid notices 

Excessive rent 

Boyce v Mariella Nominees Pty Ltd ATF Lorusso Family Trust (Residential Tenancies) [2023] VCAT 89  

Facts:  

• • The renters applied to CAV for an investigation and report under s 45, seeking orders under s 46(1) that the rent increase was excessive and the notice failed to comply with s 44(3)(b) because it did not contain details of the method used to calculate the rent increase. 

• • The renters also argued that the rent increase was intended to make them move out.  

• • The method by which the increase was calculated was said to be ‘Comparative Market Report’. The notice did not include any further information or documentation.  

Decision: 

• • The notice was invalid. It did not contain details of the method used to calculate the rent increase.  

• • The VCAT Member applied Smith and determined that “a notice of rent increase, like a notice to vacate, should contain sufficient information to the renters to enable them to not only answer the question as to why it is given, but also enough information for them to determine whether the rent being proposed is excessive and should be challenged.” [27] 

• • A simple reference to a “Comparative Market Analysis with no further information about the properties that were used, their location or features, which would enable the renters to make a proper assessment about the reasonableness of the increase, is in my view against the spirit or purpose of the requirement to provide the method of calculation.” [28] 

• • The amount of information required will depend on the method used. A notice must contain sufficient information to enable the recipient to (a) understand why the notice has been given and (b) to determine whether the notice should be challenged. [34] 

• • VCAT did not need to address whether the rent increase was excessive because the notice was invalid. 

• • The Tribunal did however address the renters’ argument that the rent increase was intended to make them move out. VCAT found that “this does not affect the validity of the notice of rent increase”. [12] 

Kennedy v Pan (Residential Tenancies) [2023] VCAT 529 

Facts: 

• • The renter objected to a proposed rent increase and requested that CAV investigate. CAV provided a report that concluded the increase was not excessive. 

• • The renter disputed the notice of proposed rent increase and the CAV report. The renter applied to VCAT under s 46(2), seeking a declaration that the notice be set aside because the notice was invalid and the rent increase was excessive.  

• • The renter submitted the notice did not provide details about the calculation method as required under s 44(3)(b). The notice stated the calculation method as ‘market review’. The renter was not provided with relevant market review data at the time the notice was served. Details about the market review data were provided in the CAV report, but not at the time of service. 

Decision:  

• • VCAT found that the notice was invalid as no market review data was provided to the renter at the time of service.  

Asif v Jian Ding Property Pty Ltd (Residential Tenancies) [2023] VCAT 1042 

Facts: 

• • The renter received a notice of rent increase and challenged it through CAV under s 45. CAV found that the increase was not excessive.  

• • The renter applied to VCAT for orders declaring that the rent was excessive.  

• • The rent increase notice did not provide a method of calculating the rent increase. The residential rental provided had provided the renter with some information about comparative rent, however this information was provided separately and not with the notice. 

Decision: 

• • VCAT found that the notice was invalid. The failure to provide information with the notice as required by s 44(3) invalidated the notice.  

Correct form 

Gregorio v Gregorio (Residential Tenancies) [2022] VCAT 680 

Facts:  

• • The renter challenged a notice to vacate issued under s 91ZM for unpaid rent on the basis that the rent arrears were overstated.   

• • The renter argued that several purported rent increases were invalid because the rent had not been increased in accordance with s 44 of the RTA.  

• • The disputed rent increases in 2010 and 2013 were verbal rent increases. The 11 January 2020 rent increase was issued via a written notice of proposed rent increase.  

Decision: 

• • VCAT found that the verbal rent increases in 2010 and 2013 were invalid. However, VCAT found that the notice of rent increase given on 11 January 2020 was valid. 

• • In reaching its decision, VCAT stated the following:   

• • A rent increase that is given verbally is not in accordance with the requirements under the RTA and is not valid and of no effect. [26]-[28] 

• • The purpose of a notice of rent increase is to put a renter on notice of the new rent that is to be payable, and the date on which this is to commence. [78] 

• • It should provide the renter with enough information to determine whether the new rent is excessive based on criteria set out under s 47(3). 

• • VCAT does not take into account the current rent payable under the rental agreement.  

• • VCAT considers “what is a fair market price for the property (given its condition and value) and is the proposed rent above what is deemed to be fair”. [80] 

• • The failure to correctly note the current rent in the increase notice does not invalidate the notice. [82] 

• • Due to the invalid notices in 2010 and 2013, the renters were in credit of more than $7,000 at the time the valid rent increase took effect on 15 March 2020. This reduced the amount of rent owing to $17,159.94.  The rent was further reduced to $4,281.43 due to the extended protections under the COVID-19 emergency legislation.  

Bergess v Semenow (Residential Tenancies) [2020] VCAT 193 

Facts: 

• • In February 2015, the renters were advised of a rent increase by telephone.  The residential rental provider did not provide the renters with a written notice.  The renters started paying the increased rent. 

• • In August 2019, the renters were advised of a second rent increase by text message. The residential rental provider provided no further written notice.  

• • The renters did not want to continue the tenancy, so they gave written notice and vacated the rented premises on 24 September 2019.  

• • The residential rental provider did not agree to the bond being refunded to the renters. The renters applied to VCAT under s 210 seeking an order for repayment of bond and compensation for the rent paid following invalid rent increases (per s 210(1)(b)). 

Decision: 

• • VCAT found that the rent increases were invalid. The Tribunal ordered the RTBA to refund the bond and the residential renter provider pay $1800.00 in compensation for the overpayment of rent paid. 

• • The Tribunal also determined that it was permitted to consider the s 211 factors in assessing what compensation the renters should be awarded. 

• • VCAT took into account any steps the renters took to mitigate their loss. The renters took reasonable steps to mitigate their loss in relation to the 2019 rent increase.  

• • However, in relation to the 2015 rent increase, the renters did not challenge the increase for 4 and a half years and did not apply to CAV. VCAT found that had reasonable steps been taken, the renters would have only suffered a loss of overpayment of rent for at the most 30 weeks.  

Sufficient information provided about how the rent increase was calculated 

Barratt v Liu (Residential Tenancies) [2024] VCAT 165 

Facts: 

• • The renter received a notice of proposed rent increase.   

• • The notice did not specifically state the method by which the rent increase was calculated. The notice only included the weekly rental amounts of three properties in the same suburb.  

• • At the hearing, the residential rental provider stated that the method was ‘fixed by dollar amount’. 

Decision: 

• • VCAT found that the notice was in invalid.  

• • The notice did not provide the relevant information that allowed the renter to understand how the amount of rent increase was calculated or determined.  

• • It was not clear whether it was comparing the rented premises to the three listed properties. It also did not state that a fixed dollar amount method was being used to calculate the rent increase.  

Barlow v Fedele 1175 Pn Rosebud Pty Ltd (Residential Tenancies) [2024] VCAT 64 

Facts: 

• • The renter was given a notice of proposed rent increase, stating that the method used was ‘a fixed dollar amount of $522 per month increase’. 

• • The renter applied to CAV to investigate. CAV recommended that the rent should not be increased on the basis that the property was in a state of disrepair.  

• • The renter then applied to VCAT seeking orders that the notice was invalid on the basis that the notice did not set out the process for calculating the fixed dollar amount increase.  

Decision:  

• • VCAT found the notice of rent increase was invalid. 

• • The rent calculation method per s 44(3)(b) requires the relevant notice to outline the process or steps that have been used to calculate the proposed rent increase. [35] 

• • Simply describing the rent increase as a ‘fixed dollar amount of $X per unit of time’ does not constitute a method of calculating the rent increase for the purposes of s 44(3)(b). [68]