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Melbourne Real Estate Weekly Recap. Episode 7 - Rental Increases

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Weekly Recap
Tim Ash
Tim Ash
August 31, 2022
minute read

Rental Increases:

Under the new legislation what needsto be done to increase the rent?
How long will it take for a rentalincrease to take affect?
How often are you allowed to Increasethe rent?

Under the new legislation the rent can be increased only once a year, if the tenant is in a fixed term tenancy then you can increase the rent during that period unless it has been written into the agreement prior to the tenant signing it.

The law doesn’t say exactly how much a rental provider can put the rent up by. However, the rental provider must give the renter information about how they have calculated the rent increase.


Essentially there are 4 reasons that you can use to be able to increase the rent and they are:

According to how much prices are generally changing in the economy, known as the consumer price index (CPI)

According to average rent prices in Victoria, known as the state wide rent index.

By a fixed percentage increase.

By a fixed dollar amount.


Firstly consumer price index – The CPI is a fixed weighted price index that relates to household expenditure on retail goods and services and other items such as housing, government charges andconsumer credit charges. CPI is currently sitting at 6.1% over the past 12months. In other words it’s the same percentage as inflation. Info located onthe Parliament of Australia’s website.


Secondly the state wide index located on the Department of families, Fairness and Housing website. This covers the rental trends on a quarterly basis and is broken up into 5 categories being: Median weekly rent, rent index, quarter change and annual change.

The median weekly rent is the leased price of the middle home in a list of properties ranked from highest to lowest over a set period of time.

Rent index: Is based on the different types of dwellings in different locations to read the shifts in the market based on new lettings.

Quarterly and Annual percentage change is calculated from the relevant Rent Indicies, not median weekly rents.

The Rent Indices are a better measure of changes in rents over time than the simple median price measure because the indices changes from quarter to quarter in thes hare of new lettings between both geographic areas and property types.


Thirdly fixed percentage increase – These can be a common approach in longer term residential leases or commercial leases, there aren’t any restrictions on the percentage amount as long as both parties agree.


Fourth option which is my favourite is by fixed dollar amount: - this means you increase the rent to a fixed dollar amount ie: increase the rent from $390 - $400 per week. As long as you can justify the market value to the tentant. The best way to do this is via a rental CMA report highlighting what comparable properties have leased out for.

Lastly if a tenant decides to challenge a rental increase?

They can request an investigation of a rent increase from consumer affairs as long as its within 30 days from when the rental increase notice was served.

Consumer affaris will then likely ring another local agent to see if the rental increase is to market value. This process will usually take 10 days from when the objection is lodged.

If the rent assessment says that the increase is too high,and the rental provider won’t agree to lower the rent, the tenant can use the assessment to go to VCAT. VCAT can set a maximum rent. This maximum rent will usually be set for 12 months on private rental properties.

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