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Three recent cases brought before the Victorian Civil and Administrative Tribunal (VCAT) serve as a reminder to do due diligence when deciding to increase a tenant’s rent.
As the Real Estate Institute of Victoria (REIV) recently reminded, agencies and residential rental providers who fail to complete rent increase notices correctly may be at risk of having to reimburse any increased amounts to renters if VCAT determines that the increases are not proven to be fair.
REIV is urging all property management teams to review their processes when issuing notices of proposed rent increases to ensure they are meeting the legal requirements.
Most importantly, the notice of proposed rent increase to the renter must document the way in which a rental increase was arrived at. It must include information about the method used to calculate the increase, and information on any comparable properties that were used to arrive at the proposed amount.
Notably, the rent increase cannot be greater than the amount calculated using the nominated method. A notice without adequate documentation could be deemed invalid if it goes to tribunal, as was the case in three recent disputes dealt with by VCAT.
The VCAT cases of, i). Asif versus Jian Ding Property Pty Ltd (VCAT 1042), ii). Boyce versus Mariella Nominees Pty Ltd (VCAT 89) and, iii). Kennedy versus Pan (VCAT 529) all resulted in similar determinations, where rental increase notices failed to meet the requirements.
REIV stressed the importance of ensuring that the notice of rent increase includes sufficient information to enable the renters to determine whether the proposed rent is excessive and should be challenged.
The institute also reminded property managers that a simple reference to a “Comparative Market Analysis” without further information about the properties that were used, their location or features, is not deemed sufficient by VCAT.
Similarly, a simple reference to “CPI” with the absence of any calculating formula, adequate data and calculations does not enable the renters to make a proper assessment about the “reasonableness” of the increase.
“In the spirit of transparency, full disclosure and mitigation of risk to any proposed rent increase notices being declared invalid, we urge all agencies and agents to provide much more information in all future notices,” REIV stated.
“Agencies who feel that some of their recent notices issued to renters may be lite-on the detail may wish to consider retracting such notices and issuing new ones with the relevant information necessary to justify the rent increase.”
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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