Understanding the new 12-month limit on rent increases - by REIWA

Phase two of the rental reforms came into effect this week. It included limiting rent increases to once every 12 months, pets, modifications and the new Commissioner determinations process.

There is always some confusion when new laws are introduced, so REIWA’s Information Services Team have answered the common questions about how the new 12-month limit on rent increases will work.

I signed a lease in early July 2024, it includes a six-month rent review in January 2025, will this be enforceable?

Yes. Six-month rent reviews included in leases signed before 29 July will be enforceable. That includes leases that were signed before the 29th but commence afterwards.

I signed my lease in May 2024. It includes a six-month rent review in November 2024. If I renew the lease in May 2025, can the owner increase the rent then?

No. The rent would only be able to be increased 12 months after the last increase, which was November 2024. If you renewed the lease in May 2025, the owner could include a rent increase in November 2025.

I had a six-month rent review in April 2024 and the rent was increased. The lease is set to be renewed in October 2024. Can the owner increase the rent then? 

No. Now that the legislation is in effect, there has to be 12 months between rent increases. If you renew the lease, the rent cannot be increased until April 2025.

I am on a periodic lease and the rent was increased in February 2024, can it be increased six months later in August 2024? 

No, the 12-month limit applies to periodic leases immediately. The rent can only be increased in February 2025. This applies even if you’ve already received a 60 days’ notice of a rent increase.

Can a landlord grant a six-month lease, end it at the end of the term, sign a new lease with the same tenant and increase the rent every six months?

No. The 12-month limits to rent increases would apply. Two or more fixed-term tenancy agreements for the same people (or even just one of the same people) and the same property will be treated as one continuous agreement under the legislation.

Property owners can still use six-month leases, for example a tenant may only want a six-month lease because they are building, but they cannot use them in this way to circumvent the legislation.

There have been other changes. You must be given 60 days’ notice of rent increases and increases will apply immediately. The 30-day grace period for fixed term leases no longer applies.

If you are looking for a new Property Management team for your investment property, please contact our Business Development Manager Amanda Leipold on AmandaL@summitrealty.com.au or 08 9592 8188.

Source by REIWA