In Victoria, there is no legal limit on how much a private rental provider can set or increase the dollar amount value of rent paid by a renter.
However, the law is clear: the total amount charged for rent can only be increased once every 12 months.
Guidelines for rent increases
There are some guidelines that rental providers must follow when increasing the rent:
- A rental provider can’t increase the rent during the period of a fixed term agreement
- The rental provider must inform the renter of the increase in advance. The provider needs to complete a Notice of rent increase form, and give this to the renter. This form must be given to the renter at least 60 days before the increase is due to start.
Methods for calculating a rent increase
A rental agreement must outline how any rent increase has been calculated. There are 3 common methods for calculating a rent increase:
- How prices are changing in the economy. This sees rent prices increasing based on the rate of change in the Consumer Price Index (also known as the level of inflation). This is calculated by the Australian Bureau of Statistics, and the data is released each quarter
- Levels of average rent prices in Victoria. The average prices are outlined in the Rental Report, which includes information on median rental prices in Melbourne, regional Victoria and the state as a whole. The report clearly shows the levels of increases as compared to the previous quarter. The report is released 4 times a year. This type of increase by an average is also known as being informed by the metropolitan rent index (for metropolitan Melbourne) or the regional rent index (for the rest of Victoria)
- A fixed percentage increase. The rental agreement may explicitly state a percentage by which the rent cost will increase each year. For example, the agreement might outline that costs will rise by three percent a year.
Clear communication is the key when it comes to rental increases
Rental providers should use easy to understand language when communicating about rental increases. Information about the increase should be presented clearly in the notice of rent increase. The notice should outline:
- How much the rent will increase
- How the rental provider calculated the new amount (was the increase calculated according to the Consumer Price Index, rent indexes or a fixed percentage?)
- What the renter can do if they think the rental increase is too high.
What to do if you want to challenge a rent increase
If you believe that your rental provider has increased your rent to a price that is higher than the market range, your first step is to try and negotiate on the rate. When you can’t come to an agreement, you can ask Consumer Affairs Victoria to investigate; this is called a rent assessment or a rent increase investigation and is a free service.
To organise a rent assessment:
- You must ask for the assessment within 30 days of receiving the Notice of rent increase. To do this, fill in a Request for rental assessment form
- As part of the assessment, one of our case officers will contact you
- One of our inspectors may contact you to organise a time to visit the property
- After the inspector has investigated the increase, they will write a report on behalf of the Director of Consumer Affairs Victoria. They will also send copies of this report to you and to your rental provider. You can use this report as part of your application to VCAT
- If the rent assessment finds that the increase is too high, and the rental provider will not agree to lower the rent, you can use this assessment to apply to Rental Dispute Resolution Victoria.
How Rental Dispute Resolution Victoria can help
Rental Dispute Resolution Victoria (RDRV) is here to help renters and rental providers to resolve any concerns about rent increases. We can help to:
- Contact the other party to understand their position and to review any evidence or relevant documents, including the Notice of rent increase form
- Work with both parties to reach a compromise agreement that complies with Victorian law.