Rental Demand versus Rental Supply:
When there is an imbalance of either the rental market will respond accordingly – whether this is an increase or decrease in what can be achieved as to a weekly rent.
Let’s explore when the demand outweighs the supply:
Normally this will result in the weekly rent to increase.
If a tenant has been in a rental property for many years and finds themselves having to move out, they may be surprised to learn what the current weekly rent prices are (especially if their landlord hasn’t kept the rent in line with the current market).
A landlord may think they are doing their tenant a favour by not increasing the rent when it really should be raised, but this just makes it harder for the tenant in the long run, as the tenants find themselves out-of-touch with current weekly rents.
This leads us to discuss the topic on how much can a landlord increase the rent with an existing tenant:
The Residential Tenancies Act in South Australia does not have a specific formula which restricts this. We have heard over the years “you cannot increase the rent by more than $10 per week or higher than the CPI”… all of these are just myths.
It’s simple: if the weekly rent is lower than the current market value (of rents being achieved), a landlord can increase the rent to bring it in line with the market (this is of course unless the tenancy agreement has terms excluding or limiting a rent increase).
There are guidelines on when and how a landlord may increase the weekly rent and they should seek advice if they are unsure.
If the landlord uses the services of an Agent, the Agent should know these guidelines. If there is a dispute regarding a rent increase, the only governing body with the authority to make a ruling is the South Australian Civil and Administrative Tribunal (SACAT, commonly known as the Tribunal).
At Barossa Rental Specialists we encourage all parties to remain calm, polite and engage in open communication when it comes to a lease extension and any rent increases.
CALL BAROSSA RENTAL SPECIALISTS ON 0414 335 660 – OR DROP INTO OUR TANUNDA OFFICE – TO DISCUSS YOUR RENTAL STRATEGY.