The Law Handbook 2024

492 Section 6: Houses, communities and the road agreement allows for a rent increase during the fixed term (s 44(4) RT Act). From 29 March 2021, if a new fixed-term rental agreement includes a rent-increase term, the agreement must also provide: • the amount of the rent increase, and that the rent is not increased by more than that amount; and • the method by which the rent increase is to be calculated, and that the rent is not increased more than that calculation method allows (s 44(4) RT Act). Renters should be wary and seek advice before signing a rental agreement with rent increases ‘built in’. If there is a clause allowing rent increases during the fixed term that meets the requirements of the RT Act, the rental provider can increase the rent in accordance with that clause and the RT Act. If a fixed-term rental agreement includes a rent- increase term, and a renter entered into that agreement before 19 June 2019, the rent cannot be increased more than once every six months (cf sch 1, cl 16). However, as soon as that fixed-term period ends, and the rental agreement converts to a periodic agreement, the ‘window’ for rent increases expands to not more than once every 12 months (s 44(4A) RT Act). If a fixed-term rental agreement includes a rent- increase term, and a renter entered into that agreement from 19 June 2019, the rent cannot be increased more than once every 12 months (s 44(4A) RT Act). The rental provider is also still required to provide proper notice in order for any rent increases built in to a fixed-term agreement to be valid (s 44(1) RT Act). Where a renter has an existing rental agreement and they enter into a rental agreement for a further fixed term, which increases the rent for the property, the renter can challenge the rent increase on the basis of failing to comply with the RT Act (s 44) (see Shafer v Bourke (Residential Tenancies) [2015] VCAT 874 (11 June 2015)). Notice of proposed rent increase A rental provider must give at least 60 days’ notice – in writing, in the proper form – of a rent increase (s 44(1) RT Act). The notice may only provide for one rent increase (s 44(2)). The notice must inform the renter of: • the amount of the proposed increase; • the method by which the increase was calculated; and • the renter’s right to apply, within 30 days, to CAV to investigate the rent increase (s 44(3) RT Act). Any rent increase notice that does not comply with these requirements is invalid (see Gregorio v Gregorio (Residential Tenancies) [2022] VCAT 680 (17 June 2022)). The renter does not have to pay the increase and may seek reimbursement for any rent paid in accordance with an invalid rent increase. In Boyce v Mariella Nominees Pty Ltd ATF L orusso Family Trust (Residential Tenancies) [2023] VCAT 89 (27 January 2023) and affirmed in Kennedy v Pan (Residential Tenancies) [2023] VCAT 529, VCAT determined that generic phrases such as ‘comparative market analysis’ did not meet the definition of a “method” of calculating the rent increase unless further substantive information to explain and justify the rent increase was provided with the notice. Accordingly, such notices of rent increase may be invalid and ineffective. Renters may be able to claim a refund for the additional rent paid under such a notice. Note, there is conjecture as to whether the refund (s 39) should be subject to an obligation to mitigate loss (s 211) if a claim to VCAT is treated as a compensation claim as distinct from an order for a refund. This issue may be the subject of an appeal in the near future. Is the rent increase excessive? If a renter believes the proposed rent is excessive, they can make a free application to the director of CAV to investigate and report as to whether this is so (s 45(1) RT Act). The application must be made within 30 days of receiving a rent increase notice (s 45(2)). A renter can apply to CAV by letter or they can use the ‘request for repairs inspection’ form or the ‘rent assessment’ form available from CAV. The renter can provide reasons with the application for why they believe the rent increase is excessive. Unfortunately, these reasons must be related to the market and the property only; CAV does not consider the renter’s circumstances (including any hardship). Complaints may relate to the state of repair of the property, or if amenities or services provided at the start of the tenancy have been reduced or withdrawn. A CAV inspector must carry out the investigation and give a written report about the rent to the renter and rental provider (s 45(3) RT Act). The report will state whether or not, in the director’s opinion,