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Key points
- Legal experts estimate thousands of renters could be owed money due to previous invalid rent increases.
- The Real Estate Institute of Victoria has encouraged agents to double-check previous notices when issuing rent increases.
- Some affected tenants have been repaid or managed to negotiate more modest rent increases.
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It was three words on Jy Sandford’s rent increase notice that made him realise he’d been paying rent he didn’t have to.
He looked back at the email from more than six months prior and realised the phrase “market rent analysis” was used by the real estate agent as justification for the increase – without providing any examples of similar properties nearby and their asking rent.
Jy Sandford was repaid a month’s rent after discovering an invalid notice of rent increase. Credit: Luis Enrique Ascui
Sandford, 21, a volunteer with the Renters & Housing Union, realised it was invalid and that he had overpaid rent on his one-bedroom apartment in Heidelberg Heights.
“We’ve been paying this rent increase up until then … I shot that back to my real estate agent and said, ‘hey, I think it is invalid because of this’ and it turned out that they didn’t want to go to VCAT (the Victorian Civil and Administrative Tribunal) and they just gave me seven months of back pay,” the renter said.
“So, I got a free month’s rent.” The back pay totalled $1365.
Sandford is not alone. Peninsula Community Legal Centre tenants’ advocate Warren Wheeler said the issue was so widespread that thousands of renters across Victoria could be owed money by their landlord.
“It’s statewide. I’m seeing clients with historical invalid rent increases dating back to March 2021 on a daily basis … There’s quite a bit of money out there to be claimed if renters are prepared to do it,” he said.
When amendments to the Residential Tenancies Act came into effect in 2021, notices of rent increase were required to state the method of calculation; otherwise they would be considered invalid.
VCAT ruled in January that rent increases need to include enough information that a tenant can assess whether the increase is reasonable, and if they should challenge it.
“A simple reference to a ‘Comparative Market Analysis’ [or similar term] with no further information about the properties that were used, their location or features, which would enable the renters to make a proper assessment about the ‘reasonableness’ of the increase, is in my view against the spirit or purpose of the requirement to provide the method of calculation,” tribunal member Jessica Klingender said in a decision.
Another VCAT decision, handed down in September, ruled that a tenant had overpaid their rent because of an invalid increase and that it was “advisable that the parties agree to resolve the … overpayment mutually, as an application for compensation for this amount is likely to be successful”.
Tenants Victoria’s lead community education lawyer, Ben Cording, said anyone who had received a notice since March 2021 should double-check if it was valid. “There are large numbers of renters who are sitting on invalid rent increases, go and look at your notices of rent increase,” he said.
Cording recommended attempting to negotiate a refund with the property manager or landlord before initiating action at VCAT.
Real Estate Institute of Victoria chief executive Quentin Kilian said that the peak body was not aware of the recent decisions, and said the amended Residential Tenancies Act was complicated and vague, which led to issues with compliance.
“This is one of the many issues in the [Residential Tenancies Act] is there is no clarity around how things get done or should be done,” he said.
Kilian said it would be difficult for property managers to audit previous notices to ensure tenants weren’t owed money given many property management departments are short-staffed, but he encouraged agents to check historical documents while issuing any new notices of rent increase.
Brunswick East renter Sophia Liacopoulos, 22, was served a similar increase notice in August. But Liacopoulos successfully challenged the rent hike with her property manager before it came into effect to agree on a smaller increase.
It wasn’t until after she created her own market report to challenge the increase that the agent provided theirs, which Liacopoulos said featured properties that weren’t comparable and were exorbitantly priced.
Sophia Liacopoulos successfully challenged her invalid rent increase.Credit: Jason South
“I think it’s a good idea to routinely look at other properties in your area and if you ever get an increase check it’s correct,” she said.
Agents generating comparable market reports can choose which properties to include.
Cording said it was becoming less common for increase notices to come without a market report, but the notices could still be challenged if tenants felt the listed comparable properties weren’t comparable.
“Renters shouldn’t just blindly rely on [the agent’s] report,” he said. “The process is you get this free report from Consumer Affairs Victoria.
“Even if the report comes back and says it’s not excessive, the renter can go check out [listings sites] and take it to the tribunal.”
Cording said the tribunal may also consider the state of the rental, including any outstanding repairs or other issues with the property.
Wheeler said that failing to provide a market report while citing a market review was the most prominent issue invalidating increases, but there were other reasons such as a mistake in the name of the rental provider.
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