Rent Increases (NT)
Updated on Oct 10, 2022 • 5 min read • 268 views • Copy Link
Rent Increases (NT)
Periodic and fixed tenancies and rent increases
The legality of rent increases in the Northern Territory depends on the type of tenancy agreement that is in place. Under a periodic tenancy agreement, a landlord can make a rent increase before each rental period (generally every month). If a tenant does not wish to accept the increase, they may vacate the premises at the end of the current lease term. By contrast, a fixed-term tenancy is designed to provide certainty for the parties for a longer term, usually a year. A landlord may only increase the rent during a fixed-term tenancy if there is provision for this in the tenancy agreement. The document must specify the amount of the rent increase, or the calculation method used to determine an increase. Otherwise, the only way that rent may be increased during a fixed-term is through agreement between the landlord and the tenant.
Even if a tenancy agreement provides for a rent increase, there are restrictions on when the landlord can seek an increase. Specifically, the landlord must wait at least six months after the tenancy commences, or at least six months after the last rent increase. The landlord must also provide the tenant with at least 30 days of notice before increasing the rent. This requirement allows the tenant time to prepare for the increase, or time to discuss the proposed increase with the landlord.
A landlord must provide written notice of a rent increase, but this notice can take a number of forms, such as posted letter, email or text message. The notice should explicitly state:
- That the notice serves to state an intention to increase the rent;
- The amount of the rent increase; and
- When the increase takes effect.
- Security deposit
When the rent is increased, the landlord often also increases the amount of the security deposit, although the total security deposit cannot exceed four weeks’ rent. As with the rent increase, the notice of the increase in the security deposit must be given in writing. In addition, the landlord can only issue a notice to increase a deposit two years after the tenant pays the initial security deposit or after the last increase.
Review of rent increases
A tenant can apply to the Northern Territory Civil and Administrative Tribunal (NTCAT) to challenge a rent increase. The NTCAT decides whether a rent rate is excessive considering the market rent (the general rate of similar properties in the area) and the value of any services provided by the tenant or landlord under the tenancy agreement (such as pool maintenance or gardening). NTCAT does not take into account whether the tenant can afford the proposed rent increase, only whether the rent is reasonable given the market value of the property. If the NTCAT decides that the rent is excessive, it may stipulate a rent rate on the tenancy agreement for a maximum of 12 months. A tenant must continue to pay the increased rent until the NTCAT issues an order to the contrary.
It is important to note that a rental change is not always an increase. In the Northern Territory, an agreed rental rate may also be decreased. As with a rental increase, any agreement for a rental decrease must be in writing and signed by both parties. A lease often contains provision for a rental reduction in certain circumstances. For instance, the lease may provide that the rent will be reduced if the tenant is not able to fully enjoy the rental premises because of a breach of the tenancy agreement. Alternatively, the tenant can apply to the NTCAT for an order on the basis that the rent is excessive because there has been a reduction in the contractually established level of service. For instance, if a property’s air conditioning is unusable and there is no pending repair, this may reduce the market value of a rental property. The tenant might then argue that the rent should be adjusted accordingly. The tenant would need to provide NTCAT with evidence of the change in service provision, the duration, and the proposed rental reduction.
A rental decrease can also occur because the current rent is excessive in comparison to the current market rate. Rent may be excessive because of successive increases or because the rental value of the premises has decreased since the tenant first signed the lease. In this circumstance, the tenant should first try to negotiate with the landlord. The tenant should inform the landlord of their reasons for requesting a reduction and state their proposed alternative rate with reference to similar properties. Any agreement between the parties to decrease the rent should then be written up and signed by the landlord and tenant. If these negotiations are unsuccessful, the tenant can apply to the Commissioner of Tenancies for a rental review. The Commissioner has authority to change the rental rate even during a fixed tenancy agreement.
These regulations apply to both the standard residential property rental market and most Department of Housing accommodations. There are exceptions for Department of Housing tenancies when the rent has increased due to the cancellation or adjustment of a rental rebate, or the tenancy agreement specifies that rent is increased automatically at certain intervals.
Contact the team at Go To Court Lawyers for legal advice on rent increases in the Northern Territory. Please phone 1300 636 846 for assistance with tenancy issues or any other legal matter.
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