Rent Increase during Periodic Agreement

Tevada on 18/01/2023 - 22:11

We are currently renting in NSW and the rental is currently on a periodic agreement (fixed term ended 2 years ago). The landlord previously increased the rent 6 months ago which we have accepted and continue on a periodic basis.

Since the rental agreement states that rental can only be increased once every 12 months, we thought, at the time, that the clause would provide us protection against further increase for at least 12 months.

This week ( 6 months after the latest increase), our landlord offered us a one-year lease agreement at a higher rental rate which we believe that if we choose not to accept, the landlord will terminate our rental with 90 days notice period and go to the market.

We obviously missed this scenario where the landlord can still effectively increase our rent within 12 months of the previous increase using the above approach.

We realised now that it was our fault for not fixing the lease but just want to hear from you guys if what landlord is doing is 100% okay and what options do we have other than accepting the 12-month at a higher rental.

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Comments

  • Hybroid on 18/01/2023 - 22:19
    +11

    Yes they can set a new amount in a new lease agreement. It's not relevant to any previous agreements.

    Your choices:-

    • Accept the new lease agreement with new rental amount.
    • Decline lease agreement and state wish to stay on periodic with risk of being given notice to leave.
    • Start preparing to move to somewhere new.
    • jv on 19/01/2023 - 00:19
      • post on OzBargain
  • bobbified on 18/01/2023 - 22:40
    +5

    ….what options do we have other than accepting the 12-month at a higher rental.

    Negotiate with the landlord on the rate in the 12 month agreement.

    If you've been a good tenant (from their perspective, not yours!) they'll probably accept something in-between because good tenants are not easy to come by.

  • MSG on 18/01/2023 - 23:49
    +3

    How much are you paying currently and how much is the new rent?

  • tallkid123 on 19/01/2023 - 00:20
    +2

    If you're gonna contest the proposed rental increase, try and research comparable properties in your area that have a similar rental rate to your current one.

    However, presenting such research is more effective if you're renting an apartment, not necessarily a house. You didn't specify what type of property you're in.

    Also, if you find your research has led you to believe that your current rate is below market, then either agree to the new rental increase or get ready to move out.

  • salmon123 on 19/01/2023 - 01:42
    +4

    the landlord will terminate our rental with 90 days notice period and go to the market.

    I find that hard to believe. With the 90day no-ground termination you can leave any day, with no further notice. The landlord would finish up with an empty property for 2-4 weeks. Worst case you stay for the full 90days and the landlord has to wait to get the higher rent. At that point, he'd just be 3 months shy of being able to legitimately increase your rent.

    I would call his bluff. Remember you can always start negotiating a new lease 60 days into your 90day notice.

    Also one negotiating parameter that people don't often think about is the start date of the new lease agreement. You could try to push that out by 90days.

    • Lichen6420 on 19/01/2023 - 09:03
      +3

      The property would not remain empty, not in this market, you could rent out the property pretty much instantly (within a day or two from handover) when the current tenant leaves.

      The OP will end up looking for a new place to live if they 'call their bluff', they do not have a good negotiating position.

      • salmon123 on 19/01/2023 - 09:20

        The property would not remain empty, not in this market, you could rent out the property pretty much instantly (within a day or two from handover)

        Pretty unlikely. It'll take the agent a few days to schedule an open and it's rare that a prospective Tennant can move in immediately.

        they do not have a good negotiating position.

        Not with that attitude.

  • GourmetFoodie on 19/01/2023 - 22:31

    If you like the place I’d probably pay the higher rent as once you add in moving costs it might not be much more. You might be able to negotiate a longer term eg, 18 months or 2 years if you accept the higher rate and you could ask them to fix that rate for that whole time period.

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