12 month lease rent increase limit attached to the property
12 month rent increase limits are now attached to the Queensland rental property.
Qld rental laws have been amended to attach the 12-month rent increase limit to the property itself, not the tenant as was the previous law.
This applies if the property is sold, a tenant on a 6-month lease moves out or a tenant on a 12-month lease breaks their lease during the current tenancy and even if the property has improvements or renovations during that time.
Let’s discuss the implications of tenants breaking their leases.
When a tenant breaks their lease and it has not been 12 months since the last rent increase, the property must be advertised and offered to a tenant at the same amount the previous tenant was paying – at least until 12 months have passed.
For example,
Lease start 1 January 2024 at $500 per week
Lease end day 31st December 2024
Tenant breaks lease on 1st July 2024.
Property must be advertised at $500 per week.
Comparative market analysis suggests market rent $550
Two options are available.
Option 1:
Offer tenant 2 a lease from 1st July 2024 to 31st December 2024 at $500.
At lease renewal, offer tenant a 12 month lease from 1st January 2025 at $500 (presuming the market value is still $500)
Option 2:
Offer tenant 2 a lease from 1st July 2024 to 30th June 2025 at $500 with a rent increase to $550 from 1st January 2025.
At lease renewal 1st July 2025 tenant must be offered new lease at $550 per week until a full 12 months has passed and so the cycle continues with mid lease increases. At some point a longer lease may be offered.
An owner can apply to QCAT for permission to increase rent within 12 months due to undue hardship. The tribunal must have regard to any representation may by the tenant in relation to affordability and ability to continue to pay rent.
The incoming tenant will have a section on their lease document that details the date of the last rent increase. The incoming tenant may also request in writing evidence of the date of the last rent increase and this must be provided with in 14 days.
We suggest a discussion is had with the property manager about which is the best option for your rental property.
Navigating the complexities of rental laws and their implications across the tenancy requires the expertise of a knowledgeable property manager. Here at McAdam & Turnbull Realty we do have that experience and in-depth understanding of the laws. You can rely on us to give you all the information to make an informed decision.
Please read our other news articles on the implications of selling, market rents and improvements or renovations and the 12 month rent increase limits.
