A Canberra landlord's attempt to raise a tenant's rent by $85 per week has been rejected by the ACT Civil and Administrative Tribunal, after it was deemed an "excessive" increase.
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In a case that put the ACT's unique rent increase caps to the test, the tribunal instead ordered an increase that was found to be more "just", despite it being above the prescribed amount.
Throughout the hearing, the landlord repeatedly told the tribunal the tenant could "move out" if they did not like the rent increase.
However senior member Steve Lancken said the landlord's submissions highlighted "the power imbalance between landlords and tenants" that the ACT's tenancy legislation sought to fix.
Developer-landlord tests rent cap
Empire Global Developments is the owner and landlord of the Marquee apartment complex in Amaroo.
It was designed as a build-to-rent complex, where the developer owns all the apartments - about 100 - and rents them out long-term.
In August 2023, Empire Global Developments served a tenant a rental increase of 20 per cent, which was $70 above the prescribed amount for a rental increase.
It would have increased the tenant's rent from $425 per week to $510 per week.
The tenant started renting the property in 2020 on a fixed-term lease that had continued as a periodic lease, despite the landlord's attempts to terminate the agreement, the ACAT order stated.
![The Marquee apartments in Amaroo and ACAT (inset). Picture by Elesa Kurtz The Marquee apartments in Amaroo and ACAT (inset). Picture by Elesa Kurtz](/images/transform/v1/crop/frm/203652251/cf36bd54-4937-49c3-8f86-b9f08bb2d6ac.png/r0_0_1200_675_w1200_h678_fmax.jpg)
The ACT is the only Australian jurisdiction that limits the amount landlords can raise rents.
The prescribed amount for a rental increase is based on the rents component of the quarterly consumer price index for Canberra, published by the Australian Bureau of Statistics.
A landlord can increase the rent of a periodic tenancy agreement (also known as a month-to-month lease) by 10 per cent more than the increase in the consumer price index for rents.
If a landlord wishes to increase the rent above the prescribed amount, they can seek ACAT approval.
Landlord cites increased costs
Empire Global Developments sought ACAT approval arguing its outgoing costs had increased and comparable rental properties were priced higher.
The landlord said expenses such as "interest on borrowing costs, rates paid to the ACT government and electricity and power costs paid to ACTEW AGL" had increased and justified the 20 per cent rent increase.
However Mr Lancken found each of the expenses related to the whole complex, which also includes commercial businesses, not the tenant's apartment.
He also noted the landlord failed to answer questions about the extent of their borrowings on the complex and "offered no evidence" that would help the tribunal determine any cost increases related to the tenant's apartment.
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The landlord also argued the tribunal should consider some maintenance and repair issues in the complex in their decision.
These included "lifts not functioning properly, disrepair in the roof top garden and problems with the carpark that is used by residents and customers of the commercial business premises", however some of the allegations were contested.
Mr Lancken found the issues all related to the common property and played a "relatively insignificant part in a determination of an appropriate rental rate".
"No doubt the applicant should, as a responsible landlord, address those issues in a timely manner," he said.
Tenant can 'move out' if they don't like rent increase
Mr Lancken said the landlord "submitted on many occasions that the respondent could 'move out' if they did not like the rent increase".
It was not a submission that assisted the tribunal in determining an appropriate rent increase, he said.
Mr Lancken said the landlord's submissions "identified the 'threat' of landlords that tenants either accept increases in rent or 'move out'" and highlighted "the power imbalance between landlords and tenants at times of high rental demand".
It was this power imbalance the legislation was designed to remedy, Mr Lancken said.
ACAT orders increase above prescribed amount
The tribunal also took into account that the tenant's rent had increased a total $25 per week (or 6.25 per cent) in the two and a half years they had lived in the apartment.
Mr Lancken considered while the tenant's rent at the time was $425 per week, comparable apartments were rented for between $450 and $510 per week.
Taking both into consideration, Mr Lancken ordered an increase of $35, taking the tenant's rent to $460 per week.
He said any higher than that amount was "excessive".
The ordered increase was slightly higher than the prescribed amount under the Residential Tenancies Act 1997, which would have amounted to $440 per week.
"An increase of rental rate of $35.00 per week is an increase of about 8 per cent, meaning the applicant has had increases in rent of about 15 per cent in two and a half years. Such an increase is just," Mr Lancken said.
A spokesperson for Empire Global Developments said the ACAT process was "incredibly thorough" and considered both parties' positions.
"Some of the changes to legislation over the years has been concerning, but I think what [Empire] were pleased with in this particular scenario was that a third party, through the ACAT, was able to determine a fair and reasonable outcome," the spokesperson said.