Almost all tenancies involve the payment of rent. (It is possible, however, to have a tenancy where you provide work or other services, rather than money, in return for the right to occupy the premises (Residential Tenancies Act 2010 (NSW) (RT Act 2010) section 9).)
Any money you pay as rent must go towards the rent account – your landlord or agent is not allowed to put the money towards any other liability (for example, a water bill) (section 33(3)).
Rent in advance
It is a term of your agreement that you pay rent in advance (section 33). The maximum amount that you can be required to pay in advance is two weeks’ rent (section 33(2)) – but if from time to time it suits you to pay more in advance, you may.
This is changed
Under the RT Act 1987, if the rent was more than $300 per week, you could be required to pay up to four weeks in advance.
Paying in advance means that for the relevant period (one week or two weeks), you pay rent at the start of the period. So, if the period is two weeks, on day one you pay 14 days’ rent, which runs down over the period so that at the end of day 14, you are no longer in advance. The next day is the start of the next 14-day period, so you have to pay 14 days’ rent again.
Be aware that some landlords mistakenly think that the requirement to be in advance means that you have to be in advance at the endof the relevant period (which means you would have to pay 28 days’ rent at day one, which would run down to 14 days’ at the end of day 14, and then the next day have to pay 14 days’ rent again).
The amount of rent you pay under your tenancy agreement may be increased only according to the process set out in the RT Act 2010. This means your landlord must:
- Give you a written notice of increase;
- Specify the amount of the new rent; and
- Specify the date from which the new rent is payable, being not less than 60 days from the date on which the notice was given. (The notice must give an additional four working days if sent by post.)
When can a landlord increase the rent?
If your tenancy agreement is a periodic agreement, there is no limit as to the frequency of rent increases.
If your tenancy agreement is for a fixed term of less than two years, the landlord may increase the rent only if the agreement specifies the amount of the new rent or the method for calculating the amount (section 42(1)). Note that the standard form of agreement does not provide for a rent increase, and in practice most agreements do not contain such a provision as an additional term.
If the fixed term is for two years or more, the landlord may increase the rent, regardless of whether the agreement specifically provides for an increase, but they are limited to one rent increase in 12 months (section 42(2)).
In all events, the usual requirements apply: that is, the landlord must give 60 days’ notice in writing and specify the amount of the increased rent. This includes where you and the landlord are renewing the tenancy with a new fixed term: your landlord must still give a 60-day notice of the new rent to be paid under the new fixed term (section 41(2)).
Excessive rent increases
If you think a rent increase is excessive, you can challenge it by applying to the NSW Civil and Administrative Tribunal. You should apply within 30 days of receiving the rent increase notice.
The Tribunal can make an order that a rent increase is excessive, considering the following factors (section 44(5)):
- the general market level of rents for comparable premises in the locality or a similar locality;
- the landlord’s outgoings under the residential tenancy agreement or proposed agreement;
- any fittings, appliances or other goods, services or facilities provided with the residential premises;
- the state of repair of the residential premises;
- the accommodation and amenities provided in the residential premises;
- any work done to the residential premises by or on behalf of the tenant;
- when the last increase occurred;
- any other matter it considers relevant...
Note, however, that the Tribunal is specifically prohibited from considering your income or your ability to afford the new rent (section 44(5)(h)).
The Tribunal will expect you to prove that the increase is excessive, so be prepared to show evidence as to rents being paid for comparable properties and any other factors from section 44(5) that might be relevant in your case.
If it orders that the rent is excessive, the Tribunal will also order that the rent must not exceed a specified amount for a period of up to 12 months.
Before you apply to the Tribunal, it is a good idea to first try to negotiate with your landlord or agent. If you agree on a smaller increase, your landlord should provide you with a written notice stating the amount (they do not need to give you another 60 days’ notice) (section 41(6)).
If you have overpaid your rent, you should first write to your landlord or agent and request repayment. If it is not repaid, you can apply to the Tribunal for an order that the landlord repay it (section 47).
If the overpayment was because you’ve been paying according to a rent increase notice that was actually invalid, there is a time limit: your application to the Tribunal must be made within 12 months of the invalid rent increase notice being given (section 41(10)). Note, however, that the time limit specifically applies only to rent increase notices given under the RT Act 2010; it appears that if the invalid notice was given under the RT Act 1987 (ie before 31 January 2011), the 12-month time limit does not apply.
If your claim about overpaid rent goes back much further than the time limit permits, consider pursuing it through the Local Court instead of the Tribunal. Alternatively, you could treat the overpaid rent as a credit on the rent account, and stop paying rent while the credit runs down. (If you do this, make sure you advise the landlord that the rent account is in credit because of overpayment, and be prepared for them to dispute it, including by giving you a termination notice for rent arrears.)
If the rent is overpaid for some other reason (for example, the landlord wrongly required you to pay more than two weeks in advance; or you simply made a mistake) you can also use section 47 to get it repaid to you, and there is no time limit (apart from the usual six-year time limit under the Limitation Act 1969).
It is a term of your agreement that you will pay rent in advance, so if you fall into arrears, you are in breach of the agreement. If you are still in arrears 14 days after the rent was due, the landlord may give you a termination notice.
It is important to keep in mind that a termination notice by itself does not terminate your tenancy, and that if you pay the arrears in full or according to an agreed repayment plan, you can generally expect that your tenancy will continue. See the section on ‘Rent arrears’ in Ending a tenancy.