Rent reviews are an inevitable part of owning an investment property. In years past, there were few restrictions on how often rent could be increased, provided the increase didn’t conflict with the terms of a fixed-term agreement.
The Queensland rules introduced in June 2024 put an end to this by introducing a blanket restriction on the frequency of rent reviews in the state to no more than one in a 12-month period.
The 12-month restriction on rent increase applies to the property (not the tenancy), and that the state government’s residential tenancies compliance division routinely audits rental prices against lodged bond data.
You’d think that this is black and white, and easy to track. There have been, however, certain circumstances that have caught some landlords off-guard.
The Family-and-Friends Scenario
Let’s say you’ve had a family friend living in your investment property for a couple of years. Market rent is around ~$750 per week, but you’ve deliberately charged them a discounted rate $400, they’re family after all. Six months ago, you increased it to $450 to help cover some increased costs. They’ve now bought their own home and are moving out.
We take over the property, complete a rental appraisal and the comparable evidence comfortably supports $750 per week. Unfortunately, the increase to $450 six months earlier technically still counts. You can’t put the property back to market at $750 until the 12-month period has passed and the fact that the previous rent was deliberately discounted doesn’t create an exemption.
The RTA actually specifically addresses discounted rent for friends and family.
An owner can apply to QCAT for permission to increase the rent within 12 months on the grounds of undue hardship, but that’s a Tribunal application rather than an automatic right to return the property to market rent.
If you know your friend or family member is likely to leave shortly, a relatively modest increase now could restrict a proper market adjustment when the property returns to the rental pool.
Buying a Property With Tenants In Place
Buying a property that is currently, or has recently been tenanted can produce a similar problem. Imagine you’re buying a house that’s currently rented for $680 per week. The previous owner increased it from $650 only three months ago, then decided to sell.
The tenants move out during the sales process and you settle on the property vacant. Before leasing it again, you replace the kitchen, install new flooring and air conditioning, repaint throughout and generally bring the house up to a much better standard. After the work is finished, it’s clearly an $800-per-week property with data to support this.
The previous increase to $680 still stands. Section 93 of the Residential Tenancies and Rooming Accommodation Act 2008 expressly carries the 12-month period across different tenancy agreements, including an agreement entered into by a previous owner.
I couldn’t find a general exemption for renovations or material improvements either. The renovation can substantially change the property’s market value, but it doesn’t reset the date on which the rent can next be increased.
As Agents, We Now Need To Seek Proof
This has become a mandatory part of the information we collect when taking over the management of a property. If the current rent is $700 per week, we need evidence showing when it became that price, regardless of whether a formal tenancy agreement is currently in place. The date of the last rent increase must also be recorded on Queensland tenancy agreements.
To note, a lease expiry doesn’t necessarily line up with the property’s next possible rent increase date. A rent increase can take effect during a fixed-term agreement, provided the increase is written into the agreement and complies with the 12-month rule.
This is why you’ll sometimes see a property advertised at something like $650 per week, increasing to $720 per week from 15 November.
In these circumstances, the RTA recommends disclosing a planned rent increase in the advertisement, so prospective tenants know both the current and future rent before applying.
For a periodic general tenancy, at least two months’ written notice is required. The two-month notice period doesn’t necessarily need to start after the 12 months have passed. Notice can be issued earlier, provided the effective date is no earlier than both the required notice period and the end of the 12-month restriction.
For us, that’s largely an administrative job. A good property management system should be keeping track of the dates so we’re talking to the owner about the market and their options well before anything needs to happen.
Basically, Rent Reviews Might Need a Little More Planning
The new rules are more restrictive, so there’s a little more planning involved.
This is particularly relevant if a tenant leaves partway through the 12-month period and you’re planning to do some work before reletting. You might spend money improving the property, but still be restricted by when the last rent increase took place.
For the most part, we just need to keep good records, know when the next increase is available and think ahead when there are renovations or a change of tenancy involved.