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Tribunal denies BTR landlord a rent increase of $85 per week

A Canberra landlord who wanted to hike their tenant’s rent by 20 per cent has had the move denied by a tribunal.

According to the ABC, the owner of the build-to-rent (BTR) apartment building, applied to increase the rent on a one-bedroom unit from $425 per week to $510 per week – an increase of $85 per week.

However, in the ACT, any rent increase of more than 10 per cent above Canberra’s housing Consumer Price Index (CPI), must be approved by the ACT Civil and Administrative Tribunal (ACAT).

The tribunal found that the increase was excessive, and ordered a more moderate rental increase of $35 per week.

The landlord, a property development and building company, had argued that if the tenant did not like the rent increase, they could “move out”.

ACAT senior member, Steve Lancken, said the Marquee apartment complex “includes more than 100 residential units, some commercial businesses and parking spaces”, and was developed as a ‘build to rent’ property.

ACAT said the rental increase cap was intended to help remedy the power imbalance between landlords and their tenants, in particular the threat of accepting a rental increase or losing a tenancy.

“The intent of the legislation is to protect tenants from excessive rent increases and from the very threat that the submissions of the applicant, misguided as was, identified the ‘threat’ of landlords that tenants either accept increases in rent or ‘move out’, highlights the power imbalance between landlords and tenants at times of high rental demand,” the ACAT decision said.

“It is that power imbalance that the act seeks to remedy.”

The landlord said the rent increase should be allowed despite being over the rental increase cap because of their interest on borrowing costs, rates to the ACT Government and electricity and power costs all going up.

However, the tribunal rejected all three of those reasons as none of them applied to the apartment specifically, but to the apartment complex as a whole.

“Should interest costs be a relevant matter when considering an excessive rental rate increase it would lead to the absurd outcome that a landlord who had a larger borrowing or paid a higher interest rate might be entitled to a greater increase than a landlord that did not have any borrowings,” the ACAT decision said.

The landlord also said other comparable properties were renting for a similar amount, however, ACAT deemed the apartment was advertised as a one-bedroom plus study, whereas the properties with higher rents were two-bedroom apartments.

“The study room does not have access to natural light or ventilation. It does not have privacy nor a light switch in the room,” the ACAT decision said.

“It is not a bedroom and should not be advertised as such.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.