ACT Canberra CPI rent increases

Anyone else in Canberra frustrated by the rent CPI increase limitations?

Lease is nearing the end. Market rent is $70 higher per week then it's current rent (thats $70 increase from last year). CPI limits rent increase to $6.60 per week (give or take a couple of cents).

Perfectly good tenants. But there are lots of perfectly good tenants in Canberra.

 

I experienced the same resistance to rent increases from my PM but the picture is not all bad for landlords. The CG and reduced loan interests of ACT IPs help to offset any Vic investment underperformances. Any small rent increases available for the time being if current tenants do not want to move on is still in the right direction.

 

how do you figure out what the CPI increase limitation is?

 

If you google "how to calculate cpi rent increase canberra" the second result should be a 'calculator' on www.tenantsact.org.au. Its really just an excel doc, but it will work it out for you, provided you know what cpi is. (Cpi is currently 1.1% for Canberra, but you can always google that to double check if you are so inclined).
Otherwise both the old tenants website and legal aid ACT have the formula for figuring it out.

Its bugger all.

 

The formula is basically the change in the ABS index figures for the rent portion of the housing category for Canberra. Plus 10%.

 

There should be some kind of provision to be able to bring rent up to market rate if there is clear case of being under market due to whatever reason (eg. poor property manager not upto scratch with market rents).

If not that is really bad to lock in the landlord to keep accepting below market rents.

Rental markets just like property sales market is heavily influenced by laws of supply and demand. If there is lots of demand the market rent can and should increase faster than CPI.

Cheers,
Oracle.

 

Where do I find the CPI figure for the rent portion of the housing category for Canberra? I could find the CPI figure for the housing group here by downloading the Table 5 and then clicking on the series id for 'Index Numbers; Housing; Canberra' but, couldn't find anything specifically for the rents component.

 

Table 9.

 

CPI restrictions are idiotic. This is just going to give rise to Landlords finding ways to remove tenants so they can re-advertise at an appropriate market rent.... It's being talked about all over Australia, but I didn't realise it had been instituted anywhere yet.

 

My PM just told me that we can get the tenants out for renovation and changing carpets in one small room will also count as renovation. So, you are spot on!

 

Alternatively, you can say that a family member is moving in, and a month later re-advertise at market rate. Just have to weigh up the cost of small renovation vs loss of one month rent. If the tenant finds out that your family didn’t ended up moving in, I’d say due to change of situation which would be none of their business.

 

I'm glad I don't own anything in the ACT.

 

The ACT rules do not prevent more as a increase. If rental supply is very low the tenant may need to consider the costs for moving out and accepting the proposed rent.

A lessor must apply to ACAT for approval of a rent increase when:

• a rent increase is more than the prescribed amount
• the tenant does not agree to the increase
• the residential tenancy agreement does not allow the increase.

A tenant can apply to ACAT for review of a proposed rental rate increase. An application must be made not less than two weeks before the day the rent increase starts.

 

I own a few properties in Canberra (I am a local) and felt made a mistake buying here. But the capital growth over past 24-36 months have made the pain much less. Most of the properties purchased have doubled in value. Mind you have owned some of them for over 10 years so growth is not exceptional but average (5-6% per annum).

Rents are normally much higher than other cities but you have to pay land tax for each property so it evens out.

Cheers,
Oracle

 

Canberra is an amazing place to own investments. Its mostly owner occupier market as interstate investors don't usually venture into Canberra because of the land tax and CPI rental caps.
More owner occupiers = more emotional buyers = better capital growth
More owner occupiers = less rental supply = better yields
Best of both worlds!

 

And yet, it's not the only place to invest. There's lots of great places to invest, but ACT does not interest me one iota.

 

Seems like the local - “The [ACT Civil & Administrative] Tribunal (ACAT) - isn't working with the local investors down here in Canberra.

Local landlord owed over $20,000 in rental arrears, repairs | CW (canberraweekly.com.au)