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[title]In August, Australia recorded its highest-ever interest rate since 1990, and we’ve all been feeling the pinch. A pint of frothy is $14 on a good day, $10 meal challenges on TikTok are now $20 meal challenges and you’ll be hard-pressed to find petrol for less than $1.80 per litre. And to top it all off, the record-high inflation has triggered a devastating rental crisis, with rental prices hitting the fastest quarterly rise on record.
So, what’s a renter to do? One of the best weapons to have in your arsenal right now is knowledge, so we’ve gone ahead and sought out the answers to some of your burning questions. Don’t panic, read on and know the rights you have as a tenant like the back of your hand.
What is causing the rental crisis?
Think of the rental crisis like a battle, and live by the wise Sun Tzu’s advice: “know thy enemy and you will never be defeated.” Things may get worse before they get better, so it’s crucial to understand what’s causing this crisis: soaring interest rates, higher home prices and supply and demand.
Inflation is expected to reach nearly eight per cent, and to put that into perspective, a ‘normal’ inflation rate is at or below two per cent. It’s the job of the Reserve Bank to stabilise our economy, so the bank has been incrementally increasing interest rates to balance the scales. As of October 26, the interest rate is sitting at 1.25 per cent – and it’s possible the rates will hit 2.5 per cent by the end of the year.
The higher the interest rate, the higher the expected repayments on loans, credit cards and mortgages – long story short, mortgage bills will be higher for landlords, and they’re likely to pass those costs on to renters. This, combined with high property prices, high demand and low rental supply, is a recipe for rental disaster.
How much – and how often – can my landlord increase my rent?
With all of that in mind, what’s stopping your landlord from doubling or tripling your rent? Thankfully, there are several rules in place that are designed to protect tenants from undue increases.
According to VCAT, rent can only be increased once every 12 months. The rental provider is not allowed to increase the rent during a fixed-term agreement unless otherwise outlined in the lease. They are also required to give the tenant at least 60 days' notice prior to any rental increase. Unfortunately, there are no laws outlining exactly how much a rental provider can increase rent – but tenants can challenge a rent increase if they feel it’s too high.
How much rent can I afford?
According to the Guardian, Australians are paying $62 more per week to rent than they did a year ago, and the average rental price has increased by almost 14 per cent. If you’re currently hunting for a rental, that means you might have to hike up your budget as a result; but how much rent can you actually afford, based on your income?
It depends on your personal preferences; would you rather spend more on fancier digs and less on everything else, or get a cheaper rental to have more spending money to play with? A good rule of thumb is that your rent shouldn’t exceed 30 per cent of your income, and ideally no more than 20 or 25 per cent.
How do I apply for rent assistance, and how much can I get?
If you receive any of the following while also paying rent, you’re eligible for rent assistance:
- Age Pension, Carer Payment or Disability Support Pension
- ABSTUDY Living Allowance, Austudy or Youth Allowance
- Special Benefit, Family Tax Benefit and/or Parenting Benefit
- JobSeeker Payment or Farm Household Allowance
You’re only eligible if you pay above a certain amount of rent, and the amount of assistance you get depends on the amount of rent you pay. For example, a single person with no dependents must pay at least $135.40 per fortnight to be eligible, and for every dollar of rent you pay above this amount, you’ll receive 75 cents of assistance.
You don’t need to apply, because Services Australia will check if you’re eligible when you make your claims for other payments like JobSeeker. So if you’re wondering if rental assistance can be backdated, the short answer is no because you should already be receiving it if you are eligible and have provided evidence of your tenancy.
Will rent go back down any time soon?
The short answer? Yes.
The long answer? Yes, but there are a lot of variables at play, and it might go up more before it comes back down. If the Reserve Bank continues to raise interest rates, the higher median rental rate will likely be passed down to the renter. Once inflation stabilises, that’ll signal to the bank that it’s time to bring interest rates back down, and we might be looking at more affordable rentals.