By Bob Wilson, 21st October 2008
Millions of dollars in back rent may have to be refunded to Darwin tenants if the Northern Territory Tenancies Commission upholds claims for overpaid rents.
Two Darwin tenants are claiming more than $4,000 in rent they say was overpaid because rent rises breached section 41 of the NT Residential Tenancies Act, which states that rents can only be raised if spelt out in the original lease.
The Northern Territory News has been following this story since July, when Tenancies Commission delegate Earl Johnston ruled that rent rises were invalid unless they had been foreshadowed in the original lease. The commission has made three decisions this year that prevented landlords from evicting tenants, citing the alleged breach of Section 41. Rents had been increased using a memorandum of variation which the commissioner has since ruled invalid.
The case has wide implications for Darwin's rental market - there are 18 more similar cases waiting to be heard and if these cases are also upheld, the ruling could have wider ramifications for rental markets in other states and territories.
The Real Estate Institute of the Northern Territory (REINT) is reportedly planning a Supreme Court appeal against the original July rulings.
Median rents in Darwin have soared in the past few years. Real Estate Institute of Australia data shows Darwin has the lowest rental vacancy rate in Australia, at 0.3%, and the median rent now matches Sydney, at $380 per week. Not surprisingly, Darwin was among the country's best-performing cities for investment property over the past five years. According to data compiled by Matusik Property Insights, the average return over the five years to June 2008 was 19.2% pa for houses and 20% pa for units. Only Hobart and Perth did better in either market.
The NT's Department of Consumer Affairs says in a recent bulletin that rents can only be increased on a fixed-term agreement six months after the agreement begins (with 30 days' written notice). The department also responded to concerns about the incidence of "rent bidding" in Darwin's hot rental market. The practice (in which tenants gazump each other by offering above-market rents), while not illegal in itself, can come under the scrutiny of the Consumer Affairs and Fair Trading Act.
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