Michael Murray Managing Director, Murray Property · 22+ years in property management across Darlinghurst & Surry Hills
NSW rent increase rules changed significantly in October 2024 and again in early 2026. A lot of landlords I speak to still aren’t clear on exactly what they can do, what they can’t, and what happens if they get it wrong. This post is the plain-English answer, what the current rules require, how to issue a valid notice, and where landlords most commonly run into trouble.
The fundamentals are straightforward: you can increase rent once every 12 months, you must give 60 days written notice, and the notice must be specific and correctly formatted. Get all three right and you’re compliant. Miss any one of them and the increase is invalid, and the tenant has the right to refuse to pay it.
What changed and when
Before October 2024, the frequency of rent increases in NSW depended on the type of tenancy agreement. Periodic leases had one set of rules, fixed-term leases another, and in some cases, landlords could increase rent more than once per year. Since 31 October 2024, new rules restrict how often landlords can increase rent, introducing a 12-month cap on rent increases for most rental properties.
The simplification is genuine: regardless of whether your tenant is on a periodic or fixed-term agreement, the same rule now applies. One increase per 12-month period, with 60 days written notice. A further change came into effect on 2 March 2026, landlords must now offer Centrepay as a payment option and enable it if the tenant requests it. You cannot charge the tenant any cost for this.
WHAT LANDLORDS CAN DO
Increase rent once every 12 months. Issue a 60-day written notice at any point during the tenancy. Increase rent at lease renewal, as long as 12 months has passed since the last increase. Include a rent increase clause in a fixed-term agreement (with exact amount or calculation method). Challenge an NCAT decision if you believe a market rent determination is incorrect. Set rent at market rate when a new tenancy begins
WHAT LANDLORDS CAN DO
Increase rent within the first 12 months of a tenancy. Issue more than one rent increase in any 12-month period. Give less than 60 days notice of an increase. Issue a verbal notice, it must be in writing. State only a percentage increase without specifying the new dollar amount. Use vague calculation methods such as “in line with the market” or “by the rate of inflation. Require the tenant to pay more bond when rent increases. Charge the tenant any fee for Centrepay or bank transfer payments
The 12-month rule, exactly how it works
The 12-month restriction applies from the date the last increase took effect, not from the date you issued the notice. This is a distinction that trips up landlords regularly.
Here is how the timing works in practice: if your last rent increase took effect on 1 April 2025, the earliest your next increase can take effect is 1 April 2026. To meet that date, you need to issue notice by 31 January 2026, 60 days before the 1 April effective date.
The practical rule: issue notice 10 months after the last increaseVerify that at least 10 months have passed since the last increase before issuing a 60-day notice, ensuring the actual start date of the new rent is a minimum of 12 months from the previous change. This gives you a clean compliance buffer without cutting it close.
The 12-month rule also applies when a tenancy is renewed or the agreement type changes. When a tenant renews their agreement or switches to a different type of agreement, it’s still considered the same rental agreement for the purposes of rent increase rules — landlords must wait at least 12 months from the last increase before they can raise the rent. You cannot reset the clock by issuing a new lease.
The fixed-term exception
There is one scenario where a rent increase can be built into a fixed-term agreement without a separate notice: if the agreement itself specifies the exact new amount or the precise calculation method. The agreement must have the amount of the increase or the exact method of calculating the increase, for example, a dollar amount or percentage. The increase is not valid if the calculation method is unclear, as the tenant must know exactly what they will need to pay. For example, ‘in line with the market’ or ‘by the rate of inflation’ are unclear and not valid.
This is a useful tool for landlords who want certainty across a fixed term, but it only works if the clause is specific and unambiguous. A vague clause is not enforceable and the 12-month limit will apply as if the clause didn’t exist.
How to issue a valid rent increase notice
A rent increase notice that is missing any required element is invalid. The tenant is not required to pay the increased amount, and if they do pay it unknowingly, they can apply to NCAT for repayment within 12 months. Getting the notice right the first time is far simpler than dealing with a challenge later.
A valid NSW rent increase notice must include all of the following:
- Be in writing, email is acceptable, verbal notice is not
- Be signed and dated by the landlord or agent
- State the address of the rental property
- State the new rent amount in dollars, not just the amount of the increase or a percentage
- State the date from which the increased rent is payable
- Be given at least 60 days before the effective dat
- Do not state only a percentage increase without the new dollar figure
- Do not use vague language such as “by CPI” or “in line with the market”
- Do not issue notice less than 60 days before the intended effective date
- Do not issue a second notice if less than 12 months has passed since the last increase took effect
What happens if the notice is invalid. For most agreements, if the landlord or agent tries to increase the rent within the first 12 months since the start of the tenancy, or more than once in any 12-month period after the first year, the tenant does not have to pay the increased rent.
The tenant can continue paying the old amount and write to the landlord explaining the notice is invalid. The landlord must then issue a fresh, compliant notice, and the 60-day clock starts again from the new issue date.
Step-by-step: how to action a rent increase correctly
Check the date of the last increase. Confirm the exact date the last rent increase took effect, not when notice was issued, not when the lease was signed. Calculate 12 months forward from that date. That is the earliest date your new rent can take effect.
Research the current market rent. Use the NSW Fair Trading Rent Check tool to compare your proposed rent against the median rent range for your postcode. Document at least three comparable current listings in your street or immediate area. This evidence is essential if the tenant challenges the increase at NCAT.
Determine the new rent amount. Set the new rent at a figure supported by current market evidence, not at the maximum you think you can achieve, but at what comparable properties are actually leasing for. In Surry Hills and Darlinghurst, units are currently leasing at $775–$800 per week. A figure significantly above current market comparables is challengeable and risks losing a good long-term tenant over a marginal gain.
Issue the notice at least 60 days before the effective date. Write the notice in plain language, include all required elements, and send it in writing. NSW Fair Trading provides a standard notice of rent increase form, using it removes any risk of missing a required element. Retain proof of delivery.
Allow for the tenant’s right to challenge. The tenant has 30 days from receiving the notice to apply to NCAT if they believe the increase is excessive. This is their right and does not mean the notice is invalid. If they do apply, NCAT will consider comparable rents for similar properties in the same area, the condition and amenity of the property, and the landlord’s expenses. Having documented your market research in advance puts you in the strongest position.
What tenants can challenge, and how NCAT assesses it
A tenant who believes a rent increase is excessive can apply to NCAT within 30 days of receiving the notice. Some of the main evidence the Tribunal considers is comparable rents for similar properties in the same area, the state of repair and amenities provided in the property, and the landlord’s expenses. The Tribunal has the power to set the rent for the next 12 months.
It is worth understanding that “excessive” does not mean any increase a tenant dislikes. It means an increase that is above what comparable properties in the same area are actually leasing for. A landlord who can demonstrate three or four current comparable listings at or above the proposed new rent is in a strong position at NCAT. A landlord who cannot demonstrate this is not.
THE BOND DOES NOT INCREASE WITH THE RENT
This catches landlords out regularly. When rent increases, the bond does not automatically increase and you cannot require the tenant to pay a higher bond. The bond remains fixed at the amount lodged at the start of the tenancy unless a new agreement is signed and a new bond is formally lodged through Rental Bonds Online. Requesting additional bond when issuing a rent increase notice is not permissible under NSW tenancy law.
Quick reference: rent increase rules at a glance
| Question | Answer |
|---|---|
| How often can I increase rent? | Once every 12 months, measured from when the last increase took effect |
| Can I increase rent in the first year of a tenancy? | No — rent cannot be increased within the first 12 months of a tenancy |
| How much notice must I give? | At least 60 days written notice before the effective date |
| Can I give verbal notice? | No — notice must be in writing (email is acceptable) |
| Must I state the new dollar amount? | Yes — a percentage only, without the new dollar figure, is invalid |
| Does the 12-month rule reset when I renew a lease? | No — renewal or change of agreement type does not reset the clock |
| Can I include a rent increase in a fixed-term agreement? | Yes — if the agreement specifies the exact amount or precise calculation method |
| Can I require additional bond when rent increases? | No — the bond is fixed at the original amount lodged |
| Can the tenant challenge the increase? | Yes — at NCAT within 30 days of receiving notice, on grounds of excessiveness |
| Must I offer Centrepay as a payment option? | Yes — from 2 March 2026, if the tenant requests it |
The practical reality for Darlinghurst and Surry Hills landlords
In a rental market as tight as Surry Hills, 0.78% vacancy rate, properties leasing in one to two weeks, the instinct is sometimes to push rent increases as high as possible at every 12-month opportunity. In my experience, this is almost always the wrong strategy.
A reliable, long-term tenant who pays on time, takes care of the property, and doesn’t generate maintenance calls is worth more than the marginal rent gain from pushing them to their absolute limit. Tenant turnover in Surry Hills and Darlinghurst is expensive, advertising, vacancy, cleaning, and re-leasing costs typically amount to $2,500–$4,000 per changeover. A rent increase that causes a good tenant to move costs you money in net terms even if the new tenant pays $30 more per week.
The right approach is a market-based annual review, check what comparable properties are actually leasing for, set a rent that reflects current market evidence without exceeding it significantly, issue the correct notice in good time, and maintain a professional and respectful relationship with the tenant throughout. That approach produces the best outcomes over a multi-year hold, is fully compliant with current law, and is defensible at NCAT if the tenant ever challenges.
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For the full picture on NSW rental law changes in 2025–2026, see our guide to the NSW no-grounds eviction ban. For property management across Darlinghurst and Surry Hills, see our property management services. The NSW Government’s rent increase guide is the authoritative source for current rules and forms.
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Disclaimer
The data, figures, and market statistics referenced in this article were current at the time of publication and are sourced from third-party providers including CoreLogic/Cotality, Domain, realestate.com.au, HtAG Analytics, PropTrack, and NSW Fair Trading, among others. Property market data changes frequently, median prices, rental yields, vacancy rates, clearance rates, and days on market figures are updated regularly by their respective providers and may have changed since this article was published. Readers are encouraged to verify all figures directly with the cited sources before making any decisions.
This article is intended as general information only. It does not constitute financial, investment, legal, or taxation advice. The information provided does not take into account your individual circumstances, objectives, financial situation, or needs. Before making any property investment, purchase, sale, or management decision, you should seek independent advice from a qualified financial adviser, solicitor, or property professional licensed in your state.
Murray Property is a licensed real estate agency operating in NSW. We are not financial advisers. References to rental yields, capital growth, or investment returns are based on publicly available market data and historical performance, which is not a reliable indicator of future results.
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