2020 is looking to be the year for renters, with proactive reforms by a number of state governments being introduced that are designed to protect renters’ rights.
One thing many don’t realise is that the government relies on private landlords (property investors like you and me) to provide accomodation to millions of everyday Australians – and they’ll continue to rely on them for many decades into the future.
Data from the 2016 Census confirmed that almost one-third of Australian households were renting, and a study conducted by Swinburne-Monash Research Centre for the Australian Housing and Urban Institute found long-term renters of 10-year periods comprised over 40 percent of private renters.
It’s no surprise that tenants are getting more attention from policy-makers, with more Australians deciding to rent than ever before, and for longer periods than they were in the past.
It’s a delicate balance for decision-makers to ensure that both renters’ and landlords’ rights are protected and both parties are fairly treated.
Is that the case with new tenancy laws?
Updates to tenancy laws in ACT, NSW, Queensland and Victoria
A number of updates to relevant residential tenancy Acts have recently come into effect in the ACT, Victoria and NSW, and in Queensland, laws in the same vein are soon to be implemented.
These laws aim to provide a higher level of comfort and security to renters – but what is the impact on landlords?
1. Rental increases may be limited
A landlord can increase the rent for various reasons, most often to allow them to keep up with the rising costs they’re experiencing on their end for expenses such as council rates and maintenance increases.
A new reform has been established by the NSW Office of Fair Trading that will only allow landlords to raise the rent once every 12 months.
This change will come into effect on the 23rd of March, 2020, and this only applies to those renting out of a fixed-term agreement.
What does this mean for landlords?
You won’t be negatively impacted by this provided you engage a proactive property manager, who ensures your good quality tenants are signed to ongoing fixed-term leases, with appropriate market-rate rental increases built it.
Other legal changes that could impact landlords in NSW include:
- Landlords must make sure the rental property the offer to the market is “structurally sound” contains private bathroom facilities provides adequate lighting, ventilation, gas and electricity.
- New penalties that apply for landlords who fail to maintain smoke alarms.
- What will the new set fees be for breaking a lease? Automatic permission for tenants to make renovations of a “minor nature”, where is “would be unreasonable for a landlord to withhold consent” – such as attaching fly screens, installing curtains, or installing hooks to hang artwork
- The introduction of set break fees for tenants who cancel a fixed-term agreement.
2. There will be new set fees be for breaking a lease
Previously in NSW, if a tenant wanted to break their lease, it could become quite expensive.
Tenants were potentially required to cover costs that include rental payments until a new tenant is found, advertising for new tenants, and any fees associated with a real estate agency (if the landlord was using one), as well as the break fee.
With the new reforms coming into place, the break fees are now set as follows:
- One week of rent if 75 percent (or more) of the fixed term has expired
- Two weeks of rent if 50 percent or more (but less than 75 percent) of the fixed term has expired
- Three weeks rent if 25 percent or more (but less than 50 percent) of the fixed term has expired
- Four weeks rent if less than 25 percent of the fixed term has expired.
What does this mean for landlords?
From March 23 when these rules take effect, fixed lease agreements won’t provide quite as much security as they used to.
However, if you own property in a central, sought-after location and you have engaged an experienced property manager, these changes shouldn’t result in any significant increases to vacancies.
3. Domestic violence victims can now immediately terminate their lease
NSW isn’t the only state to overhaul their rental laws.
Over the other side of the country in WA, in May last year, new rules were introduced around dealing with tenants in a domestic violence situation.
Previously, domestic violence victims were able to break the lease by providing 14 days notice if they were able to show their co-tenant had been served with a final restraining order.
Unfortunately, the nature of domestic violence and the lengthy process of finalising restraining orders means that many victims aren’t able to provide that.
It’s important to note that the lack of a restraining order doesn’t mean any victim is in ‘less danger’, so this new reform has been designed to provide a safer, swifter alternative to those who might feel as though they’re trapped in the lease.
Further, there is no penalty in relation to leaving under DV circumstances, removing yet another stressor for those in such a situation.
What does this mean for landlords?
On a day-to-day basis, not much will change.
But again, you’ll need to work with your property manager to ensure any of these cases are dealt with quickly and sensitively.
4. Elsewhere in Australia, key rental law changes include:
In Victoria, all leases signed after July 1, 2020 will be bound by the following:
- Rental increases outside of fixed-term agreements will be limited to one per year.
- Landlords will no longer be able to evict tenants without cause, once a fixed-term agreement expires; this effectively bans ‘no grounds’ evictions.
- Tenants will be allowed to make minor modifications without their landlord’s consent.
- Landlords can only stop tenants from keeping a pet if they obtain an official order from the Victorian Civil and Administrative Tribunal.
- A new blacklist will be introduced to name and shame landlords who don’t treat their tenants fairly.
In the ACT, all leases signed after November 1, 2019 will be bound by the following:
- Rental increases outside of fixed-term agreements will be limited to one per year.
- Tenants will be allowed to make minor modifications without their landlord’s consent; landlords can only refuse if they obtain approval from the ACT Civil and Administrative Tribunal.
- Rental agreements cannot prohibit pets completely.
In Queensland, proposed changes are under consultation now that include:
- All rental properties will need to meet new minimum standards.
- Landlords will no longer be able to evict tenants without cause, once a fixed-term agreement expires; this effectively bans ‘no grounds’ evictions.
- Owners will be asked to provide reasonable grounds for denying tenants the right to own a pet.
- The government will make it easier for renters experiencing domestic and family violence to end tenancies without the usual notice requirements.
