New tenancy act amendments are coming to your state.
Are you ready for Tenancy Act reforms?
New Tenancy Act amendments are coming to most states in Australia. These reforms aim to clarify legislation and make it easier for both tenants and landlords to understand their rights and responsibilities. Ultimately it will bring an added level of transparency between the owner and the renter, making what is required of each party black and white.
The amendments vary from state to state but include changes around tenants’ rights to make minor modifications, pet ownership and tenant safety. The Tenancy Act changes will affect both tenants and landlords in some way, so it is important to be aware of the amendments coming to your state.
Landlords should especially take note of the changes, as non-compliant properties could see financial consequences.
"Tenants want a home, and investors want a return on their investment – often these are diametrically opposed. The Tenancy Act amendments will hopefully bridge the gap for both parties and make the expectations a lot clearer,” explains Amy Sanderson, LJ Hooker Head of Property Management.
Thirty two percent of Australians currently rent their home, and a large proportion of these are lifetime renters due to factors such as increased property prices. Amendments to the Residential Tenancy Acts have been prompted by both the federal and state governments adapting to current home ownership trends and are intended to relfect the needs of tenants and landlords.
“The whole rental reform that’s happening in each state, is really to bring more comfort and security to renters,” says Shaun Doyle, Property Management for Victoria and Tasmania, Ray White.
So what do you need to know?
Below is some basic information about changes in each state but we'd also recommend speaking to your property manager or conducting further research to see how you might be impacted.
Reforms commenced in Victoria in 2019 and implementation of the changes will take place from July 2020.
The biggest reform that may affect property owners is that rental properties will need to meet a minimum standard before they can be leased. These standards are expected to be announced in May.
Some items we already know that will be on the list include:
- Locks on windows
- Deadlocks on outside doors
- Landlords must check the gas and electricity often to make sure it is safe
Shaun anticipates that four percent of rental providers will sell their properties so they don’t have to worry about making the required changes. He predicts another four percent will make changes to their property to bring it up to minimum standard, but will pass on these costs to the tenant in the form of rent increases.
“About 40 percent of the bottom quality rental properties will either be removed or increase in price, as they are brought up to minimum standard. Landlords will be reducing supply in the rental environment and increasing the rent, so financially, rental providers will be better off,” explains Shaun.
With over 132 reforms being implemented in July some of the key changes to be aware of are:
- Renters can keep pets at a rental property with the written consent of the rental provider. A rental provider can apply to VCAT for an order that it is reasonable to refuse permission
- A landlord cannot increase rent more than once every 12 months under any type of rental agreement
- Renters can make prescribed modifications without the rental provider’s consent, such as adding a hook to hang a picture or installing security measures
- Rental owners must ensure the rental property is provided and maintained in good repair and is in a reasonably fit and suitable condition for occupation. This applies regardless of the amount of rent paid or the property’s age and character
- Rental providers will no longer be able to give ‘No specified reason’ notices to vacate for periodic leases
You can view the full list of amendments here.
Some states now allow tenants to make minor alterations, like add picture hooks.
New South Wales
The amended Residential Tenancies Act 2010 and the new Residential Tenancies Regulation 2019 New South Wales was released in 2019, however, changes will only come into effect from 23 March 2020.
New South Wales is also seeing the implementation of a minimum standard for living, however unlike Victoria, there are only seven standards.
The seven minimum standards are:
- Structurally sound property
- Adequate lighting in each room, except storage rooms or garages
- Adequate ventilation
- Supplies with electricity or gas, and has adequate outlets for lighting, heating and appliances
- Adequate plumbing and drainage
- Connected to water supply service
- Contains bathroom facilities, including toilet and washing facilities that allow the user privacy
There are a few other amendments that landlords need to know. The key changes include:
- Landlords must ensure that smoke alarms are in working order. A penalty will apply for landlords who don’t comply
- Greater freedom for tenants to install fixtures or make alterations, additions or renovations that are minor
- Mandatory set fees for the tenant if they break a lease (this will apply to all new fixed-term agreements that are three years or less)
- Limiting rent increases to once every 12 months for periodic (continuing) leases
To stay on top of property owner obligations, owners should chat to their real estate agent and insurance provider.
“If you want to start online, Google ‘rental changes in New South Wales’ and look for the link to your local governing body such as NSW Fair Trading and have a read. There will be information of a general sense and usually some hyperlinks to the legislation and prescribed forms, this is where the depth of detail is,” suggests Amy.
"Write down your questions or concerns. Speak with your landlord insurer and see where your liabilities sit if you do or don’t do certain items such as smoke alarm compliance."
For the full list of implementations, which includes those mentioned above, you can view the full act at The Department of Fair Trading website.
Australian Capital Territory
The Australian Capital Territory have already had their Tenancy Act amendments come into effect as of November 2019.
The changes aim to make it easier for tenants to keep pets and make modifications to a property with consent.
Additional amendments to be aware of are:
- Pets are no longer excluded from rental agreements in properties. If a landlord wishes to refuse a pet they will have to apply to ACAT
- Tenants will be able to make minor modifications, provided those additions are able to be restored to their original condition before the termination of a lease agreement. These could include security measures and picture hooks/li>
- Provision to allow landlords to terminate a tenancy if the renter uses the property for an illegal activity
The new amendments also include laws to protect tenants against excessive rent increases. A landlord may only increase the rent up to a maximum of 110 percent of the of the percentage increase in the rent’s component of the housing group of the Consumer Price Index for Canberra, published by the Australian statistician.
You can find more information about the Australian Capital Territory amendments here.
ACT and VIC permit tenants to have pets. Landlords who wish to refuse will need to apply to ACAT and VCAT.
Queensland and Western Australia
Both Queensland and Western Australia are currently amending their Tenancy Act. For those living in Western Australia, you can have your say about what changes you think need to be made to the Act by emailing the through the government website.
For those in Queensland, the time to have your say is now over, and the government is reviewing the recommendations and findings in five key areas:
- Minimum housing standards
- Renting with pets
- Minor modifications
- Domestic and family violence
- Ending a tenancy fairly
These findings will be put towards the creation of a bill, which once approved by parliament will be implemented in Queensland.
South Australia and Tasmania
South Australia and Tasmania are not currently reviewing their Tenancy Acts.
However, it is important to note that amendments are often made and you can view them on the relevant government websites:
Many landlords and tenants may already be in a rental agreement and depending on which state you are in some new laws will apply to existing contracts and some won’t. Speak to your property manager to make sure you know which will affect you, and what to be aware of when you start a new rental agreement.
The opinions expressed in this article are the opinions of the author(s) and not necessarily those of Resimac. The above is general commentary only and is not advice tailored to any individual’s financial situation. We recommend seeking advice from a mortgage or finance professional before implementing changes relating to your finances.