The Residential Tenancies Act Amendment 2021, on top of the Healthy Homes standards, are some of the biggest legislative changes we’ve seen in property management since the 1950s. Add in the recent tax changes and it’s all a bit overwhelming! We’ve done the research to fully understand how these changes will affect you and your property. Below is a helpful list of key points.
When do the changes take effect?
Officially 11th February 2021 for all new tenancies and periodic tenancies.
However, if your fixed term tenancy started before 11th Feb 2021 you are still covered by the old law.
Ending a tenancy – 90 day ‘no cause’ terminations are no more.
This isn’t a bad thing; competent property managers rarely use them. Now that the RTA has a clearer process surrounding Anti-Social behaviour (more on this below) they will stop being a crux used by those who ‘can’t be bothered’ following the other options to end tenancies – they were always just an ‘easy way out’.
Arrears
You can still terminate under 21 days in arrears, and we can now terminate if there is a pattern of arrears (previously this was very tough to prove)
The new ‘three strike policy’ means a tribunal application can be made to end a tenancy if the tenant is in arrears by more than 5 days, 3 times in a 90 day period. This is great news for anyone who is struggling with a tenant paying late and then repaying the debt just before court – this is a lot of work for property managers and stressful for property owners too!
Anti-Social Behaviour; noise, abusive or threatening behaviour
Termination based on antisocial behaviour will require the same three strike policy as rent arrears. It must be noted that it should be three strikes of the same type of notice, not a mix of the two.
What happens if the property owner wants to move back in?
If the tenancy is periodic, then termination based on the owner of the property wishing to move back into the property requires that the tenant must be given 63 days’ notice (this used to be 42 days).
Owners must move in within 90 days for a minimum of 90 days.
What about if the property is going to be sold?
If the tenancy is periodic, then termination based on the owner of the property wishing to sell the property requires the tenant to be given 90 days’ notice. The property must be placed on the market for sale within 90 days.
This is a positive adjustment; it allows the owner to give notice if they intend to sell and wish to do so while the property is vacant – and staged properties do often secure a higher price. This doesn’t change the process though if an owner wishes to sell the property while it is tenanted.
Any other changes regarding notices?
Despite some reports of these changes being very one sided there are some increased security for the property owner as well;
‘A landlord will be able to issue a 14-day notice to terminate the tenancy if the tenant has assaulted the landlord, the owner, a member of their family, or the landlord’s agent, and the Police have laid a charge against the tenant in respect of the assault.’
And although it’s hard to accept, family violence is on the rise and many of those affected are renting. Managing these situations as a Property Manager normally leads to vacated properties where you need to apply for possession, deal with all the items left and rubbish, then finally return to market. This process will be much faster with this change;
‘Tenants experiencing family violence will be able to withdraw from a tenancy without financial penalty. In this situation the tenancy must give two days’ notice.’
Leases
All leases now automatically revert to periodic unless otherwise agreed upon – a periodic tenancy being where tenants have the flexibility to end their tenancy at any time by giving 4 weeks’ notice – as opposed to a fixed-term tenancy of an agreed period of time.
All requests to change a tenant on the tenancy agreement must be considered and property owners must not decline unreasonably. Requests to assign a fixed-term tenancy agreement must also be considered.
So how is this going to change lease management? Some people may opt to roll onto a periodic lease but many will still want the security of a longer lease.
Rent
Rent increases can only be issued every 12 months in one tenancy (this has changed from previously being every 6 months). This isn’t a bad thing and we’ve always recommended it to our owners. Most tenants accept an annual rent increase but a 6 monthly increase is considered greedy and often leads to the tenant losing faith in the owner.
There is one area where this will be problematic; fixed term lease breaks. If a tenant/s sign a rental agreement for 12 months but then needs to leave the property and end their tenancy, we then facilitate finding a new tenant to replace their lease. The exiting tenant pays all the fees associated to finding a new tenant. We then sign a new agreement and lodge a new bond and this is where the problem occurs. A new agreement restarts the clock back to day 1 and we need to wait a further 365 days till the rent can be increased. A rent increase within 12 months is only accepted if the tenancy ends and the property is relet at a higher price.
Rental properties cannot be advertised without a rental price listed now. You may have noticed we’ve removed all our For Rent Signs as these also need a rental price!
Rental Bidding
Property Owners/Property Managers cannot encourage tenants to bid on a rental (i.e. compete or pay more than the advertised rent amount).
Changes to the property
Tenants can ask to make changes to the property and property owners can’t just simply say no if the change is ‘minor’ – this includes installation of Fibre.
Neither of these raises alarm bells and we’ve always accommodated these changes. The property normally benefits in the long run. There are still some sensible reasons to say ‘no’ though and these include if the install isn’t safe, in line with building code or against body corporate rules.
Penalties for Property Owners have increased
The Tenancy Tribunal can now hear cases and make awards up to $100,000 (increased from $50,000). As well as this enforcement and penalty measures are generally increased – see here for more information on this.
We’re not worried about this – it’s not out there to catch the good property owners. It’s there to catch the people who treat their tenants unfairly and that’s not your way or the Wendell way.
Some of these amendments sound extreme but these changes are being well-managed and smoothly implemented – trust us, we’ve got this!
If you have any questions or worries please feel free to get in touch with me, your property manager, or for more information online you can find the official Summary of Changes here.
It’s important to think about how these changes, coupled with the tax and healthy homes changes affect your property and tenancy planning. Each situation is unique and its best to treat it that way. We recommend all advice should be sought from a professional property manager before making decisions regarding the above – with clever planning we can meet these new standards, keep tenants and owners happy and make renting better!