Proposed Government Changes an Overreach

Thursday 19 Dec 2019

 

Document

“A better renting future- safety, security, and certainty”

The Consultation Regulatory Impact Statement

Review of the Residential Tenancies and rooming Accommodation Act 2008

 

It is our opinion the government is taking a sledgehammer approach to minor anecdotal issues and social issues that could be easily dealt with by consulting and working with the industry.

The government is reviewing the act and has proposed changes in five areas.

It is our belief that the proposed options presented in the Regulatory Impact Statement (RIS) are not going to improve the environment for tenants in the way the government expects, in fact they will increase tenants’ cost of living.

Before we examine the five areas of change let’s have a look at the survey. The government is claiming that 135,000 people have responded. 79% of the respondents are tenants, 18% are owners and 2% are property managers, this hardly seems balanced. The government also says that 34% of Queenslanders rent and that is an increasing trend.

When examining the proposal, we should also look at the current situation in Cairns. Over the last 12 months the number of properties advertised for rent has dropped by 14%*. The vacancy rate has consistently been very low. So, the implementation of these changes is going to happen in an already difficult environment for tenants.

Let’s examine the reports preferred options.

Minimum Housing Standards

Five options were put with option five to be recommended. “Minimum housing standards for safety, security and functionality combined with enhanced repairs and maintenance provisions”.

Whilst this sounds great and we are always keen for our properties to be safe, clean and compliant, it is difficult to provide constructive and meaningful feedback in relation to proposed minimum housing standards, as there is little detail provided in the RIS as to what the minimum housing standards mean. By not releasing the actual draft regulation at this point of the reform, Government is greatly disadvantaging investors by not enabling a constructive and fair consultation regarding proposed standards.

Renting with pets

Six options were put and option 4 and 6 are recommended. Option 4 legislates a tenant’s right to have a pet with the landlord given right to appeal through QCAT. Option 6 suggests a pet bond.

For some time, we have supported the idea of pet friendly homes for rent, and most of our landlords will allow us to advertise their properties as pet friendly. We understand the general thrust of this but disagree with the approach. Option 4 is contrary to an asset owner’s right to see their asset utilised in the way they desire. The decision for a tenant to have a pet should always remain with the landlord. In this case parts of option 2 may be useful in educating landlords and tenants about pets, with the inclusion of pet resumes.

Option six suggests the introduction of a pet bond. On the surface this sounds like a good idea as more owners would feel more comfortable about allowing pets if there was a separate bond., But under the option, the bond cannot be used for repairing damage a pet may cause, like scratching floorboards or digging in the garden. It can only apply to cleaning carpets and fumigation and is limited to $250.

Minor modifications

The RIS offers three options with option three being the recommended approach. “Establish mechanism for managing minor modifications with appropriate safeguards”. The proposal is vague at best, and offers no certainty of any direction. It is impossible to make constructive comment.

Domestic and family violence

The report canvasses 3 options the second and third options are recommended. “Communication and Education Campaign” and “Improve tenancy law protections for people experiencing DFV”.

Whilst we in no way condone any form of domestic violence and agree with the measures recommended, we do not feel the landlord should suffer financial loss. The recommendations give the right of a victim of DFV to vacate immediately and limit their financial obligation for rent to one week from date of notification. They would also have faster access to their bond.  In the circumstances where the victim is not the sole tenant the proposal becomes less clear and less practical and needs more consultation with those who manage property. It is obvious that with less tenants remaining in the tenancy it is highly likely rent payments will fall behind, and with reduced bond, landlord security will be greatly reduced.

We recommend a government fund should be set up so victims of DFV could draw on funds when required. We should also point out that reduced bond could expose landlords to being in default of their landlord insurance policy

Ending tenancies fairly

The motivation behind this is that the government believes tenancies are being ended unfairly for vindictive reasons. That tenants will not report maintenance issues for fear of being evicted. This is absolute nonsense and the figures used to justify this opinion are weak to say the least. Of all QCAT published decisions and appeals during the last ten years, my understanding is there are three known cases that involve retaliatory eviction. Not all decisions and appeals are published. It is an indication that this may not be as widespread as stated by Government in the Regulatory Impact Statement, media statements and social media posts.

The report puts six options and is recommending option 5. Requiring property owners and managers to only end tenancy agreements for approved reasons. We believe that this is onerous and restricts the basic right of an owner of a property. The current situation enabling a landlord to end a tenancy at the end of a fixed term agreement should continue.

A solution to ‘retaliatory and revenge eviction’ could be to introduce a penalty unit provision to section 291 (c), with section 292 being the means for the tenant to make complaint to the RTA if there is an alleged breach.

An added ramification of introducing this in legislation may be that landlords will be in breach of their mortgage obligations. Some banks require mortgages for investment property to have fixed term leases in place, especially properties held in super funds.

Summary

We would suggest much closer consultation with industry needs to happen before the proposal moves forward. The ramifications of the proposed legislation are much greater than the government understands, and the perceived hardship of current standards are way overstated.

The people most affected by this proposal could be the very people the government is looking to help.

Propertyology head of research, Simon Pressley, had this to say.

“While tenants might currently think this new legislation is a dream come true, the probability is they will be faced with extreme household budget pressure sooner rather than later.”

Mr Pressley said the average rent for a three-bedroom house in Mackay had already risen by $3000 over the past 12 months, $1400 in Cairns, $830 in Townville and $728 in Bundaberg.

“If you think these numbers seem extraordinary, they’re nothing compared to how rents will soar if this absurd legislation comes into effect”.

Real Estate Institute of Queensland CEO Antonia Mercorella also strongly opposes the reforms.

Ms Mercorella said the most damaging change was the proposed abolishment of a landlord’s right to not renew a tenancy agreement at the end of its agreed term. She said that would allow a tenant to remain in a tenancy indefinitely and for as long as they wanted unless the landlord could establish a reason prescribed by law.

“This reform has been cleverly disguised by the Palaszczuk Government as the abolishment of ‘without grounds terminations or evictions’,” Ms Mercorella said.

“That description is inaccurate and misleading.”

Regional Queensland cannot afford this proposal in its current format and I suspect it is the case for all of Queensland. Closer consultation with owners and owners’ representatives is needed.

 

David Forrest

 

 

 

*Source REA