Proposed Residential Tenancy Changes

From the Head of Property Management with over a decade of experience.

Changes to the Residential Tenancy Act are due to go before parliament towards the end of the year, with an expectation these will be effected from mid-2024. The news has whipped up a fair amount of trepidation from investment property owners and agents alike.

I acknowledge there is a need to ensure tenants are afforded reasonable rights and security, one may question whether investment property owners are offered an equal balance of rights.

One of the amendments is to allow tenants to have pets (without prior consent from the lessor), meaning a lessor cannot decline an application on this basis. There are certain circumstances, allergies for example, that owners can apply for dispensation/exemption which must go through a bureaucratic process. Although I am professionally pro-pets, in appropriate properties, statistically pet owners tend to stay for longer, as they are fearful of not finding another pet-friendly home, and it also reduces landlords re-letting costs.

Pets do not draw on walls or rub mum's makeup all over the carpet. However, with limited or no supervision pets can cause damage to properties in other ways. One wonders whether there will a pet 'damage' bond to supplement the existing $260 'fumigation' bond.

Another change is to reduce the frequency of rent increases from 6 monthly to annually. In a balanced market (unlike what we are currently experiencing) I do not see this as a real issue. Under the current circumstances where unprecedented demand is coupled with a very quick succession of cash rate increases, one may argue otherwise. Tenant demand has been driving prices north and owners are scrambling to recoup what the banks are taking away. Sadly, both factors are uncontrollables for owners and tenants alike and it seems the government's only solution is to restrict an owner's opportunity to balance the books.

Following a similar path, agents will be prohibited from encouraging tenants to offer a higher rent to secure a property (known as ‘rent bidding’) ie. a landlord cannot ask you to offer more rent to out bid other tenants. This does not prohibit tenants from offering more!

It could be argued, this keeps tenants in the dark and if they are strong applicants and may be only $10 less than someone who offered more, but is less suitable. Theoretically, owners can either take better rent and a less desirable tenant , or less rent and better tenant - I'm opposed to both.

Perhaps it is another conversation altogether, but why not adopt a transparent process such as an auction ; terms are set before the auction, 'finance already approved' and then demand sets the price? They are investment properties afterall, not charity housing.

Finally, tenants will have greater freedom to make minor modifications to their rental home eg. putting hooks on a wall, painting walls. In principal, this seems reasonable (to an extent), however removing consent opens up a string of foreseeable problems. Allowing a tenant to make the property more homely likely encourages them to stay for longer. However, how will the quality of workmanship (install/repaired) be measured? Will the property be restored to pre-tenanted quality? What happens if there is a difference in opinion. Will courts favour the tenant, as many often do? What is considered reasonable or excessive? Can owners not have a say on what happens to their asset?

Perhaps like the covid mandates of rent freezing, it will not be as bad as expected. One may hold reservations of what the next round of proposed changed will be. The question remains will it deter people from investing in properties when we are in such a time of housing crisis?

Rob Woolmer 

Head of Property Management

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