There is a raft of new changes coming into effect from 1 October 2022, which generally provide more safeguards for tenants.
However, Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella (pictured) says these changes could have unintended side effects.
Read on to explore what each new rule could mean for property investors.
New Laws at a Glance:
- ‘No grounds’ ends to periodic tenancies are out.
- Simply saying ‘no pets’ is out, sufficient grounds must be provided.
- New framework for tenants requesting repairs, maximum spend on emergency repairs increased from two weeks' to four weeks' worth of rent.
REIQ CEO Antonia Mercorella said the new tenancy laws could turn some people off pursuing property investment. Image supplied.
End of tenancy notice periods
More reasons for ending a periodic tenancy agreement will need to be given, effectively ending a Notice to Leave without grounds.
Ms Mercorella said this could spell the end of periodic tenancies in the state.
“We wouldn’t be surprised if periodic leases become extremely rare if not extinct in Queensland, which is a shame given the flexibility it offers both tenants and lessors,” she said.
A periodic tenancy can be ended in a number of ways after 1 October, including: unremedied breaches such as failing to pay rent, a sales contract, non-compliance or a tribunal order, significant repairs or renovation, among other reasons.
“Our best practice advice for property managers is to start talking to their clients now about the risk of a ‘never-ending tenancy’ if they don’t transition periodic tenancies to fixed-term tenancies ahead of the new laws,” Ms Mercorella said.
Renting with pets
The new laws include a framework for negotiating renting with pets. Lessors will have further hoops to jump through should they disallow pets, and have limited grounds to refuse.
Upon receiving a request from the tenant, the lessor must respond to the tenant’s request in writing within 14 days of receiving it. If the application is rejected, lessors must provide grounds for refusal and justification as to why they apply to the request.
This means that simply saying ‘no pets’ is no longer sufficient.
Check the Queensland Government website for specific amendments to the legislation, such as sufficient grounds for pet refusal.
Ms Mercorella said the REIQ expects an influx of queries from property managers as a result of the new pet legislation.
“We recognise that pets are often a beloved family member, but equally appreciate that not all property owners feel comfortable with the potential risk of pet damage to their property and its value,” she said.
“Previously property owners could choose to simply say 'no' to pets in their property, but with these new laws, property owners will have limited grounds to refuse a pet request.
“While it’s a silver lining that property owners will gain the ability to impose certain conditions in relation to the approval of a pet in their property, and be able to seek compensation for damage caused by pets, only time will tell if this change will shrink the rental pool if investors tap out.”
New repair order avenues
From 1 October the value of emergency repairs that tenants or property managers can order without the landlord’s approval will increase from two weeks to four weeks' worth of rent.
Tenants will now also be able to apply to the tribunal for a repair order. This includes routine repairs if the repair was not made in a reasonable time frame.
Orders can include the amount of rent to be paid, or compensation for loss of amenity, or lease termination if repairs are not undertaken by a certain date.
Simon Pressley, head of research at Propertyology, said the new laws could exacerbate the rental crisis should investors pull out of the market. Image supplied.
Could the new laws have unintended side effects?
Investors could pull-out
Ms Mercorella said these new laws could make investing in Queensland property less attractive.
“The unfortunate reality is that for some, this will take the shine out of investing in Queensland property,” she said.
“While some property investors may have made the decision to sell in anticipation of the new laws being introduced, it’s concerning to think what the aftermath could be once the laws are in operation.
“While we understand that there need to be protections available for tenants, finding the right balance is important because we do heavily rely on private investors when it comes to housing Queenslanders.”
Could deepen rental crisis
Head of research at Propertyology Simon Pressley (pictured) provided the data pointing to Queensland’s rental crisis, which could be exacerbated should investors turn away from the Sunshine State.
“In Queensland, there are only 5,000 properties advertised for rent across the entire state today [late August 2022], many of those are already taken. This time five years ago, when 400,000 fewer people lived in the sunshine state, there were 22,000 rental properties available,” Mr Pressley told Your Investment Property Magazine.
“Twenty-two of the state’s 24 largest townships currently have a vacancy rate of 1% or less. A ‘balanced’ market is 2.5 per cent. Propertyology predicts that the annual price to rent a standard house throughout Queensland will increase by $7,000 by the end of 2023.”
Mr Pressley said private investors carry the burden of housing most of Queensland’s renters, as opposed to public housing.
“Policymakers fail to understand that actions which punish and restrict those who fund more than 90% of Queensland’s total rental pool will result in insufficient rental supply. That forces rents up and pushes people into makeshift accommodation,” he said.
“Tens of thousands of couples and families will be squeezed out of conventional accommodation and into last resort shelters such as garages, tents, cars and caravans.”
“Don’t listen to the unreasonable commentary”
On the other side of the coin, Tenants Queensland CEO Penny Carr told Your Investment Property Magazine the response to these rule changes has been unreasonable and that there’s no evidence they will hamper investment activity.
She said that panic surrounding periodic tenancies and the new pets legislation is unjustified.
“The most important thing in managing tenancies is the relationship between the agent and the tenant. And this is just destroying and undermining those relationships,” Ms Carr said.
“It will probably also undermine relationships with owners as well because the owners will feel some of this pushback from tenants.”
She said would-be investors choose to invest in property because of fiscal policy, not because of smaller decisions around tenancy law.
“There might be individual investors that make decisions based on their experience in tenancy law, but overall, people are investing in residential property because of the financial benefits of it,” Ms Carr said.
What’s the solution?
Where Tenants Queensland, the REIQ, and Propertyology agree is that government support needs to shoulder more of the burden of housing renters in Queensland.
“This requires all levels of government to work together. Tenancy law reform is a very important part of making a stable and secure rental market. We also need more social housing, and better regulation of the short-term rental market,” Ms Carr said.
“The current laws are fit for a time when people transition to home ownership from the private rental market for a short period of time. And that's not the reality anymore.
“We need to make sure that we've got a product that's fit for purpose. And that means people having some agency over their space, some security where they live, and that they've got a safe place to live.”
