Property Sector in Political Crosshairs Again

September 27, 2024 Edward Dever

Rent controls, National Renters Protection Authority and negative gearing changes.

In the lead up to the 2024 Qld State election, Ch 9 News is reporting that the Qld Government is considering ACT style inflation-linked rent controls.

Sounds like a pre-election thought bubble. Any move towards greater rent controls in Qld runs contrary to the position of the Government's own Department of Housing, Local Government, Planning and Public Works

In May 2024, the Department stated that it believed forms of rent control are generally ineffective.

The ALP risks losing several seats to The Greens at the October election so it is not surprising that they may make election promises that seek to limit voter bleed to The Greens.

Meanwhile, The Greens want to implement a National Renters Protection Authority.

Costing $200m per annum and staffed by 1,000 public servants, the NRPA would investigate rental breaches as well as offering advocacy, advice and education to renters around Australia.

The NRPA would deal with tenancy disputes and enforce the minimum standards the Greens want, including rent freezes, ventilation, heating, cool and insulation standards. The NRPA is part of a wider $2.5b Greens Plan to convince the States to enact rent freezes.

How the NRPA would work in practice is unclear. There seems significant overlap with the role of State Government Departments.

Victoria, as an example, is planning to implement far reaching housing standards to include heating, cooling and insulation.

Qld's latest round of rental changes come into force on 30 September 2024. These include new standards for re-letting costs, methods for paying rent, timelines for utility bill payments, and supporting evidence for bond claims.

NSW is also moving towards tightening the rules for no-default evictions.

And just to top it off, media reports indicate that the Federal Government has asked Treasury to look at the implications of changing negative gearing rules.

Lots of political obfuscation peppered with some denials by Government members.

Similar to the Government's superannuation changes which targeted the higher end of superannuation balances, it wouldn't be surprising to see the Government target negative gearing changes, for example, at the 5% of landlords who own 6 plus properties.

Any uncertainty over rent controls and negative gearing just reinforces nervousness amongst investors at a time when Australia needs greater investment in rental housing.

Ch 9 News - Rent Controls

Report No. 7, 57th Parliament Housing, Big Build and Manufacturing Committee, May 2024

National Renters Protection Authority Plan

Negative Gearing Changes

September 2024

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

Queensland Government Shuts The Door On Rent Controls - For Now

May 20, 2024 Edward Dever

On 10 May 2024, the Housing, Big Build and Manufacturing Committee released its report on the Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Bill 2024.

One of the more interesting matters in the Report is a statement that the Department of Housing, Local Government, Planning and Public Works believes forms of rent control are generally ineffective.

The Report (on page 20) states:

"the department noted that economic research has identified that rent price controls, such as restricting or limiting the amount rent can be increased by, are generally ineffective at improving rental affordability and can have other negative effects, such as reducing the quality of rental stock and reducing renter mobility. They noted that the best way to address rental affordability is by increasing housing supply."

The Greens continue to press the Federal Government to introduce a form of rent freeze followed by rent caps.

As recent as 16 May, Greens MP Max Chandler-Mather, commenting on Twitter/X about PM Albanese's move to evict his tenant ahead of a likely property sale, stated that "[i]f the Prime Minister wanted to treat renters fairly, he would coordinate a freeze and cap on rent increases". The Greens are unlikely to drop rent controls as part of their platform ahead of the next Federal election.

The Committee concluded that the Government's Bill should be passed although it noted a number of areas where the Department needed to do more homework.

These include:

- the time frame for the retention of tenant records

- wider consultation on a portable bond scheme

- the documentation needed for utility bills payable by tenants

- the prohibition of accepting more than four weeks rent in advance, and

- disclosure in leases of the last rent increase as it applies to newly purchased properties.

The Bill, when enacted, will restrict residential property rent increases to once every 12 months and apply the restriction to the property rather than the lease.

It will also legislate that a landlord cannot act unreasonably in refusing a tenant’s request to attach a fixture or make structural changes to the premises either relating to safety, security and accessibility, or for personalisation purposes. Tenants may seek recourse through QCAT if denied approval. This also applies to modifications related to strata common property with strict timeframes for strata approval.

Over time, we will see if some of these provisions act as a further disincentive to residential rental property investment in Queensland.

UPDATE - The Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Bill 2024 was passed by Parliament on 23 May 2024.

Report No. 7, 57th Parliament Housing, Big Build and Manufacturing Committee May 2024

May 2024

Further Proposed Changes to Queensland Residential Tenancy Legislation

April 2, 2024 Edward Dever

On 21 March 2024, the Queensland Government introduced the Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Bill 2024.

The Bill’s purpose is to further strengthen tenants’ rights and stabilise rents in the private rental market.

The proposed amendments include:

- adopting a standard rental application form (as yet only partially specified) which limits the information a tenant need provide.

- applying the 12 month rent increase restriction to the property rather than the lease, regardless of a change in property ownership. Lease breaks may lead to rent increases during future lease terms rather than at the commencement of the lease term.

- requiring leases to state the date of last rent increase, with tenants permitted to request evidence of such increase. Existing leases are exempt.

- prohibiting rent bidding, including accepting an unsolicited offer higher than advertised.

- capping reletting costs in the event of a lease break.

- legislating that a landlord cannot act unreasonably in refusing a tenant’s request to attach a fixture or make structural changes to the premises relating to safety, security and accessibility. Tenants may seek recourse through QCAT if denied approval.

- capping rent in advance payments to a maximum of 4 weeks rent - the amendment changes the prohibition on requiring an advance payment to accepting an advance payment. This may necessitate refunds in certain circumstances to prevent breaches although perhaps less problematic with periodic payment arrangements.

- adding new time limits for the provision of water service charges payable by a tenant.

One of the Bill’s stated aims is to improve the rental experience for Queensland renters and property owners. Some landlords may contend that the seemingly endless legislative amendments are having the opposite effect. Agents are also facing more compliance tasks and complicated leasing arrangements.

The deadline for submissions on the Bill is 10 April 2024.

RTA - Have your say on new rental law reforms

April 2024

Minimum Housing Standards Commence in Queensland

September 20, 2023 Edward Dever

From 1 September 2023, any new residential lease in Queensland or lease renewal is subject to the new minimum housing standards requirements. All remaining leases will be subject to the requirements from 1 September 2024.

Some of the requirements such as adequate plumbing and drainage, connected water supply and a functioning toilet seem obvious to most landlords.

However, these requirements, together with items such as functioning latches or locks on external doors and windows, effectively place an onus on the agent and owner to confirm compliance prior to any new lease or lease renewal.

There are already examples of agents advising owners they will not lease properties that, in their view, do not comply with the minimum housing standards.

Tenants have a variety of remedies where a residential rental property does not meet the minimum housing standards.

These include ending the tenancy within seven days of occupying the property, requesting emergency repairs, or applying to QCAT for a repair or termination order.

Minimum housing standards fact sheet – general tenancies

September 2023

Public Hearings Held On Greens' Queensland Rent Freeze Bill

December 22, 2022 Edward Dever

In 1987, renting a student house at Indooroopilly in Brisbane's western suburbs would set you back $125 per week. That worked out at $33 per week for each of the three larger bedrooms and $26 per week for the small one. Inexpensive housing. Comfortable surroundings with fresh paint and carpet, provided you ignored the termites slowly consuming the downstairs bedroom.

35 years later, the median asking rent for houses in Indooroopilly is $650 per week although that particular house is no longer there. Demolished long ago (along with numerous neighbours) to make way for a car dealership car park.

Public hearings on the Greens' rent freeze Bill were held in Brisbane on 5 December.

Under the proposed Bill, a two year rent freeze will be implemented with the maximum permitted rent being the relevant property's rent on 1 August 2022. Future rent increases (after the two year freeze) are limited to 2% every two years with no end date. There are no plans to implement any form of freeze on expenses such as rates, water rates, land tax etc.

Resolving the current rental crisis is a complex task. However it is not clear that broad-based rent control measures are the answer. Increasing the supply of both public and private rental housing is key. The entire housing stock in that street in Indooroopilly is now lost to commercial development. Rent control measures are likely to stifle private sector housing investment.

Examples elsewhere in the world highlight the housing supply issues associated with strict rent controls.

Ireland’s 2016 rent control measures are considered counterproductive and ineffective and have resulted in a serious lack of supply of residential rental properties available for rent with landlords leaving the market because they are not permitted to charge market rent for their properties.

St Paul, Minnesota is introducing rent control measures from 2023. Ahead of its implementation, the number of building permits issued in St Paul from January 2022 to July 2022 dropped 31.4% compared to the previous four-year average for building approvals.

San Francisco - a Stanford University study in 2017 relating to rent controls implemented in 1994 on small multi-family housing built prior to 1980 found that rent controls reduced residential rental housing supply by 15%.

Qld Parliament rejected the Greens' last attempt to introduce rent control measures in Qld. The Committee is due to table its report on the Bill in February 2023.

Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022 - Public hearing(s): Monday, 5 December 2022 - Brisbane

December 2022

Queensland Rent Controls Revisited

October 28, 2022 Edward Dever

The Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022 is The Greens' latest attempt to impose rent controls on residential rental properties in Queensland.

Under the proposed Bill:

- a two year rent freeze will be implemented with the maximum permitted rent being the relevant property's rent on 1 August 2022..

- landlords who shift a property to the short-term accommodation sector during the rent freeze period will be fined over $7,000.

- newly built properties during the rent freeze period are subject to rent caps based on the suburb's median rent.

- future rent increases (after the two year freeze) are limited to 2% every two years with no end date.

There are no plans to implement any form of freeze on expenses such as rates, water rates, land tax etc.

After the furore over the Qld Government's now shelved plans to assess land tax based on combined Qld and interstate land holdings, this Bill is generally flying under the radar

Stakeholder submissions are sought by 31 October 2022.

Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022

Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022 - Submissions

October 2022

Rent Control - Failed in Queensland, Try Canberra

August 29, 2022 Edward Dever

Federal Greens MP for Griffith Max Chandler-Mather has announced a proposal to freeze residential property rents for a two year period followed by a maximum 2% increase each two year period thereafter until wages catch up to rents.

The proposed national rent control measures are to be backdated to 1 August 2022. Any residential properties not rented at that time (including new builds) can only be rented at the suburb's median rent. Rent stays frozen even if a landlord renovates the property between tenancies.

The Greens propose that the Federal government force each State and Territory government to impose these rent control measures while at the same time ending negative gearing and CGT concessions for residential property and calling on the Reserve Bank to halt interest rate rises.

Missing from the proposal was any discussion of a corresponding freeze and subsequent caps on government charges such as council rates, water rates and land tax. No comments either on whether (somehow) a freeze should be enacted on insurance, strata levies and maintenance costs.

Also missing was any comment that a similar proposal was made in Qld in 2021 by Greens MP for South Brisbane Amy MacMahon as a Private Members Bill. One of the provisions of the Residential Tenancies and Rooming Accommodation (Tenants’ Rights) and Other Legislation Amendment Bill 2021 stated that rent increases be limited to CPI increases.

This proposal was rejected by the Qld Parliament and the Bill was discharged on 14 October 2021.

The Greens claim Victoria froze rents for six months during the Covid-19 pandemic and this justifies their rent freeze proposal.

However, the pandemic rent freeze in Victoria was accompanied by cost related measures such as deferrals and interest waivers on costs such as council rates and water rates. Similarly, Qld residential property investors were able to access discounts, deferrals and reductions on costs such as council rates and land tax. The Greens propose no such equivalent measures.

The Greens proposal seems to have a few hurdles. As PM Anthony Albanese said recently - "It's not clear to me short of nationalising property how that could be achieved and I haven't seen any proposal."

It is not clear whether the PM will seek to impose the Greens rent control measures on the State and Territory governments.

Update - Meanwhile, Greens MP for South Brisbane Amy MacMahon plans to resurrect her failed Bill, update it for the proposed more restrictive rent control measures and submit it to Qld Parliament for consideration.

Proposal for rent control put forward

Report No. 8, 57th Parliament - Residential Tenancies And Rooming Accommodation (Tenants' Rights) And Other Legislation Amendment Bill 2021

Greens Push To Freeze Qld Rents

August 2022

Qld's RTA - Reporting On COVID-19 Dispute Resolution Requests Is Wrong

June 7, 2020 Edward Dever

Qld's Residential Tenancies Authority has taken issue with claims in the media that there are 30,000 Covid-19 related requests for dispute resolution.

Either in search of clicks or lazy journalism, the article got the figures completely wrong.

While the RTA Covid-19 Hotline has handled 28,042 phone calls since late March, there have only been 1,281 conciliated disputes, with 80% resolved.

The RTA’s conciliation data does not indicate that tenants and landlords are “going to war” as the article states. Rather, where Covid-19 related issues have arisen, the parties are negotiating in a reasonable manner.

The total number of phone calls comprises calls by all parties, not just tenants. As one real estate agent has indicated, they have rung the Hotline multiple times to clarify various issues.

As the RTA states: “The RTA thanks the Queensland renting community for doing their absolute best to work cooperatively and constructively together during these challenging times."

RTA responds: COVID-19 dispute resolution data article

June 2020

Squeezing the last cent out of a dead tenant?

January 29, 2020 Edward Dever

A recent article highlights the timing of the end of a tenancy when a tenant dies - Woman’s estate ordered to pay three weeks’ rent after her death

As a landlord, you hope that tenants don't die. But it does happen. In Qld, generally the tenancy ends two weeks after notice of the death (Qld RTA - death of a sole tenant).

I view the date of death as the end of the tenancy. I see no point requesting written notice from the deceased tenant's relatives at a time when they should be focused on other things. While formalities need to be addressed, a landlord should make things as easy as possible for the deceased's relatives.

There are ways of trimming costs from property ownership without trying to squeeze the last cent out of a dead tenant. Not every landlord would agree with that.

You can make the property ready for the next tenant in a way which makes the process as simple and helpful as possible for the deceased tenant's relatives. An agent who genuinely shows empathy in these situations is also helpful.

A simple rule of thumb is how would I like to be treated in similar circumstances.

PELEN

January 2020