Good news for owners – the Residential Tenancies Amendment Bill 2015 was passed by both Houses of the WA Parliament on 16 November 2016, and now awaits Royal Assent to become law. The Bill introduces three areas of minor change to the Residential Tenancies Act 1987. These changes are positive for owners of residential rental properties in Western Australia.
The Residential Tenancies Act 1987 is the central law that governs the renting of residential properties in Western Australia. The Act commenced in 1987 and received a major overhaul in 2013. The 2013 laws had some minor benefits for owners, however they greatly enhanced tenant’s rights, created much tighter regulations for how owners rent out their properties, and boosted a range of fines for landords. At the time of legislation these fines were presented as being precautionary in nature and not a threat, however since that time the Department of Commerce has actively fined owners for infringements.
So what are the changes in the new Bill?
- The entry notice procedures is simplified: in the past, owners and property managers were required to consult with a tenant prior to issuing notice of inspection. Obviously that was procedurally difficult and complicated, particularly when attempting to schedule more than one inspection on a particular morning or afternoon (remember that inspections must be split between AM and PM). The new change still requires the property manager to negotiate the inspection date “if it would unduly inconvenience the tenant for the lessor to enter the premises”; however that negotiation can now take place after notice has been issued. Additionally, it appears that a prescribed form will be introduced for the giving of notice to the tenant.
- Tenants can be notified about their abandoned goods via the web: this change is a great money saver for owners as they will no longer have to advertise abandoned goods in the public notices section of the West Australian at a cost of around $250. To provide some background, when a tenant abandons a property or is evicted, it is common for them to leave possessions behind. The Act does not require the owner to keep general possessions if “the estimated value of the goods is less than the total estimated cost of the removal, storage and sale of the goods”. This is normally the case as we are usually talking about used and dirty bedding, clothing and furniture, with the occasional pizza box or used nappy thrown in for seasoning. But occasionally there are higher-value items left behind, and in those circumstances the Act requires that public notice be given. Thanks to this Amendment, we will be able to advertise at little or no cost on the internet rather than paying for a public notice that in almost all cases is ignored and the goods subsequently auctioned.
- Service of documents by electronic means: in a move that will simultaneously bankrupt Australia Post and flood tenant’s inboxes, documents under the Act will be “given or served by electronic means in accordance with the regulations.”. We are talking about notices of inspection, rent arrears, breaches etc. This is a very positive move and thank you for that one.
The property managers at HouseSmart Real Estate are aware of these changes and will update procedures once they become law.
Since we are making some positive improvements in landlord tenancy law, why stop there? Here are a few suggestions for starters:
- Penalties to tenants for late payment of rent: there are no financial penalties for a tenant paying rent late. It is common across all other industries to allow penalties for late payment as an incentive to encourage on-time payment. When a tenant is late with rent it hurts the landlord, who has property-related bills to pay and often a mortgage. Late rent results in owners having to pay penalty interest and late fees to the local government, Water Corporation and their bank.
- De-regulate the amount of tenant bond allowed to be held: landlords are restricted by law to a maximum bond of four weeks rent. This amount will never be enough to cover anything more than minor tenant damage and/or rent arrears. It is legally impossible to evict a tenant in less than four weeks; with a wait time for Form 1B of around 13 days then an average delay of 22 days for a court hearing – in other words we are at day 35 of arrears already, with no allowance made for the cost or re-keying, cleaning or property damage. A typical eviction costs owners between $3000 and $6000 and there are between 20 and 60 evictions every week in Western Australia (its difficult to get the exact numbers but that is an estimate based on published hearings). Why should owners have their hands tied behind their back when it comes to protecting their most valuable asset? Let the market decide how much bond can be charged.
- Remove the 3-year expiry date for bad tenant listings: tenants who have damaged property and owe money can be listed on a tenancy database after a long and restrictive process, but must then have their name removed after three years. Which frees them up to offend again. Why are people who have effectively stolen money from property owners allowed a free pass? It is entirely possible after three years that the poor owner is still suffering the consequences of a bad eviction, while the ex-tenant can apply for a new rental property with a clean record. The impact of the three-year wipe is that all tenants are effectively lumped together into the same category. Why not have better reporting of good and bad tenants? That way the good tenants would be able to rent better houses at lower rents, while tenants who have damaged property in the past will pay a higher bond and have less choice in houses. Compare this with another part of the housing market – buyers who need home loans. Buyers who have worked hard, saved a good deposit and have clean credit will be able to buy a higher-quality house at a lower interest rate; while someone who has repeatedly broken contracts in the past (unpaid phone bills, defaulted on personal loans) may still be able to get a home loan but it will require a larger deposit and be at a higher rate, to reflect the higher risk with that client. Why are defaulting tenants a protected species? Property owners have worked hard to purchase their investment property – let them protect it and provide quality housing to deserving tenants – win-win free market cooperation for a mutually-beneficial outcome.
I did not write the above suggestions as a “pick on tenants” session, but rather as an attempt to balance the Act, which is currently strongly-biased in favour of tenants. Most owners want to provide a good quality property for tenants to enjoy, and many tenants respect that, pay their rent on time and maintain the property. My suggestions above will only enhance the ability of good tenants to rent property, and also enable owners to lease with confidence, not fearing late payments or a concealed rental history that may lead to another expensive eviction.
Feel free to add your own suggestions for improvements to the Residential Tenancies Act 1987.