Proposed RTA Changes

The future continues to look bright for the residential property sector. Recently introduced changes to the residential tenancy Act – even if they done take place immediately – show that the new Government appreciates that private landlords need to be encouraged to remain in the sector. Media focus has been on the eligibility of interest payments for tax consideration. But the re-introduction of the 90-day termination clause provides an easier environment for landlords facing difficulties with tenants.

No landlord sets out to get rid of tenants at regular intervals. Landlords do not use this to maximise rents. It is always better to retain good, reliably, viable tenancies than it is to evict and to find replacement tenants.

However, from time to time a wrong tenant is selected. They fall behind in rent. They damage the property. They are offensive or threatening to neighbours and landlords. Since the 90-day termination clause was removed it has become extremely hard and stressful on landlords. The legal system, through the Tenancy services process, with its long delays and limited ability to enforce has not always been supportive in such circumstances. The re-instatement of the 90-day termination clause will provide greater support to landlords and will enable more deserving tenants to find accommodation.

The re-instatement of fixed term tenancy agreements will provide stability to both tenants and landlords.

The current 10-year bright-line-test- for residential properties are to be repealed and replaced by the original 2-year bright-line-test.  The stated policy is ’to return the test to its original purpose of ensuring that speculators pay their fair share of tax on gains from property’.

Most of the news around the Residential Tenancies Act however has been the planned introduction of Pet Bonds. Until now it has been illegal to write Pet Bonds into a lease agreement – even if both parties are in agreement. They are unenforceable in the current context. Resultant from this has been a reluctance by landlords to allow pets in their properties. There have been cases where damage to property by pets has exceeded the maximum 4-week bond currently permitted by the legislation.

The Government plans to introduce a bill amending the RETA so that a ‘pet bond’ up to a maximum of 2-weeks rent can be applied on the basis of both parties agree. Landlords are not obliged to accept pets and some reasons for not doing so include (but not limited to) –

  • Property not being suited to pets due to the property size, inadequate fencing.
  • Relevant body corporate rules or council by-laws.
  • The size, type and number of animals.
  • If a dog, that breed of dog is classified under the Dog Control Act 1996 as dangerous or menacing.
  • Disruption to the neighbourhood.
  • Evidence that the pet has previously attacked people of other pets.
  • Evidence that the tenant has history of not complying with relevant local council animal by-laws.

The amendments also propose to make tenants fully liable for careless and accidental pet-related damage that is beyond fair wear and tear.

NOTE: This is a proposed amendment. It is not yet in force. It may be 2025 before this change comes into play.