7 November 2018

ACT rental reforms bring a bit of balance back to renting

| Joel Dignam
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The proposed changes to the ACT’s renting laws are a win for tenants and landlords – but we could still do better.

On Thursday 1 November, the ACT’s Attorney-General, Gordon Ramsay, introduced a bill to change renting laws in the ACT.

The bill proposes a number of changes that will bring a bit of balance back to renting.

For example, renters will now have a default right to a pet. A landlord can still refuse permission, but only following an external review. No longer can a landlord just say no on a whim. This is similar to changes that Victorian Labor promised back in 2017, which they eventually delivered on earlier this year.

Ramsay’s bill will also make it easier for renters to make their house a home, with stronger rights around modifications. For certain modifications, as with pets, a landlord won’t be able to refuse without external approval. This will cover changes that can be “reversed or undone”, as well as changes related to safety, disability, energy efficiency, or security.

These are sensible, positive changes. In introducing the bill, Minister Ramsay acknowledged that renting is becoming more normal, including for families and older Australians. These people deserve the right to make a liveable home. This bill will help with that.

Unfortunately, Minister Ramsay has left some important reforms on the cutting room floor.

All over Australia, experts have called for an end to unfair evictions. This is where a landlord terminates a lease without having to provide any reason at all.

There are, of course, legitimate reasons to terminate a lease. Currently, a landlord can terminate a lease if the tenant is at fault or if they wish to sell the property, conduct major renovations, or make it available for them or a family member to occupy it. Additional reasons could be added, if necessary.

Because the legitimate reasons are so well-defined, it’s concerning that unfair evictions are still allowed. In reality, these evictions exist to intimidate and punish renters. Even if they don’t often happen, the fact that they could happen means that renters have to worry about eviction just for asking for simple things like repairs.

Fortunately, there’s still time to fix this oversight. The Make Renting Fair CBR Alliance will be working with the crossbench and the opposition to make sure that people who rent don’t have to fear losing their homes for no good reason.

In another omission, the changes include nothing on minimum standards for rental properties.

As Better Renting has shown, Canberra’s renters are living in homes that are dangerously cold in winter and more expensive to heat or cool. A rental property is at least five times more likely to have the lowest-possible energy efficiency rating. We estimated that renters in the ACT are missing out on benefits worth about $39 million a year. Minimum energy efficiency standards would make rental homes more comfortable, and cut power bills.

This is an issue that people who rent cannot forget. We will be keeping up the pressure, especially as the government looks at ways of reducing our carbon footprint.

On another note, it’s almost laughable to see the arguments raised by the Real Estate Institute of the ACT, which has advocated against the changes. They have argued that changes could make renting more expensive.

These arguments, oddly enough, have no basis in evidence, theoretical or otherwise. It’s a straw that the REIACT is clutching to. And let’s be real: the real estate industry has no problem with rent increases. It’s like the fox complaining that the henhouse isn’t secure enough.

Groups like the REIACT don’t actually represent landlords. They represent property managers. These are two different groups. Landlords benefit from rental reforms, because it can lead to longer tenancies. This means a steadier, more reliable income for landlords.

But property managers make bank when a tenancy ends, because they charge big fees for setting up a new lease. Sadly, it’s in their economic interest to have unhappy renters who want to leave after 12 months.

Ultimately, the changes are a win-win for renters and for good landlords who want to offer a decent home. While Better Renting will be working for more ambitious reform, these changes are still a small positive step in the right direction.

Joel Dignam is the Executive Director of Better Renting, a member of the Make Renting Fair CBR Alliance. If you support these reforms, please sign our petition.

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But doesn’t the landlord own the property? Or is it the tenant?

More reliable income stream? Isnt the market really hard for renters at the present?

At Dexar Group we strongly support initiatives that help to improve affordability, housing supply and living conditions for lessees. Each of these is a vital component of a healthy, balanced market. What we are calling for is genuine collaboration to address the barriers that exist to achieving these outcomes.

Where I have a serious concern is if any policy is implemented where the impact is to lessen supply, increase the cost of accommodation or play to minority prejudices at the expense great tenants or property owners who are the largest proportion of the rental market in Canberra.

Let’s look at a few examples:

• Affordability. The cost of property ownership is already rising as rates and land tax increase, particularly in the apartment market. Energy costs are putting increasing financial pressures on all residents and limited housing options for first home buyers has also increased pressure on the rental market.

• Housing Supply. Vacancy rates have been below 1% in Canberra for much of the last 2 years and yet we have unsupported assertions from Mr Dignam that increasing ownership costs for lessors will not make renting more expensive. Let’s be clear – any action that is taken that reduces the financial viability of investing in property must on basic economic theory have a negative impact on supply and will drive some investors from the market. We need more affordable housing, not less.

• Living Conditions. In a balanced market where affordable housing supply has been addressed, the competitive point of difference will of necessity become liveability – whether through energy efficiency, quality inclusions or weekly rent.

Several proposed changes are a step in the right direction and providing tenants with improved rights but there are too many grey areas. A few points to consider:

• Every person should be able to make their house a home – I’m sure many Landlord’s would be happy for tenants to make changes if they improve the property or if they’re willing to reverse these changes when they vacate. What concerns us is there are too many unanswered questions with what the government has proposed. What’s the definition for a modification? How much say can the Landlord have over what actually happens within their own properties? What happens should a tenant not return the property exactly as it was and how will these changes impact the current bond process or the value of the home?

• No industry professional or property owner supports “unfair eviction”. They are not rapacious tycoons out to “intimidate and punish renters” despite this petty assertion. No Landlord or Property Manager should ever evict a tenant based on retaliation or discriminative purposes. Landlords are currently required to give 26 weeks’ notice to a tenant on a ‘No Ground’s clause to provide tenants with reasonable notice and to allow Landlord’s freedom over how their property is used. Most investors want the security of a long term tenant and in many cases will be prepared to accept better conditions or lower rents to recognise the mutual benefits this brings. Without good reason, few owners would want to create 6 months’ worth of uncertainty for themselves or any unnecessary angst for the tenant.

• We welcome all discussions regarding energy efficiency rating in properties and believe a smarter approach to EER benefits both tenants and Landlord’s. What we don’t support is the suggestion that an owner can live in their own house and happily accept a lower energy rating than they are legally required to achieve in their rental property. Creating 2 classes of property makes no sense at all so once again let’s have a collaborative discussion where input from all stakeholders is considered. Let’s consider how we holistically improve energy efficiency across all housing stock rather than take arbitrary action to increase costs and reduce affordability.

Collaboration means working together for a great result. Despite resistance from some quarters, we want to repeat our offer to work with all stakeholders to identify win-win outcomes. The best possible experience for both landlords and tenants is in everybody’s interests.

As a property manager, this is going to open a can of worms. ACAT is already swamped with ridiculous claims and now you want owners to make applications to ACAT if they don’t want a dog tearing up their yard or modifications made to their million dollar investment they worked hard to purchase… The majority of owners are reasonable and happy to accept pets but those that don’t usually have good reasons why – one declined a cat today because shes highly allergic.
I can also assure you that no property manager is looking for an unhappy renter and the industry is highly regulated and reputable; its more work for us to have a run down property so we either make recommendations to the owner on upkeep and maintenance or price it accordingly. Or if its bad enough – we don’t take it.

Theres other issues with the ACT tenancy agreement and the relevant government bodies like the rental bond board and ACAT that need fixing before these.

As landlords managing our own property, we will be factoring these changes into our rental, just as we had to do when rates and land taxes were monumentally hiked. We do the rental as a business, not as as an act of benevolence or charity.

So you’re saying that you were artificially charging under market rates previously?

If you could charge more, you already would be. These changes won’t make any difference whatsoever.

Landlords don’t set rents, the market does.

If I were still invested in residential property in the ACT, I’d just be adding $50 or $60 a week to the rent to cover the likely damage from pets and modifications. This is almost guaranteed to drive up the cost of landlords insurance, which will no doubt be passed on to tenants. No property owner is going to wear these extra costs. It is an investment, and there to make money.

I still find it ridiculous that the government has any say at all on the rules people put around use of their privately owned asset.

So you’re saying if you were a landlord, you would have been charging $50-60 under what the market would actually bear before these type of changes?

Such generosity, I thought it was an investment out to make money.

Yes good article. I also hope these changes will improve things for renters, but I’m still concerned previous ACT government interventions that were designed to reduce rental costs to Tennants didn’t deliver the outcomes promised.

The claim that increased Rates and Land Tax charges wouldn’t be passed on to renters, proved laughable.

Let’s hope on this occasion that following the changes, the reality matches the rhetoric.

Over complicating the rules for the market rarely makes things better for either Landlords or Renters.

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