30 September 2022

ACT to ban no-cause evictions in tenancy laws overhaul

| Ian Bushnell
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Shane Rattenbury

Attorney-General Shane Rattenbury says the changes will mean a fairer rental market in the ACT. Photo: Region.

Landlords will not be able to evict tenants without a reason or conduct rent bidding, and will have to declare that a property meets minimum standards under a draft bill released by the ACT Government.

The government has released for consultation an exposure draft of the Residential Tenancies Amendment Bill 2022 which aims to give Canberra renters more security when leasing a home.

Attorney-General Shane Rattenbury said the government was modernising tenancy laws to create more secure housing and a fairer rental system in an environment of soaring rents and extremely low vacancy rates.

The bill proposes laws to remove ‘no cause evictions’, which has been a consistent complaint from tenants.

“The bottom line is people deserve a home to live in and shouldn’t be evicted without a legitimate reason. The ACT Government has committed to ending no-cause evictions to help address the power imbalance that currently exists between landlords and a tenant,” Mr Rattenbury said.

He said the change struck a balance between giving tenants more security while also ensuring landlords could continue to manage their properties effectively.

Currently, a landlord can terminate a tenancy agreement for no reason by giving a tenant 26 weeks’ notice.

This will go, but a landlord can still terminate a tenancy agreement for legitimate reasons such as failure to pay rent or damaging the property.

A proposed new termination clause will also allow tenants or landlords to terminate the agreement where one party threatens, harasses, intimidates or abuses the other party.

Better Renting executive director Joel Dignam welcomed the change but said a compensation clause would deter landlords from using frivolous reasons for terminating a lease.

“While these proposed changes tighten protections, we are worried about the abuse of ‘with cause’ termination notices,” he said.

“Compensation should be payable when a lessor terminates a tenancy and the tenant isn’t at fault. This would discourage frivolous terminations and help to address the significant cost burden that a landlord imposes when they end a tenancy.”

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He was pleased that tenants would now have access to compensation for wrongful eviction and better rights to protest retaliatory evictions.

“For example, we know of a pensioner who opposed a rent increase because it was excessive,” Mr Dignam said.

“That person later got a no-grounds notice to vacate. This was retaliation, pure and simple. It should not be allowed and with these changes, it will not be allowed. Landlords should follow the law.”

The draft bill will also outlaw landlords or agents soliciting rent bids, which Mr Rattenbury said should not be part of a fair system.

“People shouldn’t be encouraged into a price war when they’re searching for a place to rent; this proposal ensures that agents and landlords can’t solicit bids to pit renters against each other and raise the rental price,” he said.

But Mr Dignam said the change did not go far enough, saying landlords or agents could still accept offers above the advertised rent for a property, a feature of Canberra’s highly competitive rental market.

“Agents can still accept offers above the asking price from renters, which will continue to cause anxiety and disadvantage vulnerable renters. A measure to stop landlords or agents from accepting rent bids would have been a better solution here,” he said.

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The draft bill also prepares the ACT tenancy laws for the introduction of mandatory minimum property standards.

Under the new laws, landlords will need to disclose if the property meets the minimum standards in force when advertising the property.

Tenants will have the right to terminate their tenancy, seek a rent reduction, or seek compensation where minimum standards are not met.

“The first standards will be energy efficiency standards for rental properties, which will require a minimum standard for ceiling insulation,” Mr Rattenbury said.

“This won’t commence until late 2022 and landlords will be allowed an extensive phase-in period to understand the changes and make arrangements.”

The government will also consider further minimum standards for rental properties in the future.

Mr Dignam said the draft bill, on the whole, was a significant step forward.

“Ending no-cause terminations makes a big difference, but it also means that every other right becomes more meaningful in practice,” he said.

“A lot of the changes that we want to see depend upon having a security to advocate without the threat of eviction.”

One area of concern was how the proposed new grounds for eviction impact public housing tenants.

“We think the detail will really matter to make sure those tenants aren’t worse off and, hopefully, they are, in fact, better off,” Mr Dignam said.

On industry pushback, Mr Dignam said the government had taken a “pretty balanced approach” after consulting widely.

Consultation on the proposed reforms is open until 26 August 2022, with the exposure draft Bill available for comment and feedback on the ACT Government’s YourSay website.

The exposure draft Bill will also be tabled in the Legislative Assembly in early August.

Comment was sought from the Real Estate Institute of the ACT.

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devils_advocate8:53 pm 04 Aug 22

Everything has a cost. Increasing the lease variation charge. Increasing the risk for landlords in not being able to remove a tenant. Increasing the risk of not being able to achieve market rental due to caps on increases. Requiring landlords to accept pets. Risk is always priced in. Always. Either in the form of higher asking rents or investors leaving the market. Either of which results in higher rents.

The worst part is politicians know this but score political points at the expense of renters.

Incidental Tourist7:16 am 02 Aug 22

If you have views on this matter, you can still upload your submission or short comment on Public Exposure Draft of the Residential Tenancies Legislation Amendment Bill 2022 portal by 26 August. https://yoursayconversations.act.gov.au/expanding-rights-renters

Tim from Canberra7:29 pm 29 Jul 22

I am amazed by the views held here. When will people understand that a house (or apartment) is not like other property. It’s not like owning a car, it’s not like owning a bar of gold. When you rent out property, accept that this becomes someone else’s home and that you shouldn’t lord over them and determine their destiny at whim.

If you want to make big profits, or speculate, invest in something else – stocks, government bonds, gold, cryptocurrency, but not in other people’s homes.

I hear people say “the landlord OWNS the house” (e.g. Scott Anthony below) but ownership cannot, and should never, be absolute. Perhaps this is another example of why this country needs a Bill of Rights. For example, in the German constitution, Article 14 (which belongs to section 1, Basic Rights, the equivalent of a Bill of Rights) states:

(1) Property and the right of inheritance shall be guaranteed. Their content and limits shall be defined by the laws.
(2) Property entails obligations. Its use shall also serve the public good.

There is a general understanding in German society that residential property is special. Ownership is not absolute. And guess what? People still invest in real estate. But most investors don’t treat it as an object of financial speculation. You invest in a house for the long term.

The tenancy laws in Australia are, by international comparison, unbelievably extreme – in favour of landlords. Tell someone in continental Europe that there are biannual house inspections here and they won’t believe you because it’s a concept they find so outrageous. The idea that a one-year lease is often considered long-term in Australia is laughable in Europe. The list goes on. So when a state government in AUS is trying to give tenants a little more power and there is immediate pushback I don’t know whether to laugh or cry. Home owners in AUS don’t know how good they’ve got it.

Capital Retro8:30 pm 28 Jul 22

It would be ironic if Mr Rattenbury, a rental landord himself with an apartment in Canberra City: https://www.parliament.act.gov.au/__data/assets/pdf_file/0006/1655772/Rattenbury-Combined-270421.pdf had to evict his own tennant/s.

Mr Rattenbury’s scope to increase rent is limited by the below-mentioned inflation * 1.1. Given inflation is not an asset index or wage index, there is effectively a regulated deteriorating dividend on the asset, to which will be added the right of the lessee to remain so long as they please given that the lessor wishes to continue to rent out. One rational response for the lessor is to buy – rent – evict to sell, rinse and repeat, to maintain consistent earnings over many years*. It is not really one or the other but the combination of capped rents with eternal leasing which I suspect will give some lessors pause.

* Viable until the Federal government gets around to fixing taxation law on asset sales, although the local shift from stamp duty to land tax reduces the frictional costs of such a ‘strategy’.

All most entertaining, and I never knew untll now that Mr Rattenbury was a vampire. Thanks, Heavs and CR.

Capital Retro10:31 am 29 Jul 22

But you will still vote for him, no doubt?

1. Why?
2. On what issues am I voting at the time?
3. Is he in my electorate?

I have said I voted against Seselja. Beyond that, guess; probably wrongly.

Drat, Slightly too late for me. I was paying $520 a week, my landlord put it up to $550, then 6 months later said I can stay if I pay $600. I said no. I move out on Monday and the new rent is $650pw.

Scott Anthony11:45 am 28 Jul 22

As a former ACT Landlord who found it impossible to terminate and evict a clever tenant for non-payment of rent this ‘power imbalance’ has always resided with the tenant and just got worse… The Landlord OWNS the house and 100% of the RISKS…. The tenant only has to pay weekly rent and has no more invested than a few weeks bond…. how about you even up the money imbalance… SO glad I sold my rental property in the ACT and bought in QLD instead, its more profitable due to lower government greedy charges and has fair protection for landlord and tenant alike.. The housing crisis will get worse now, maybe the Rat needs to build more public housing and leave investors to manage their massive investment in providing safe, clean housing. ?

I wouldn’t mind seeing the evidence that shows that these changes were necessary.

I had an investment property for 7 years about 10 years ago and made a $50,000 loss because the capital gains over the period was zero.

Landlords are being painted as greedy, unreasonable uncaring, and eager to get get rich quick at the expense of poor tenants. But the reality is this: To buy a unit to rent out, a landlord has to get a loan and pay investor interest rates and loan insurance, the ACT government will expect to receive full rates AND several thousands of dollars per year in land tax (as high as rates again), there will be body corporate fees, water and sewerage charges, estate agent fees, and if the property needs maintenance or repairs, the trades will not come unless there is an estate agent and then charge several times more than they would an owner occupier (“replacing the smoke detector will cost $800 mate, but don’t worry its all tax deductible”).

So the landlord pays and pays and pays and the rent will not cover the costs. So the only way for the landlord to make money in the end is to hope/gamble on a capital gain, and even that will be taxed by the Federal Government. If the market rent is rising rapidly, would you blame a landlord for trying to minimise these losses by trying to get another tenant that may be willing and able to pay more than the rent that they are currently getting (note that rent rises are capped)?

If the ACT government was really serious about making rents affordable and providing tenants security, then they would abolish Land Tax… (why aren’t rates, stamp duty, etc., enough?) Until then, you’ll need to forgive me for being cynical of their portrayal of themselves as protectors of poor disadvantaged tenants.

Navaratnam Muralitharan10:19 am 28 Jul 22

Notthaemama, I totally agree with you. In the ACT, the ACT Government is so greedy to milk the money thorugh higher rates and the land tax from landlords

Amusing… neither of you seem to get the fact that by buying a investment property you are seeking to rent seek and avoid taxes in an artificial market where profitability is completely reliant on a continuation of bad government policy – who is greedy now? The suggestion to abolish land tax shows astounding ignorance. I suggest you look for a productive way to invest.

These laws will make the ACT a terrible place to be a landlord.

I’d easily forecast that there will be less investment in the residential area going forward = less available properties, from an already impossible situation.

The rental crisis has only begun.

Scott Anthony12:00 pm 28 Jul 22

yep, I sold mine and never looked back mate.. There’s no point putting half a million dollars up for this lazy government to use to get votes with.. I forecast a worsening of the housing crisis over this.

brucewantstobecool5:02 pm 27 Jul 22

Here’s the detail for what constitutes a legitimate termination by the lessor:

Termination of periodic tenancy
96 (1)

For a periodic tenancy, the lessor may give the tenant—
(a) if the lessor genuinely intends to live in the premises—8 weeks notice to vacate; or
(b) if the lessor genuinely believes the lessor’s immediate relative intends to live in the premises—8 weeks notice to vacate; or
(c) if the lessor genuinely believes an interested person intends to live in the premises—8 weeks notice to vacate; or
(d) if the lessor genuinely intends to sell the premises—8 weeks notice to vacate; or
(e) if the lessor genuinely intends to reconstruct, renovate or make major repairs to the premises and the reconstruction, renovation or repairs cannot reasonably be carried out with the tenant living in the premises—12 weeks notice to vacate; or
(f) if the lessor genuinely requires the premises for a lawful use other than as a home—26 weeks notice to vacate.

(2) A notice to vacate under this clause must be accompanied by written evidence supporting the lessor’s reason for the notice, for example, a statutory declaration, a development application or quotes from a tradesperson for renovations.

(3) In this clause:
immediate relative means a son, daughter, son-in-law, daughter-in- law, mother, father, mother-in-law, father-in-law, brother, sister, brother-in-law or sister-in-law.
interested person, for a lessor, means a person who is not an immediate relative of the lessor but who has a close family or personal relationship with the lessor and who has a reasonable expectation arising from that relationship that the lessor would provide accommodation for that person.

It is very inequitable against the landlord and removes the landlord’s legal rights to do what they want with their own property. These laws are depriving and limiting an owner from choosing and doing what they want with their own legal property. The tenant can terminate for any reason, but the landlord can now only terminate on very limited specific grounds like if they want to sell or move back in (or have a family member move in). It is not just, fair or equitable at all that the tenant can do what they want, but the landlord has very strict grounds to end the ‘contract’. This goes against the fundamental principles of contract law. In fact, it appears that tenancy ‘contracts’ in the ACT are not even a ‘contract’ anymore; it is now an ongoing never-ending arrangement for the tenant.

Maybe sell your property then you vampire.

Why should I have to sell my family home? You are trying to say all landlords are nasty, but you don’t know my circumstances. Sounds like you are a bitter person because the bank won’t give you a mortgage.

Scott Anthony11:47 am 28 Jul 22

And yet I’ve had the tenancy tribunal over rule my plans to house my homeless kid in my own house…. because the tenant made up a clever excuse, my rights were thrown out..

Scott Anthony11:59 am 28 Jul 22

‘vampire’ there it is…. ENVY…. Landlords provide clean, safe housing and take 100% of all the risks only to be vilified by greedy tenants looking for a free ride. Being a landlord is a legitimate and ethical investment, pity tenants aren’t up to the challenge.

Lol. It’s not envy. It’s disgust. Undoubtedly there are good landlords, ones who treat tenants with respect and as people. Then there are those who simply look to increase their yield and sook it up when the law doesn’t let them jack rent by 25% to cash in on people’s misery in a rising market. And try and circumvent that law by inventing close family members to move in so they can use the eight week trigger. Or those who give no cause NTV six months and one day into the lease so they can jack it up when they get a new tenant in. Vampires. It’s the life you chose, don’t be ashamed about it

Why on earth can a landlord not terminate with 6 months notice – ridiculous. What if he wants to do renovations or move in himself.

Get rid of this Government of clowns.

Well, as is currently the case, if it’s a periodic tenancy they can give 12 weeks notice to renovate and 8 weeks if they want to move in.

That took me less than 90 seconds to find by the way.

brucewantstobecool5:05 pm 27 Jul 22

Have a read of the proposed law. Those are legitimate reasons to terminate a periodic tenancy and they will still be allowed.

The purpose of the law isn’t to stop a landlord from legitimately ending a lease. It’s to stop a landlord evicting someone for no cause when the landlord will otherwise continue to make the property available for rent.

Are they going to do the same with public housing tenants?

Based on a recent article in the Riotact, the government affords itself lessor rights which are withheld here. I refer to the example of a house which formerly contained a family and is now down to one person who prefers not to leave, when a family could make better use of the house. A private lessor could not make that change, the government can and does.

They way this weak Gov treat public housing tenants already, they may as well just hand them the keys and the title to the lease!

Even when these public tenants destroy the house and decorate the gardens with old car bodies and junk they are never moved on.

I often genuinely wonder if Barr and co are out to destroy the ACT.

What a terrible idea. Haven’t the ACT Govt heard of contract law? Basically a tenancy contract means nothing anymore with these new laws as landlords will now be forced to keep the tenants forever. The tenancy contract states a written period of time that it applies for, and the law is now trying to interfere with that and say tenants should be allowed to stay as long as they want. Either party should be able to end the contract when it reaches its completion date, and not be forced to continue the tenancy if they don’t want. Landlords (the legal owner of the property) should not be forced to keep renting out their property to tenants.

Completely agree with you. The only thing this change will achieve, is to disenfranchise the landlord. I’m glad I don’t own a rental property in the ACT, if I did I would put it up for sale.

jorie1….And following on from that, what happens when the landlord decides to increase the rent at the end of that contract period? My understanding of the article is that, if the tenant objects, the rent remains the same for as long as the tenant decides to occupy the property.

“Excessive” increase, opso. The standard agreement terms provide for inflation * 1.1 or as approved by ACAT, although if inflation is high, I do not believe ACAT is obliged to agree with inflation + 10%.

I have been reading the proposed legislation. It seems to be an arrangement in which the lessee can break a fixed term contract without cause, with a known break fee, whereas an investing lessor essentially has the choice of renting to the same lessee for life (i.e. at the lessee’s pleasure) or else selling (the other special circumstances are not really material). I might have expected a converse break fee process (not just a notice period), as might be found in other commercial contracts.

The above does not seem to me equitable.

Yes, it is basically taking away any rights the landlord has over their own legal property. Landlords will be forced to keep renting to the same tenants forever at a low rate (landlords can only increase rent by the current CPI). I wonder if landlords are best to do a short-term 6 month tenancy contract only, with a clear end date, and make it clear that the tenancy will end in 6 months time. No options to renew. No extensions. The law should not interfere in contracts between 2 consenting parties.

Thanks phydeaux. It’s been quite a while since I had an investment property, so things like ACAT involvement and fixed % increases are all new to me. Regardless, and for all the reasons you stated, it certainly seems to be a very inequitable arrangement.

Storm in a teacup. Victoria, QLD and TAS got rid of no-cause evictions years ago, and most other developed countries have stronger rental rights than Aus anyway.

Tenants can still be moved on if the landlord is selling, renovating, moving in or installing family, or if tenants are damaging the property, failing to pay rent etc; what other reasons do you need?

catipso, Qld and Tas allow termination at the end of any fixed period contract. Vic allows termination at the end of the first fixed period contract only. These are all different from the ACT proposal, which disallows any termination for so long as the owner wishes to lease out a property.
I suggested above a fair break fee payable by the lessor, rather than current risk cost (where risk is low). Not many lessors want to throw away, say, 4-8 weeks rent in a fee, additional to their costs in obtaining a new tenant. A rise in rent will hardly compensate.
In case you missed it, I am looking for something equitable, not “the lessor can do as they please”. The actual proposal renders lessors powerless short of some sort of tenant’s crime.

Scott Anthony12:06 pm 28 Jul 22

Tenants can’t just be ‘moved on’ and will often tie you up in the ACAT for months and then get a ruling in their favour ‘just because’…. Landlords own the house, and costs can easily rise well above CPI, this will only force more landlords to sell and more people living in their cars while the bad tenants and bad landlords will still rort the system thats left… its supposed to be about helping the community, it rarely is.

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