Reform, details and unintended consequences

The devil is in the detail. I have said that multiple times regarding the upcoming reforms to the Residential Tenancies Act 1987 (the Act), but what does it mean?

Essentially, the reforms will be broad. For example, the Act will give the State Government the power to stipulate minimum standards in rental properties.

The Residential Tenancies Regulations 1989 will then outline what the minimum standards will be. This is the detail, and governments need to be very careful with details, as they can have unintended consequences.

For example, Victorian tenancy legislation does not allow you to advertise a rental property unless it meets minimum standards. On paper, that sounds fair and reasonable, but it’s causing problems in practice.

Let’s say a tenant vacates a property and damage of some form has seen it fall below a required minimum standard. Or, an investor buys a property and it needs to be brought up to standard.

It can take a significant amount of time to find tradespeople to provide quotes, and then even more time to get the work done. It could be several months before the property can be advertised.

Meanwhile, it’s removed from the rental pool. When supply is constrained, you don’t want legislation removing properties from the market for significant periods of time.

If Western Australia’s legislators are considering a similar clause, we would recommend a property could be advertised, but not let, until it met minimum standards, or it could be let on the condition the issues were being addressed.

Another Victorian example related to no grounds terminations.

In that state, you are allowed to end a tenancy if you want to sell your property. The detail in the legislation requires you to provide proof you are planning to sell and also stops you from re-letting the property for six months.

The intent is to prevent investors from using selling their property as an excuse to remove a tenant and then lift the rent. That sounds very reasonable. However, in reality, this is also affecting supply.

There are investors who genuinely wanted to sell but found it difficult to do so. They want to return their property to the rental market but they have to wait six months. They could appeal to the relevant regulatory body but, unfortunately, that also takes time. In the meantime, their property remains unavailable for rent.

We appreciate the State Government has good intentions, but the devil really is in the detail when it comes to reform. WA has the benefit of learning from the experiences of other states.

We hope our government listens to those who know how tenancy reform is working in practice around the country before determining the details for WA.