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Changes to Residential Tenancies Bill Announced

The Residential Tenancies Amendment Bill has passed the Select Committee stage, but not without recommending a number of changes. Below we explain what changes the Select Committee recommends.

Residential Tenancies Act 2020 Tenancy Amendment Bill

Assignment and Breaking Lease

Assignment involves a tenant transferring their interests and responsibilities under a tenancy to a new tenant. Currently, the law distinguishes between tenancy agreements that prohibit assignment, and those that require landlords to consider assignment requests on a case-by-case basis. The bill proposes that all assignment requests be considered by the landlord, who may not withhold consent unreasonably.

The Select Committee has since made a slight change, requiring landlords to respond to the assignment request in writing, and within a reasonable amount of time if the tenant makes a written request that identifies and includes contact details for the proposed assignee. This will ensure landlords do not effectively withhold consent by failing to respond, and tenants provide the correct details need for the landlord to conduct checks and make a decision.

Tenancy Termination by Notice

The bill removes the “no cause” terminations to prevent landlords from being able

to end a periodic tenancy without a reason. Instead, landlords would be able to end a

periodic tenancy on various specific grounds already existing in the Act, as well as additional grounds proposed by the bill. This is designed to ensure tenants know why their tenancy was ending and that a justified reason existed, plus it gives tenants the benefits of security of tenure.

Termination for anti-social behaviour

The bill allows a landlord under a periodic tenancy to apply to the Tenancy Tribunal to terminate the tenancy on the ground of anti-social behaviour. For termination to be granted the tenant (or person on the premises with their permission) must have exhibited anti-social behaviour on three separate occasions, and the landlord must have given written notice each time. The landlord’s application to the Tribunal must be made within 28 days after the third notice.

The bill currently places the onus on the tenant to disprove the charges. However the Select Committee now recommends if a tenant makes an application to the Tribunal challenging a notice given, it is for the landlord to prove that anti-social behaviour occurred and that the notice met the requirements.

Termination to allow the owner or a family member to move in

The bill specifies that a landlord may end a periodic tenancy with at least 63 days’ notice if the owner requires the premises as the principal place of residence for themselves, or a family member.

The Select Committee has recommended that the owner, or their family member must move into the premises within 90 days to help ensure that the notice of termination was genuine in its intent and that the property does not stand vacant for an extended period of time.

Termination to change to a commercial premise, to allow renovations, or demolition

Currently the bill allows a landlord to terminate a periodic tenancy by giving at least 90 days’ notice if the premises are to be converted into commercial premises. 90 days'notice must also be given if extensive alterations, refurbishment, repairs, redevelopment, or demolition are to be carried out, and it would not be reasonably practicable for the tenant to remain in place.

The Select Committee has added further specification, stating the premises must be used for a commercial purpose for at least 90 days. The also recommend to require the demolition or renovations to have begun or taken material steps towards this within 90 days after termination date.

Enforcement: Associated Person Test to Determine Landlord Penalty

The bill provides that landlords with six or more tenancies would be subject to higher infringement fees and pecuniary penalties. To avoid landlords structuring their affairs in such a way as to avoid liability, the bill also sets out an associated person test, with the tenancies of the associated person counted towards the landlord’s number of tenancies. The bill proposes that the associated person test include parents, children, partners and spouses, and the parents and children of partners and spouses, as well as a number of company arrangements.

On the positive, in reference to landlord submissions, the Select Committee has acknowledged that landlords can have very little contact with the people who would be considered their associated persons in the bill, and agree that there will be many instances where two or more landlords are considered associated persons but will have little or no business connection with each other. Instead the Select Committee recommends for an associated person to be the landlord's spouse, civil union partner, or de facto partner.

Determining what is a “large-scale” landlord

The bill provides that landlords with six or more tenancies should be subject to higher infringement fees and also to pecuniary penalties. The intent of the bill is to hold larger-scale landlords to account for breaches of the Act because they are likely to do more serious damage across a larger property portfolio.

The Select Committee has specified that a landlord would be liable for fines and fees for infringement offences if they have six or more tenancies or are the landlord of a boarding house, providing an example that a landlord may own two houses with three room-by-room tenancies in each, which would amount to six tenancies.

Final Thoughts

So there we have it. The Residential Amendment Bill has passed the Select Committee stage with a variety of recommendations to be considered in the second reading. I think we can agree, some changes are more positive than others.

Reducing the list of associated persons to simply being your partner makes the associated person test far more reasonable and applicable.

It's understandable that the government believes landlords with 6 or more properties should be held to a higher standard and so get higher penalties. Though in reality, a rental property is a small business, landlords should know the law and apply it. If the government wants to create consistency in the rental industry, protecting landlords and tenants alike, they should encourage the same standard from all landlords.

The most problematic aspect of the bill is not allowing landlords to end a tenancy with 90 days'notice, except for a very limited number of reasons. Proof of anti-social behaviour in three separate instances within a 90 day period will inevitably prove difficult in many circumstances.

Keep an eye out for our next update on the Residential Tenancies Amendment Bill.

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