Following our previous articles and the royal assent on 22 April 2024, the Residential Tenancies Amendment Regulations (No. 2) 2024 (“RTAA”) is officially in place. This is the second phase of the RTA reforms, which will be going live on the 29/7/24. As a property investor, the new Act will affect you, your tenants and both parties’ contractual obligations. Here are some of the key changes from Phase 1 and Phase 2 of the RTA reforms.

PHASE 1: IN EFFECT SINCE MAY

  1. NO RENT BIDDING

Landlords and their agents are prohibited from asking or pressuring prospective tenants to pay more than the advertised rental amount to secure the tenancy, known as “rent bidding”.  Landlords & Agents must:

  • Advertise or list the rental property for a rent at a fixed amount and not in a range or “from” a particular amount. 
  • Not encourage a potential tenant to offer to pay more than the advertised rent amount.

Section 27AA of the RTAA states that ‘Residential tenancy must be offered for rent at fixed amount’. It is an offence to conduct rent bidding to pressure the tenant into paying more money to secure the rental property. This change helps to ensure fairness and transparency in the rental market.

Please note that Landlords or their Agents may accept above the advertised rate if freely offered by the prospective tenant. 

  • NO RETALIATORY ACTION BY LESSOR

Retaliatory action is action taken by the landlord or agent as payback or because the tenant sought to enforce their rental rights. If a tenant believes their Landlord or Agent is taking action against them for exercising their rental rights (known as retaliatory action), they can challenge that action in the Magistrate’s Court.

For example, retaliatory action if when a tenant thinks their rent was deliberately increased, or their lease agreement not renewed, just because they asked for some basic maintenance or made a complaint about their landlord or agent.

Section 26A and 26B states about retaliatory action by lessor. A lessor will be considered to take retaliatory action if the lessor:

  • Gives the tenant a notice of breach (other than failure to pay rent) and requires the tenant to remedy the breach;
    • increases the rent;
    • takes action to terminate the tenancy; or
    • refuses to renew the tenancy agreement

This is a grey area, and the Magistrate Court is the legal avenue to determine whether retaliatory action occurred. It is an objective test where the tenant must prove that the lessor has taken retaliatory action. The onus of proof is on the tenant.

PHASE 2: EFFECTIVE 29/7/24

  1. RENT INCREASE ONCE PER 12 MONTHS

Section 30 of the RTAA states that the minimum period between rent increases is 12 months. This will impact the Landlord in terms of the rental income they would expect to receive.

I strongly recommend the property manager to calculate the amount of rent increase, based on the future rental trend.

Note that any agreements signed before the effective date, will remain in place, but will switch to the new laws once a lease renewal is signed.

  • COMMISSIONER TO DECIDE ON DISPUTE

Section 11E of the RTAA given the Commissioner the right to decide on the dispute between the tenant and the landlord. This approach is to remove the backlog of the Magistrate Court in bond and rental disputes. Section 11L also states that the Commissioner may refer the parties to the Magistrate Court.

To me, this is a ‘modified’ approach from the Covid period where the mandatory reconciliation is required before any application to court.

  • PETS WELCOME

Section 50 talks about keeping pets. The new changes states that the Lessor can still reject pet requests but only with an in-place law specifically preventing pets (For example, a Strata By-law) and exceptional reasons after an application to the Commissioner for Consumer Protection is approved.

  • The premises is unsuitable for keeping a pet
  • Keeping the pet would exceed a reasonable number of pets being kept at the premises.
  • Keeping the pet at the premises is likely to cause damage to the premises that could not be repaired for less than the amount of the security bond.
  • Keeping the pet at the premises would pose an unacceptable risk to the health and safety of a person.
  • Keeping the pet at the premises is likely to cause the landlord undue hardship.
  • The pet is a ‘dangerous dog’ as defined in the Dog Act 1976 (WA).

 If the landlord is not able to reject pet, a lessor may impose a reasonable condition about the number of animals that may be kept at the premises, the cleaning, maintenance or fumigation of the premises or a prescribed matter.

If the tenant is not accepting pet condition or lessor’s refusal to have pet, the Commissioner will have the final say.

  • MINOR MODIFICATIONS ALLOWED

Subdivision 2 & 3 of the RTAA allows the tenant to conduct small, personalised changes, known as ‘minor modifications’ to the premises and will be allowed in most cases.

The tenant must make a request in the approved form and include a description of the proposed minor modification.

The lessor must respond in writing within 14 days advising whether the lessor approves or refuses the request and may also impose reasonable conditions on making the modifications. For some modifications this includes that the work must be undertaken by a qualified person.

If the modification is on the list of allowable changes, a landlord will only be able to refuse if:

  • A law or strata rule prevents the change
  • It will disturb asbestos
  • There is a heritage listing
  • They can prove one of the listed reasons to the Commissioner for Consumer Protection.

A landlord must apply to the Commissioner to refuse for other good reasons. For example, if the modification would:

  • Result in extra maintenance costs to the landlord
  • Make the home unsafe
  • Cost more than the security bond to repair or remove
  • Not be practical to reverse/remove the changes e.g. holes in a tile

At the end of the rent agreement, a tenant will have to remove any changes made and restore the premises, unless the landlord or agent has agreed to leave them – for example remove picture hooks, fill in holes and repaint the wall.

  • BOND

Section 81 of the Act discussed about bond. In tenancy, most issues come from bond dispute and the Commissioner is the person to go to for any disputes in the future.

With the change in the Residential Tenancies Act, landlords must appoint an experienced property manager to act on their behalf. The amendments in WA have been fair, as the no-ground termination is still in place. Other states have removed this, which many in the interstate industry have criticised.