As I’ve briefly mentioned last week, the Queensland Minister for Housing has put forward a suggested reform of current Tenancy Laws here in the Sunshine State.

The recommendations appear to have been made with the idea that the new legislation (if passed through Parliament) would provide tenants with more rights over the home that they occupy.

Now I must say that in twenty years of real estate, I’ve seen Government Departments conjure up all sorts of wonderful ideas without actually thinking them through…but I’ve never seen anything as ludicrous as these reforms.

I thought the ‘Sustainability Declaration’ held the top spot for stupidity…and it did until I read this.

Do you remember this idea back in 2008?

It lasted for around 12-18 months before common sense prevailed and it was abolished.

The idea was that the seller would fill out a two-page document pointing out the environmentally sustainable features of the property…thus the idea was that a home might be more attractive to a purchaser if there were more energy saving initiatives put in place in a property.

It sounded good in theory but many sellers didn’t know a lot of the information that was requested and the legal advice at the time was for a seller to leave an empty space if they weren’t sure of a particular answer rather than declare the wrong answer…but many owners didn’t exactly know things like exactly how many energy efficient light bulbs there were (remember this was back in 2008 where they weren’t as prevalent).

So, the result was that many owners would simply sign a blank form that meant nothing and buyers wouldn’t even ask to see them…even they were a legal necessity at the time.

Ten years on and these new proposed changes are (in my opinion…and fortunately the strong opinion of the Real Estate Institute of Queensland who are boisterously opposing these changes), dangerous (rather than just inconvenient like the Sustainability Declaration).

Whilst there’s plenty of consideration of the rights of tenants, these proposed changes would mean that a landlord’s rights are vastly diminished in ways that honestly beggar’s belief.

For a good snapshot of the reforms, please see today’s ‘Insights’ article in this newsletter but here is a brief summation of the main changes the Labour Government are proposing…

• The proposed abolishment of a landlord’s right to not renew a tenancy agreement at the end of its agreed term
• The loss of a landlord’s right to refuse pets
• The introduction of a tenant right to make modifications to a rental property without the landlord’s consent; and 

• The introduction of minimum housing standards requiring the rental property and its inclusions to meet prescribed standards and to be in a certain state of repair

As the article states, the first point alone if put into practice would allow a tenant to remain in a tenancy indefinitely and for as long as they want unless the landlord can establish a reason prescribed by law.

What would constitute a ‘valid’ reason prescribed by law?

It would seem that if an owner was planning on moving back into the home themselves, this would constitute a ‘valid’ reason, but what if the owners just wanted it vacant to sell once the agreed lease had expired? From what I’ve read, this would not constitute a ‘valid’ reason and if so, the tenants would have legal and financial recourse over the landlord. Lovely.

Another controversial point is the landlords’ lack of rights to refuse pets.

So if you had a home with a stunning polished timber floor, a tenant may bring any pet into the home and whilst you’d think there would be recourse for the owner if the floors were significantly scratched by the pet, the tenant would likely avoid financial compensation due to ‘general wear and tear’…and this alone could cost an owner thousands and thousands of dollars.

And it goes even further whereby a tenant (again, if the proposed changes were passed) would be able to renovate and/or make whatever cosmetic changes they’d like to a property provided they ‘made good’ at the end of their lease.

Can you imagine how many disputes there would be when a tenant might have work done to a property and then have it re-done at the end of the lease…but not the original standard of the home?

They would be legal dispute after legal dispute for sure…filling the QCAT court room with a never-ending trail of hearings of such matters.

Seriously…who would want to be a landlord if these changes are implemented?

I’ll tell you the answer…around 40% less than there are now as surveys have already been taken of Queensland landlords and more than 40% have suggested that they will likely sell all their investment properties should this legislation be passed.

There are other changes less significant but the potential for disaster here is enormous.

Around 34% of properties in Queensland are investment properties according to this article…meaning that if 40% of landlords do follow through and place their properties on the market instantly, we face an epidemic of around 14% of all properties in the State instantly listed for sale immediately.

Given there’s already around 1.5% of all properties currently on the market for sale, this means that the number of properties for sale would multiply by 10 very quickly.

This might be great news for new buyers as prices would plummet but how would you feel as a current property owner that’s been slaving away and paying off your mortgage with diligence?

As you can tell, I’m not a big fan of these changes at all.

In my opinion, they’re poorly considered, dangerously written and potentially catastrophic to the market.

I’m all about giving tenants plenty of protection and only last week, we attended (and I promoted) a fabulous Government funded workshop designed to promote Sustainable Tenancies for women needing a fresh start after suffering domestic violence… a cause I truly believe in.

But landlords need rights too as they are the ones taking the financial risk and absorbing increasing costs of rates, insurances and taxes whilst average rental amounts are not increasing at the same pace as these costs.

I’m confident that common sense will again prevail and these changes will be nothing more than a bad idea put to bed but it it’s likely that this subject will play out in the media in the lead-up to next year’s State Election.

Until next week…Happy Renting, Happy Listing and Happy Selling.