Scott Lachmund and Karen George from Richardson&Wrench Caboolture spoke with Chief Executive Officer of Real Estate Institute of Queensland, Antonia Mercorella about concerns around Stage One (1) of proposed rental reforms.
“What we know is that inevitably we will see some landlords leaving the market and that’s not being hysterical,” Ms Mercorella said in the podcast above.
“This will tip many landlords over the edge.
“We also know that in Queensland we have a number of markets that have very tight… Availability is very tight, vacancy rates are very low.
“And so what we know is that supply is essential and when supply is diminished it will increase rent prices.”
Real Estate Institute of Queensland (REIQ) Statement
The Minister for Housing and Public Works, Mick de Brenni has announced Stage One (1) of proposed rental reforms that would significantly damage Queensland’s rental market and create the most onerous rental laws in the country.
The REIQ strongly opposes the proposed reforms which are a slap in the face to every day ‘mum and dad’ property owners who provide the majority of housing to Queensland’s renters.
If enacted, the law change would erode fundamental landlord rights and deter property investment across the state.
The reforms’ ripple effect would see renters struggling to find suitable housing under already tight conditions.
In a further blow to renters, by de Brenni’s own admission the reform would likely increase weekly rent from an average of $360 per week to $378, which is a massive 5 per cent rise.
The most controversial and damaging reform is the proposed abolishment of a landlord’s right to not renew a tenancy agreement at the end of its agreed term.
In practice, this will 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.
This reform has been cleverly disguised by the Palaszczuk Government as the abolishment of ‘without grounds terminations or evictions’ – that description is inaccurate and misleading.
Under current rental laws, landlords cannot end a fixed term tenancy agreement before it ends unless a breach has occurred.
Other proposed reforms include:
• 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.
The REIQ is disappointed that landlords have been totally overlooked in this rental law review.
Queensland has one of the highest proportions of renters in Australia with more than 34 per cent of Queensland households in the rental market.
The vast majority of rental housing is provided by everyday Queenslanders, and many of those are already making a loss on their investments.
Given the significance of these reforms, we are disappointed that the Minister is offering a mere six week consultation process after waiting a year to announce these reforms.
On its face, the Government may think it is protecting tenants but in reality, we are likely to see housing supply reduce.
There will be no winners.
As a community, it’s time for us to unite and fight against these damaging and disingenuous reforms, which will negatively impact both landlords and renters.
The REIQ will be actively campaigning against the reforms via a range of avenues, including social media and other shareable channels.
For success, the campaign will rely on the active support of real estate professionals and the community at large.
REIQ Website > www.reiq.com
Submit your Opposed Concerns HERE > www.rentalreforms.com.au
Read the Queensland Rental Reforms Podcast TRANSCRIPT
Scott Lachmund: Hi Scott Lachmund, and welcome to the 4510TV podcast series, episode number five. Thanks to our listeners for joining us over the last few episodes and I hope you’re enjoying the ride. There’s plenty of more episodes coming your way across our networks of 4510TV and various platforms in the Morton Bay region.
The podcast series, we want to bring you detailed information about events happening in and around our region. But also there’s some global events and national events and state events that we want to keep on top of and share the news across our audience. So today we’re talking about the state government’s proposed reforms to Queensland rental laws announced by Minister of Housing and Public Works, Mick de Brenni, on Saturday the 16th of November.
Quite a few changes coming into effect or proposed to come into effect for underpinning the Queensland law for tenancies. With me, guest today, Karen George, property management director of Richardson & Wrench Caboolture. Welcome Karen.
Karen George: Hi everyone. Thank you for having me.
Scott Lachmund: You’re back on again because from, I think it was episode two, we talked about a rental activity in the area and you know everything property management related. But this is to the heart of the future of what that property management landscape looks like for investors, tenants and properties in general. Karen, give us a brief rundown of your take on these proposed changes at the moment.
Karen George: Okay, so the proposed changes that are around at the moment are into their second phase. So there was a first phase that went out from the government saying, “This is the information that we want to consider changing within the residential tenancies act and these are the things that are of concern.” They gave everyone, landlords, tenants, property agents, private owners, body corporate owners, everyone involved in tenancies, a chance to have a say.
Now they’re at the second stage where they’ve pretty much got five key areas for everyone to take into consideration and give some feedback. An example of those five areas are ending a tendency fairly. So giving the tenant a notice to leave at the end of the lease. Minimum housing standards, does the property have screens, does the property have insulation, does the property, are the stairs safe?
So minimum housing standards, domestic and family violence, which is certainly important to everyone. This is to implement some more guidelines and rules around if you are in a domestic and family situation and you needed to get out of a fixed tenancy, how that looks and the steps you’d take. Minor modifications, so this is a really scary one for everyone involved. Minor modifications are about changes, tenants being able to make a change to the property without written permission.
And we’ll go into detail on some of the things that were an example there. And the other big one is pets. So these suggested changes would say that the tenant doesn’t have to ask permission to have a great Dane in a small yard. They don’t have to have permission to have three cats in a in a property.
Scott Lachmund: Yeah. Well, you’ve listed off five main concerns and I think there’s maybe not enough information has been published around these five topical points. So let’s go through them in a bit more detail. And what we are going to do on today’s podcast is we’re going to cross to the REIQ, the Real Estate Institute of Queensland’s CEO Antonia, for some comment as part of this podcast.
But before we get her on the line, let’s go through those points. So number one, ending a tendency fairly. My understanding of that is that we can no longer, or we will no longer be able to serve a notice to leave without grounds. Can you explain what without grounds means?
Karen George: Exactly. So an example of an owner giving notice without grounds is, you’re on a lease until the 20th of December and back in June the owners work was finishing up and they need to move back to your town. And they want to come back and live in their property. So you would give them a notice to leave without grounds. They haven’t done anything wrong. The term is coming to the end of that term. And without any reason I need to move back to my house, you won’t be able to do that without giving [inaudible 00:04:04] without grounds.
Scott Lachmund: Right? So what would be… There would be under grounds, there would be provisions for maybe hardship or financial circumstances on behalf of that owner. There would be some legitimate reasons that we could give grounds for?
Karen George: Yes, there is. For example, the most common that everyone would experience would be if you would ask a tenant to leave because they’re behind in their rent. So that’s an example of giving a notice to leave with a ground, there is a reason. Or if you’ve sold the property, you give a notice to leave property sold, so they’re reasons.
Coming back to your property without a specific, something wrong that the tenant’s done or something wrong with the property should be the owner’s right to end a tendency at an end of the time. That is why we encourage in our office, fixed leases, so the tenant is guaranteed of a set time. You may not know the future after that 12 month lease, but for that 12 months you are safe and secure in that tendency.
Scott Lachmund: Yeah, because I guess just on that point with the most damaging reform is that effectively it could create a tendency for life. Where if it isn’t that fixed term, a tenant could possibly stay in a property for five, 10, 20 years without having reasonable grounds to ask them to leave.
Karen George: That’s right.
Scott Lachmund: So that’s a concern for property owners.
Karen George: For property owners. I don’t think that involves the property managers because we do what we’re told to do in relation to the relationship between the landlord and the agency. But as a landlord, it’s still your property. You still pay that mortgage, you take full risk and full responsibility for that house to keep it in a certain standard for that tendency to be able to live there.
Scott Lachmund: Okay. So from there, let’s move onto the next one you mentioned, the minimum housing standards. That’s a pretty broad explanation.
Karen George: We do like this one and you know why I’m a little bit black and white and I think minimum housing standards is a really good way for the owner to be expected to keep a property in a good condition and from a tenant to expect it to be. I do believe there is a proportion of our market where the owner doesn’t fulfil their obligations in keeping the property to a good, healthy standard. And I think this will protect. So I’m very passionate about this one, that I think that’s really important.
Scott Lachmund: So as we understand, that there’s already some elements that we have to involved in housing standards and that would be safety. So electrical safety switch and smoke alarms.
Karen George: That’s correct.
Scott Lachmund: And we talked about cleanliness and a fair condition of a house. So yeah, again, there’s pretty broad outline there of what is being proposed. Move on to the next one. Oh actually we might skip that, domestic and family violence for a moment. Let’s move on to the minor modifications. What does that spell out?
Karen George: So I think the minor modifications is going to be the scariest for a lot of landlords. It pretty much is giving the tenant the chance, the opportunity, the choice, to make any minor modifications to the property without written permission. And I’ll give you an example of one of those. They could fit child safety locks to every wardrobe in the house. They could instal screens to the property without permission.
They could have a cabinet for their spoon collection and they could screw that up onto every wall in the house without needing permission from the owner. Yes, the hooks and nail thing, everyone puts a couple of hooks for their photo frames and when you leave, you must rectify that. They could instal security cameras in every bedroom and have little holes in every room, without requiring permission.
Scott Lachmund: So another quick one there. We know that if a tenant makes modifications at the end of the tenancy, they do need to return the property to the same condition and standard as when they first moved in. But the concern there for landlords and property owners is that we hold a bond of four weeks rent, possibly if a tenants repainted or they’ve made additions and then they take those additions away. How do we know that they’re going to return the property to a tradesman like quality.
Karen George: The condition the property was when they first moved in. So what happens if I repainted my house and made it beautiful for a tenant to move in and after three years they removed all these modifications and tried to match the paint. Have you ever tried to do that at Bunnings anyone?
Scott Lachmund: Yeah. It turns out to be a Dalmatian.
Karen George: It’s never the same.
Scott Lachmund: And my question there is that obviously a bond of four weeks rent isn’t going to cover the repaint of the house.
Karen George: Absolutely not. And I know the intention from a tenant to patch some holes and repaint over is many times, absolutely honest and upfront and they do try and do their very best. It’s just never going to be the same. And is that okay then for the next person and the next person and the next person, for that standard to deteriorate because it hasn’t been brought back to the same condition. A, the money might’ve gone in cleaning or carpets or for pest control. There’s not going to be a lot left for painting.
Scott Lachmund: Yeah, correct. So we’ve got through three points there. We are going to get Antonia Mercorella on the phone, REIQ CEO. Just want to get her take from an industry standpoint and there might be some guidelines here for investors or agents to get involved as well. So let’s get her on the line.
Karen George: Fantastic.
Antonia M: Hello Antonia speaking.
Karen George: Hi Antonia. Scott Lachmund from 4510TV. How are you going?
Antonia M: Yeah, good Scott. How are you going?
Scott Lachmund: Very good. Thank you. And I know you’re a terribly busy lady, but thank you for your time.
Antonia M: No, that’s all good. No, no, really happy to do this, it’s important. Yeah.
Scott Lachmund: It is, it is. So on the line for our listeners, we’ve got Antonia Mercorella, REIQ’s CEO. And again, thank you for your time for our listeners, Antonia. I’ve also got Karen George in the studio, my sister and property management director of Richardson & Wrench. So Karen, say good day.
Karen George: Good morning. Welcome, I’m so interested to hear what you’re saying this morning in relation to the REIQ’s approach.
Antonia M: Thank you. Good morning to you.
Scott Lachmund: So Antonia, we’ve briefly just before getting you on the line, we’ve briefly discussed some main points of concern regarding these proposed rental reforms. I’d like to hear from the REIQ industry standpoint, your concerns and what we can do as agents, investors, property owners, if we have concerns about these reforms.
Antonia M: Absolutely. So look, I guess what I really wanted to start by saying is that the REIQ has actually been supportive of the reviews. We want to see rental laws reviewed. We consider that it’s incredibly important that the regulatory framework is right and that it’s fair and balanced. So I want to be really clear about that. What we know is that a huge proportion of our population are renters. It’s close to 35% and that number is on the rise.
So I think we have to understand that a good framework that is fairly balanced, is essential. But that brings me to our position on these reforms, which is that our concern is that many of these reforms do not strike a balance. In fact, on the contrary, many of the reforms seek to completely disempower the landlord, really take away the control that a landlord has over their asset. And, really impede decision making powers. And we think that’s really concerning.
What we know is that inevitably we will see some landlords leaving the market and that’s not being hysterical. This will tip many landlords over the edge. We also know that in Queensland we have a number of markets that have very tight… Availability is very tight, vacancy rates are very low. And so what we know is that supply is essential and when supply is diminished it will increase rent prices.
So ultimately, whilst I think the minister for housing is suggesting that these reforms will help renters. In actual fact, what will happen is landlords will be feeling pain and feel the hurt, as will tenants. And the minister himself concedes that rents are likely to rise, by as much as $18. Now of course those figures are included in the regulatory impact statement, but history has shown that they are often very conservative figures.
But even if we assume that those figures are right and not too conservative, it still represents a five to ten increase, based on the average rent for a three bedroom house in Queensland. A five to ten rent increase is fairly significant. So, there’s a fair few concerns we have in that.
Scott Lachmund: Yeah, most definitely. And you know, just again, great to have you on the line for our podcast. I think another part, you mentioned like the percentage, 35% of accommodation being rental. From experience of our 25 years here in Caboolture, we know there’s a lot of one off mum and dad investors that, that choose to have investment properties. Now if they start to feel like they’re not in control of that investment, there’s certainly those ramifications.
I’ve been talking to Karen about how we end a tendency fairly. How we have a minimum housing standard, now we elaborate on that, that we have… The house needs to be safe with electrical safety, switch, smoke alarms, a clean standard, et cetera. But it really is a broad comment on those minimum housing standards. And that could impact on the mum and dad investor being able to afford to maybe bring that property up to scratch if it is maybe an older dwelling.
Antonia M: I think that’s a really important point. I mean, what does concern me a little bit is that, there is a little bit of a… If you read the regulatory impact statement, and it’s pretty mammoth in length, but it actually acknowledges that the heavy lifting in Queensland, when it comes to rental housing supply, is actually performed for mum and dad investors. The vast majority of rental accommodation is provided by mum and dad investors.
And these are not people with a multitude of properties, which sometimes can be the way that media depicts landlords. The vast majority own one. And we’re not talking about people who are rolling in wealth. We’re talking about people who are trying to be responsible and look after their future. And in many cases what we know, is that it can be really tough to be a landlord.
Often you’re not… The income that you are generating from owning that property in many instances is not sufficient to meet the financial obligations that come with holding that asset. And of course, there’s a longer term vision there, the aim is always to hopefully achieve growth and hopefully the asset will grow in value and in the end it will be a worthwhile investment. That’s the ultimate objective.
But I think we have to understand the important service ultimately, that these private landlords are providing. We have seen the government in Queensland and indeed across Australia, shifting away from social housing. And so what we are seeing is, increasingly that responsibility rests on the shoulders of private investors. And so I think we have to be really fair about that.
And this is not about us saying that tenants shouldn’t have rights. I want to be very clear about that. The REIQ has always been very balanced on this. We do a lot of work with tenancy groups and organisations. We want to be really fair about this. But again, we have to consider that many landlords are already struggling. And so these reforms will tip many over the edge. And we’re being quite sincere when we say. And we’re already seeing comments, during our campaign, that many are saying, “There’s just no way I would be able to hold onto my asset, if these reforms are implemented?”
Karen George: And I completely agree from a property manager on the ground point of view. When a landlord comes to us to give us their property to rent out, it is a really big decision for them. If they’re a mum and dad investor, that had been transferred to Western Australia for work, it’s a huge risk they’re taking for someone to come and pay rent and look after the property the way they have.
So for them to do that, at the moment, I can say to them, “Here’s the residential tenancies act and these are the rules that the tenant must abide by. And this is what I can control for you to make sure everyone knows the rules and the standards and the guidelines that we’re going to go through during this tendency.”
If these guidelines are changed or if the tenants have permission to do minor modifications or keep pets without permission, then as the agent, I have no control over being able to give that reassurance to the landlord to say, “Your property will be in the same condition.” I know the act says you must return it, but it’s going to be really hard to do that and give everyone that reassurance from an investor.
Antonia M: Absolutely. I think those are all really valid points. I mean, if you look at what these reforms are proposing, I mean the let’s start firstly, for us, at the very top of our priority list is that… In terms of what changes we want to see made to these reforms. I mean, first of all to suggest that, a tendency for life, effectively… You know, we’re really concerned with the why that this particular reform is being characterised by the minister and by the government.
It’s being referred to as ending a tendency failure or abolishing a landlords right to evict, without grounds or without grounds for termination. All of that language, in my view, is very, very misleading. Because in actual fact, currently, the law does not let you just end the tenancy during a term. You can’t just wake up as a landlord and decide, “I’m going to boot the tenant.” And so the way it’s being described, suggests that the law allows you to do that, which of course that does not.
What’s actually being proposed here is that if a tenant wants to stay beyond the length of the agreed term, whether it was six months, 12 months, two years, whatever it might be. If the tenants decide, “Actually I don’t want to go, I want to stay,” the landlord will not have the right to say, No.” Now, how can that be reasonable? How can any objective person think that’s reasonable?
Karen George: It’s not.
Antonia M: Now the minister will say, “Well, the landlord has grounds that they can rely on.” But those grounds will be very limited. It will be things like the landlord wants to move back into the property. I family member wants to move into the property. Very significant renovations needs to be done to the property. And ultimately what it also stays is the tenant needs to commit a very serious or a very significant break, for the landlords to be able to remove them from the property.
Now what other assets class, I don’t know of any, where there is that kind of control. Where government intervenes and says, “We are going to control how long that tenant stays in your property or the tenant rather is going to control that. We will create laws that allow the tenant to control that.” I mean, I’ve even heard of tenants saying that, that’s outrageous.
So we think that that is absolutely ridiculous and I actually think that most people in the community, if you explain it accurately will agree, that that is absolutely ridiculous, so. And again that really sets the tone and the theme for these reforms. So if we start with a tendency for life, a tenant dictating the term of their lease. We start there and then we look at that theme continuing, you can’t say no to a pet, you can’t say no to minor modifications.
And again, I wouldn’t mind speaking about that, minor modifications. Because again, I think the inclusion of the word minor. When you actually look at the detail, I’m not sure I would describe them as minor modifications. But my point is that these reforms really say, “We’re going to take really fundamental rights away from a landlord and we’re going to pass that power wholly and solely to the tenants.” And that’s concerning to us.
So we’re not saying that reforms aren’t required, we’re absolutely not saying that. We’re not saying we don’t want safety in rental properties. The REIQ has been one of the main advocates for that reform. We want to see better safety standards in rental properties. So I want to be really clear about that.
But you do not achieve those things by saying, “We’re going to completely suck the landlord dry of any power that they have and we’re going to transfer it to one other party in that transaction.” That can not be fair and that cannot be a good thing when it comes to rental stability.
Scott Lachmund: Yeah, totally agree. Thank you for your comments Antonia. We do appreciate your time on our 4510TV podcast. I’m sure this conversation’s going to continue. What can investors or property owners do via the REIQ, if they have concerns over these proposed reforms?
Antonia M: Absolutely. So, yep great, thank you. So first of all, I would love to see all real estate professionals, landlords and tenants understanding what these reforms are really about. It’s a big read, but it’s important that people do read that regulatory impact statement because it gives you insight into what it really is. And that’s available through the department of housing website. You can go to our website, www.rental reforms.com.au.
And we give you the ability to understand the impact that these reforms will have. And we’ve also created a really nice, easy function that allows you to submit a letter to the Premier. You can either use a standard letter that we have prepared or you can amend that letter to suit your purposes so that says what you want to say specifically. So that’s probably the best starting point, going to rentalreforms.com.au having a bit of a read and writing to the Premier, to let her know what your views are on these reforms.
Scott Lachmund: Yeah, perfect. And what we’ll do with our podcast production, we’ll put some links to the REIQ and to the rentalreforms.com.au website, so that people can can follow that. Once again, Antonia Mercorella, REIQ CEO, we sincerely appreciate your time. And let’s get this message out, let’s get involved. What would be… Final question, what is the next step, Antonia? When is the next…
Antonia M: So this consultation process, crisis it’s only a very limited window of opportunity, it closes on the 28th of December. So we’re incredibly disappointed with the timing of this, at Christmas time. A cynical person would say it was strategically timed. So important that you get those submissions into government and let your voice be heard during that period.
Following that early in the new year, we will expect to see draught legislations. And that will make it way into parliament and their are of course, some processes involved, it’s likely to go to a parliamentary committee. So we will continue to fight to the fight. We will continue to be… Well, certainly to make our voice heard and hopefully we will be able to convince the government that more balanced reforms are required.
Scott Lachmund: Yeah, most definitely. Thank you Antonia. Have a great day and we’ll get this podcast out across our platforms so that everyone can get involved.
Antonia M: That’s fantastic. Thank you both so much.
Karen George: Thank you.
Scott Lachmund: Okay then. Well there we go, Karen George, Antonia Mercorella, from REIQ. What’s your takeaways? Obviously she’s very passionate from the industry body, of making sure people are clear about these proposed changes. What would you say?
Karen George: So as a property manager in Queensland, I am so proud that we belong to an organisation that has a female leader like that who can succinctly say, “I’m not taking sides, I’m just passing on the information that’ll impact us.” So warning, warning, read, educate yourself. If you’re uncomfortable going to any websites, drop into a real estate office, go and speak to a property manager.
This is their day to day job. Go and speak to them about what does it mean to you? Can you explain to me from a tenant point of view, what does it mean to me? And then, how do I have a say? Because like Antonia said, 35% of the market is in rentals, like come and talk to us. That’s what we’re paid to do, educate you, communicate with you and work out negotiating. And that’s what Antonia’s doing from a more professional point of view, as the REIQ, is getting that information out to us, so that we can have a formal say.
Scott Lachmund: All right, let’s wrap up and finish this podcast, episode five the proposed rental reforms for Queensland real estate. Prior to getting Antonia on the line, I just wanted to touch on those two other subjects.
Karen George: The pets?
Scott Lachmund: The pets. Let’s just, give us the quick rundown on pets.
Karen George: Look, really basic. At the moment, if you rent a house, you ask the owner, “Do you mind if I have a dog?” You have it inside, you have it outside. You get a written permission on your tenancy that says, “Yes, one Staffy-dog permitted.” The reforms are saying that you shouldn’t have to ask for that. You should just be able to buy three puppies on the weekend and have them in your backyard. Whether they break through the fence, whether they cry every day and annoy your neighbours, whether they poo everywhere and no one picks it up. Everything like that, the owner won’t have a single say
Scott Lachmund: And a final comment, touching on domestic and family violence, that’s a very broad subject that affects all our communities. But there’s going to be some proposed changes if you need to break a lease or vacate from a property due to those circumstances. What would be the take there?
Karen George: There are already provisions in place for this, so why change? Why modify something that’s already working? If you’re in a position at the moment, you go to your agent and you try and break the lease. You try to mutually arrange to leave the lease. You go to QCAT to end your tenancy. You get advice from many community services, police advice. Everyone is there to help each party, but each party still needs to go through the process of it.
I think they’re trying to minimise with these changes that the owner can be left without their property next week, due to a family and domestic violence. So that legally binding contract that the tenant signed in the beginning is worthless.
Scott Lachmund: Okay. We’ll wrap it up there. As we say, the conversation is going to continue over the next month. If you want to have your say about the rental reforms in Queensland, follow the links on our podcast to the REIQ website and follow those prompts. And from a standpoint of Richardson & Wrench real estate in Caboolture, established 25 years. We have a property management portfolio of a thousand properties locally. And we’ll also be clear on the record that we advocate for tenants and landlords equally, but there’s some serious changes here that everyone needs to be aware of.
Karen George: That will impact both tenants and landlords. So our door’s open for anyone, any day. If you’re a tenant or landlord and you want to have a say about this, you want to discuss it with someone, you want more information, please drop into 87 Morayfield Rd. We’re here all the time, all of our property managers are up on this information and we’d be happy to share.
Scott Lachmund: All right, lovely. A topical conversation, rental reforms in Queensland, as we say on 4510TV, stay tuned.