Residential Tenancies Reform: No grounds gives investors certainty

Now the frenzy over the proposed changes to the Residential Tenancies Act has died down, we can take a step back and look at the reforms in more depth, in particular the retention of no grounds terminations.

Bob’s story

Investors told REIWA loud and clear that no grounds terminations was very important to them. They want certainty in managing their investment and the ability to decide how to use their asset and who to lease it to.

Bob in Dunsborough had a tenant who, after four great years, became late with rent payments, was breached repeatedly and only paid after the matter went to court. This happened multiple times over 12 months. Naturally Bob decided not to renew the lease, but still faced difficulty getting the tenant to leave. I’ll let him tell the story.

“After this tenant eventually vacated, we needed to spend over $12,000 having the property repainted and replacing the window blinds throughout. His bond only covered a negligible portion of the repairs needed to get the property back to the same condition before he took up residence.

“The stress that this tenant caused my wife and I and our Property Manager was immeasurable. For 12 months we didn’t know if or when we would receive the rental income we needed to service the loan on the property.

“Denying this tenant the opportunity to renew his lease would be considered a ‘no grounds termination’, because he paid the rent he was contractually obliged to pay - although only under the threat of a hearing before a Magistrate - and was considered to be complying with his lease.

“After this experience is it any wonder why we don’t want to buy another investment property? We wanted to sell but thought about our long-term plans and decided we shouldn’t let one bad experience ruin those plans.

“Imagine now how my wife and I feel when all we read and see in the media is how hard tenants are finding it with rents increasing because of greedy landlords taking advantage of a tight rental market. The interest we pay on the mortgage on this property has risen over $14,000 per annum in the last 13 months. The rent we will receive this calendar year will have increased by $3,200.”

The media love using the word eviction when talking about this reform. It is a very emotionally charged term and I would like to remind tenants that terminations and evictions are not the same. There are many rules and processes surrounding ending a tenancy. If you find yourself being summarily ‘kicked out’ of the home you rent without proper notice, contact the free REIWA Information Service on 9380 8200 during business hours for guidance.