‘Balanced’ WA rental reforms earn state body’s thumbs up

On 26 May, the state announced a comprehensive set of changes to the rental laws, marking the first significant update to the state’s Residential Tenancies Act in over a decade.

A significant change introduced by the rental law reforms is the reduction of allowable rent increases from twice a year to once a year.

Additionally, tenants will generally be allowed to have pets, but landlords can apply to the commissioner for consumer protection with reasonable grounds to deny pet permission.

REIWA chief executive Cath Hart acknowledged that investors generally prioritise timely rent payment and the proper care of their properties, while tenants desire the freedom to have pets and personalise their rental homes.

“Many investors do approve and welcome pets — about one-third of properties currently have a pet bond — but it needs to be the right pet for their property.

“They will still be able to withhold consent but only with the approval of the commissioner for consumer protection and only within reason,” she noted.

The updated laws also grant tenants more freedom to make minor modifications to the property, with the potential requirement to restore the property to its original condition at the end of the tenancy.

The process for releasing security bonds will be streamlined, and any disputes, including those related to bonds, will be handled by the commissioner for consumer protection.

These changes aim to address concerns raised by renter advocates, who argued that without such protections, tenants may hesitate to request repairs or challenge rent increases due to fear of eviction.

Commerce Minister Sue Ellery highlighted that the reforms are a response to the challenging circumstances faced by tenants in Western Australia, who are currently grappling with a combination of low vacancy rates and escalating rents.

Perth has one of the nation’s lowest rental vacancy rates, with REIWA estimating it sat at just 0.7 per cent in April — far from the 2.5 to 3.5 per cent it said represented a balanced market.

While Ms Ellery acknowledged “[there] is no single solution to ease the current tight rental market”, she underlined the new laws proposed by the McGowan government “strike a good balance by protecting the owner's investment property while providing stability and certainty for tenants”.

“The modernisation of WA’s tenancy laws will give tenants more freedom to make the rental their home by being allowed to have a pet and make small modifications to the property,” she added.

Notably, Western Australia did not announce any changes to the “without grounds” terminations provisions in the act — one of the most contentious parts of the reforms process.

Currently, landlords can end a periodic lease with 60 days’ notice, or a fixed-term lease with 30 days’ notice, for any reason.

Victoria, Tasmania, the ACT, and Queensland have passed similar laws which allow landlords to only evict some, or all, tenants if certain criteria is met.

Renters’ advocates in Western Australia had been calling for the change, stating as long as landlords have the power to evict tenants for no reason, renters would be left worried that asking for repairs to their property or challenging rent increases could see them kicked out.

But property bodies like REIWA have countered that such a change could lead to investors fleeing the market, reducing an already small pool of rental properties and driving prices even higher.

Considering the current challenges in Western Australia’s rental market, the McGowan government emphasised “it is not in the best interest of the community to introduce additional complexity in owning and managing long-term rental properties”.

“Our state needs more investors in the market and uncertainty about their ability to manage their own assets may stand in the way of increasing supply,” it stated.

Ms Hart welcomed the decision to maintain the existing policy of no-grounds terminations.

“No grounds terminations has been a particular concern for investors and potential investors, and they will welcome the decision to leave this unchanged.

“It gives them certainty and they can move forward with confidence, knowing they can manage their assets appropriately,” she said.

Western Australia also became the latest state to ban rental bidding, with the changes now prohibiting landlords and property managers from pressuring or encouraging tenants to offer more than the advertised rent. But tenants will still be able to offer more than the advertised price if they choose to.

Ms Hart acknowledged that while rent bidding is not a significant issue for the properties managed by the institute’s members, it may occur in the private landlord market.

“The reforms will set a clear standard everyone must adhere to which should give tenants more confidence when looking for a rental property.”

Overall, Ms Hart said the announced reforms offer a sense of assurance to investors, who comprise the lion’s share of the state’s rental market.

“Investors make up about 85 per cent of the private rental market — and the majority of investors only have one property,” she said.

She emphasised the alarming trend of property investors exiting the market in significant numbers, resulting in a substantial reduction of nearly 20,000 rental properties compared to the situation just two years ago.

“This exodus has contributed to the vacancy rate falling to a 42-year low and rent prices increasing. Over the course of the review of the Residential Tenancies Act, REIWA’s aim has been to make renting possible, and the reality is that it’s not possible without investors.”

Ms Hart explained that “if investors aren’t confident about property, they will put their money into other assets and rental queues will remain long.”

She also acknowledged the tedious process that came in the run up to the announcement, stating it has “been a long road to reform”, noting it has “been a difficult task balancing the needs of investors and tenants in unprecedented market conditions”.

“WA’s affordable housing is already attracting the attention of eastern states investors, and this balanced approach to rental reform will also give them more confidence in investing in our market.

"Now that we have a decision and a stable legislative environment, we may see some short-stay providers reconsider the benefits of listing their property in the long-term rental market,” she concluded.