Monday, 26th of June 2023
The Residential Tenancy Act Reform: What It Means To Property Investors
The latest Residential Tenancy Act (RTA) reforms have injected some much-needed confidence and balance into the WA rental market, offering more of a pull with local investors, as well as Eastern States investors looking to invest in the West.
Whilst the residential tenancy agreement remains unchanged for now, with all proposed changes currently in the planning and discussion phase, the impending changes have been leaving property investors with some questions and uncertainty around control, profitability and sustainability.
Whilst the media is spotlighting this uncertainty, the good news is, it’s not all doom and gloom if the changes go through - we’re here to show you why.
The Proposed Changes to The Residential Tenancy Act (RTA)
It has been some time since the Residential Tenancy Act (1987) has been reviewed to align with the current property market, with many investors and owner-occupiers feeling the changes are well overdue.
The McGowan Government is currently progressing with its reforms of the WA tenancy laws to strike a balance between tenants and landlords. Below is an overview of the proposed changes, or you can view the Media Statement on the WA Government website for the expanded list.
- No change to no-grounds terminations
- Rent bidding to be prohibited in Western Australia
- The frequency of rent increases to be reduced to once every 12 months
- Funding boost for tenancy advocates and legal centres to assist tenants in trouble
- Tenants allowed to make minor modifications and keep pets at rental properties
In a recent interview, REIWA President Cath Hart made the point that the new Residential Tenancy Agreement reforms recognise an overwhelming need for new legislation to encourage more local investment (to address housing supply issues) whilst also balancing the needs of tenants.
“The reforms announced today strike the right balance for owners and tenants. The next step will be to work through the detail of these measures, and we will continue to advocate for practical and pragmatic approaches to their implementation.”
– Cath Hart (REIWA President)
What the Changes Mean to Landlords
If you’re a property investor with a rental property in the current market, the simple message here is don’t panic - the proposed Residential Tenancy Act changes aren’t as bad as you might think.
No grounds terminations: With no grounds terminations proposed to remain unchanged, property investors will welcome this as it provides more control and confidence when it comes to managing investment properties. As local investment is needed to address the rental shortage, owners are set to retain control of their asset.
Limiting rent increases and banning rent bidding: Whilst this proposed change may seem a risk to property owners, with the right planning and tools to forecast rental amounts and rises, owners can stay proactive and cashflow positive within the market. Your property management agency should be able to forecast your bottom line with proactive and collaborative strategies to get the most out of your valued asset.
If you need some help with this, we welcome you to book a rental review with us.
Pets and minor modifications: Happy tenants mean better tenants, so the proposed flexibility will mean tenants can enjoy a more homely property. This is likely to lead to better-maintained properties, rents paid on time and even an increase in the length of leasing contracts. Owners will still have the final say on pet bonds and tenant requests, and tenants will be required to restore properties to their original condition once their tenancy contract expires.
It's still a prolonged landlord’s market: With mortgage rates set to ease throughout the year, patience is needed to hold onto rental properties which are so highly sought after within the local Perth rental market. Due to the shortage of rentals on offer thanks to a 42-year low vacancy rate, compounded by increased pressure from migration, Perth is still a landlord’s market with rents continuing to rise - firmly placing owners in the driver’s seat.
Perth housing affordability: In a recent report by the Property Tribune, Perth was officially declared as the most affordable capital city in Australia thanks to having the most affordable residential blocks in the country! Whilst interest rate rises continue to apply market pressure, Perth’s housing affordability continues to encourage both local and interstate investment.
We’d love to talk with you more about how the proposed changes are forecasted to assist savvy property owners who are looking to maximise the return on their asset - book an appointment with our award-winning team today!
Addressing the Supply Issue
In this REIWA article in May 2023, CEO Cath Hart welcomed the McGowan Government’s measures to address housing supply in the 2023-24 WA Government budget which also announced:
- A $4.2 billion operating surplus for 2022-23
- A $3.3 billion net operating surplus forecast for 2023-24
- Inflation set to fall to 3.5 per cent by June 2024
- 4.25 per cent economic growth in 2022-23, the strongest in nine years, with 2.25 per cent growth forecast in 2023-24
- An unemployment rate of 3.4 per cent at March 2023, forecast to be 3.5 per cent by the end of the financial year
Population growth is still spurning strong demand for housing, with upgraded forecasts predicting population growth increasing from 1.5% to 1.8% in 2023-24, and a further 1.6% - 1.7% increase projected in 2024-25. This has translated into rental properties being snapped up within just 16 days of being listed, as reported in this REIWA article.
Whilst $47.6 million of the new budget has been allocated to improving the building and construction industry in Western Australia, the reality is, the rental shortage won’t be resolved overnight. Supply issues and building delays still remain as the construction world continues to struggles with labour and material constraints, where the demand just hasn’t kept up with supply.
“By addressing supply and stabilising the market, owners should have growing confidence that the government is taking a pragmatic approach to the rental crisis by addressing housing supply rather than interfering with owners' rights to set appropriate rents which align with the market.”
– Kristy Copping | PPM Director
Why lease with Perth Property Management?
If you’re concerned about the upcoming Residential Tenancy Agreement reforms, or you don’t have a crystal clear leasing strategy ready to go, why not lease with the best in the West!
Here are a few reasons why our property owners love working with us:
- Our Director, Kristy Copping, is currently Australia's #1 Residential Property Manager as awarded by the Real Estate Institute of Australia (2023) and is actively involved in delivering her award-winning service for all of our properties.
- Kristy, was also recognised by REIWA as the Residential Property Manager Of The Year multiple times throughout the years at the 2019, 2021 and 2022 awards nights.
- Our team has over 35 years of real estate experience, having picked up Property Management Team Of The Year at the REIWA Awards for Excellence.
- We’re only happy if you’re happy, which is why our clients are always protected by our 60-day guarantee to maintain our exceptional service levels.
If you’re not getting the most out of your valued property asset, we can provide a rental review to forecast your bottom line after future rent rises. We welcome you to get in touch with our award-winning team today either by calling us direct or requesting a market appraisal via our Contact Page.
