The following will help you understand how much pain the changes will make to your rental property business. Read the justifications for the amendments given by the Hon Simon O'Brien, Minister for Housing, followed by comments by Adam Bettison . . .
 |
| Explanation of Contracting Out by Hon Simon O'Brien MLA |
The original act was reasonable in its allowance for owners and tenants to contract out certain provisions. The negotiation of any agreement is seldom equal in bargaining power, this is a universal principle and not restricted to rental property. Allowing parties to contract out certain provisions provided some flexibility. Instead the proposals are introducing rigidity, force and compulsion. The proposals are restricting the market, which inhibits creativity and expression.
 |
| An explanation of Eviction Procedures by Hon Simon O'Brien MLA |
It is at least inadequate to say that eviction matters are outside the scope of the Act, and, at worst, totally incorrect. The following eviction matters are completely within the scope of the Act:
- The time frame for termination notices
- The format of termination notices
- The basis for termination
- Restrictions on claiming costs
- The inability to appeal a decision
- The inability to have more than two weeks rent in advance
- The restriction on tenant bonds to 28 days rent which is less than the average to even get to court
- The inability to terminate a lease without a court order
- The abandoned goods procedures
- The abandoned documents procedures
The Property Owners Association requests improvements to laws associated with tenancy evictions. Some possible improvements would be as follows:
- Deregulate tenancy bonds - this would allow markets to develop products appropriate to the situation - for example a tenant deposit bond - this would aid in the development of reliable tenant databases, as the bond insurers would work closely with the databases for risk management.
- Failing deregulation, then increase in the maximum tenant bond to 6 weeks rent - this still not be enough on low rent properties to cover the average eviction cost of $2600 but it would help. Note that low income tenants usually qualify for bond assistance through the Dept of Housing, so affordability is not really an issue here.
- Decrease the Form 1B Notice of Termination notice period to 3 days. Note, it would still take 31 days to get to a court hearing.
- Improve the Magistrates Court legislation - allow for fast track processing of residential tenancy terminations
- Introduce an Appeal Provision into the Bill - this would assist in the building of Case Law which would provide guidance - at present there is very little
- Allow for Termination Notices to be served by email
- Allow for costs to be claimed - at the moment the owner has to pay despite the default being entirely due to the tenant
 |
| Explanation of Infringement Notices by Hon Simon O'Brien MLA |
There are prosecutable offences under the current Act. We have never seen a tenant prosecuted in the lifetime of the Act, but have seen owners prosecuted. We are confident that the new Infringement Notices will used entirely on owners, and never likely on tenants.
 |
| Explantion of Option Fees by Hon Simon O'Brien MLA |
The ability to charge an Option Fee is important for both owners and real estate agents. The purpose of the Option Fee is to encourage earnest applications (without an Option Fee it is common for tenants to make multiple applications which they never intend to fulfil); and to compensate the owner for the lost time and effort when they have held a property off the market for a tenant only to have the tenant withdraw their application at the last minute. We object to the wording of the 'prescribed amount' of am option fee, as we are confident that the wording will be used to restrict the amount to a token level and thus eliminate the benefits of an Option Fee. Owners should be allowed to charge an option fee if they see fit in their business model. The market will quickly punish with vacancy any owner who charges an amount higher than the market can bear.
 |
| Explanation of Owners Right of Entry by Hon Simon O'Brien MLA |
The Bill gives tenants power to deny owners from altering their own property. That is morally wrong as anybody should be able to control their own property. The normal scenario is an owner improving the property. In the unlikely event of an owner diminishing a property, contract law would provide the appropriate avenue for compensation to the tenant.
 | |
| Explanation of Penalties by Hon Simon O'Brien MLA |
There are 30 new fines for owners, 2 new fines for owners and tenant and ZERO new fines for tenants. Tenants are NEVER fined anyway so it is a moot point. The proposed new Act punishes owners. Period.
 | |
| Explanation of Property Condition Reports by Hon Simon O'Brien MLA |
Punishing owners with a $5,000 fine for not preparing and issuing a report within 7 days is "nanny-state" material. It is in the owners best interests to prepare a property condition report, and compulsion is not necessary. In the Magistrates Court, the onus of proof is on the owner to establish that property damage is new and not pre-existing. Failure of the owner to complete a condition report is its own punishment.
 |
| Explanation of Rent in Advance by Hon Simon O'Brien MLA |
The prohibition of rent in advance is entirely unnecessary as the market finds its own level and would solve this problem if allowed to. There is an incorrect assumption behind this Bill that owners are all powerful. They are not. There are 3000,000 property owners all competing with each other to lease quickly to tenants. To require a high level of rent up front simply results in a vacant property.
 |
| Explanation for requiring Owner's Name by Hon Simon O'Brien MLA |
It is is completely valid for Governments to protect owners privacy by permitting owners using a licenced real estate agent to name the agent instead of the owner. What protection is offered to owners who are routinely threatened and assaulted by tenants?
 |
| Explanation of RTD Provisions by Hon Simon O'Brien MLA |
The RTD provisions do not benefit owners, they do not want these provisions. The 3 year sunset clause and prevention of listing until a court order is obtained, force owners to make losses on repeat offenders. By the time the court order comes through the offender is already in possession of the property of an unsuspecting owner. Why is this government making owners pay additional costs due to individuals who are unconcerned with their contractual obligations? Law abiding tenants have nothing to fear from the operation of these databases. At present tenants can be listed as "recommended tenants" and there is the potential to develop a positive reporting system, in the same way that consumer credit files are heading. However, this Bill will stop that and effectively punish the good tenants.
The changes are seen as a "lesser burden" for owners to bear rather than preventing an errant tenant being deprived from a home to live in while they trash it. The burden of rent theft and property damage is to be born by the private owner, not the public housing sector. It is claimed that the RTD provisions will prevent threats and duress being inflicted on errant tenants by owners. This is just an outrage and a fictional claim to justify the legalisation of rent theft and malicious damage.
STANDARDISED LEASE AGREEMENT
We are unaware of any members of the Property Owners Association requesting a standardised lease agreement. Will similar provisions be introduced in the retail and commercial sectors? What about standardised housing loan agreements? When will this Barnett Government stop trying to control the market and stifle innovation?
TENANT COMPENSATION BONDS
It is wrong to force owners to pay a bond to maintain their own property. Tenants already have the ability to issue a Breach Notice to owners for such things. This Government is empowering the Court to deal with matters in which they have not been trained - maintenance management of rental properties. Handing the keys of of the property to the tenant. Whose property is it, anyway.
TENANT DEFAULTS
We are unaware of any tenant being prosecuted and forced to pay a Penalty, ever.
How about a couple of new provisions for tenants:
- Malicious Damage - fine $20,000
- Assault on an owner or property manager - fine $20,000 and exemption from the normal sunset provisions on RTD.
- Abandonment of property - fine $20,000
As far as "support continued investment in the private rental market" we have already seen members sell property in anticipation of this legislation, and I am on public record as recommending sale if the Bill is passed in its current form.
Adam Bettison - President
22 August, 2011
No comments:
Post a Comment