Changes to the RTA (Residential Tenancies Act 1987)

There have been quite a number of changes to the Residential Tenancies Act 1987. The changes will be effective from 1st July, 2013. Changes have been made to Security Bonds, New Tenancy Agreements, Property Condition Reports, Option Fees, Increases in Rent, Rent in Advance, Urgent Repairs, Lessor’s Right of Entry to Inspect the Premises, Minimum Security and Residential Tenancy Databases.

As your property management company, we are on top of it. We like to keep our landlords well informed, so over the coming months we will step through some of the changes and what they mean for you. [artBreak]

Security Bonds

Tenant Security Bonds

Currently

Tenant security bonds – can be deposited:

  • in a real estate agent’s tenancy bond trust account; or
  • with an authorised financial institution (bank); or
  • with the Bond Administrator.
From 1 July 2013
  • All security bonds must be lodged with the Bond Administrator as soon as practicable, and in any event, within 14 days of being received.
  • Existing bonds must be transferred to the Bond Administrator upon renewal of a tenancy agreement.
  • In any event, all bonds must be transferred to the Bond Administrator within 18 months from 1 July 2013.
Why the change?

If all tenant security bonds are held by a sovereign third party, such as Bond Administrators, tenants are guaranteed that bonds are secured throughout the duration of the tenancy. Any disagreements related to the disposal of the security bond after the tenancy will be treated independently in agreement with the Act, as it should be and as practiced by other Australian States.

Security Bond Increases

Currently

Security bonds can be increased every 12 months where there has been an increase in rent.

From 1 July 2013

Security bonds can be increased every six months if there has been an increase in rent.

Why the change?

Security bonds can be increased simultaneously as the rent increases. 

 

Pet Bonds

Currently

Pet bond only applies if a dog or cat is allowed to be kept at the premises.

From 1 July 2013
  • Pet bond now applies to any pet capable of carrying parasites that can affect humans
  • Guide dogs are exempt but fumigation expenses, if required my be taken from the Security Bond or recouped from the tenant.
Why the change?

This shows that aside from dogs and cats, other pets may also carry ticks, fleas and other kinds of parasites, which may need fumigation at the end of the tenancy.

New Tenancy Agreements

Agreements which can be used

Currently

Agent’s/lessor’s own tenancy agreements can be used.

From 1 July 2013
  • A prescribed tenancy agreement must be used if there is a written residential tenancy agreement between the parties.
  • Additional clauses that are specific to the tenancy can be added to the agreement.
  • The prescribed residential tenancy agreement is available free from the Department of Commerce website.
Why the change?

Residential tenancy agreements are a complicated document and that is what’s currently implemented. To use a standard for residential tenancy agreement written in simple language will make it easier for tenants, lessors, as well as property managers to better comprehend the scope of their rights and obligations as mandated in the Act. 

Property Condition Reports

Reports are compulsory

Currently

Property Condition reports are not compulsory.

From 1 July 2013
  • Property condition reports (PCRs) will have to be prepared at the beginning and end of a tenancy.
  • The PCR must contain prescribed content which is available free from the Department of Commerce website.
  • A tenant will be able to record their comments about the condition of property on the PCR.
Why the change?

Tenant’s liability for any damage in the property is one of the main reasons for disputes in residential tenancies. Implementing compulsory condition reports will lessen the possibility of disputes since there will be a concrete proof of the property condition during the beginning until the end of the tenancy.

Increases in Rent

Fixed Term Agreement

Currently

To increase the rent during the term of a fixed term agreement, the agreement must stipulate that the rent may increase or be increased.

From 1 July 2013

To increase the rent during the term of a fixed term agreement, the agreement must set out the amount of the increase (e.g. $20 per week) or the method of calculating the amount of the increase (e.g. increase by CPI or a percentage amount).

Why the change?

This will help the tenant determine whether or not they are able to afford the rent throughout the fixed term agreement.

New Residential Tenancy Agreement

Currently

If the same parties enter into a new residential tenancy agreement for the same premises, the rent may increase from the first day of a new agreement.

From 1 July 2013

If the same parties enter into a new residential tenancy agreement for the same premises, the rent cannot increase for the first 30 days of the new agreement.

Why the change?

This gives the tenants a leeway to adjust to any rent increase brought about by the new residential tenancy agreement for the same premise. 

Rent in Advance

Required Rent Advance

Currently

At the commencement of a residential tenancy agreement, only two weeks rent in advance can be required and then after that there is no limitation on how much rent in advance can be sought.

From 1 July 2013
  • No more than two weeks rent in advance can be required at any time throughout the tenancy agreement.
  • A tenant may elect to pay at a different interval, for example, monthly, however it cannot be an enforceable term of the agreement and the tenant can revert to paying fortnightly if they choose.
Why the change?

This amendment is made to ensure that everybody are able to apply for a tenancy with the flexibility to pay for their rent based on the interval of their income, whether monthly or weekly.

Urgent Repairs

The Need for Urgent Repairs

Currently

Tenant must advise the lessor about the need for the urgent repair. If the lessor fails to take action to rectify the repair, the tenant must first notify the lessor of their intention to organise the repair and incur expense. The lessor must then compensate the tenant for any reasonable expenses incurred by the tenant in making urgent repairs. This applies only to urgent repairs that are likely to cause injury to a person or property or cause undue inconvenience to the tenant.

From 1 July 2013

Tenant shall notify the lessor as soon as practicable about the urgent repair, and the lessor shall ensure the repairs are carried out as soon as practicable. 

If, within the 24 (for the restoration of essential services) or 48 hours (for other urgent repairs), the tenant cannot contact the lessor, or the lessor fails to make arrangements for the repairs to be carried out as soon as practicable, the tenant may arrange for the repairs to be made. Repairs must be made to the minimum extent necessary with a suitably qualified repairer. The lessor must reimburse the tenant for any reasonable costs.

Essential services are: gas, electricity, water supply (including hot water), waste water treatment and functioning refrigerator (if supplied with the premises). 

Why the change?

The failure of the lessor to complete an urgent repair is often a source of complaint from tenants. This certain change will provide clearer scope of what is included in an urgent repair as well as a reasonable timetable of when a lessor should act on such repairs. 

Lessor’s Right of Entry to Inspect the Premises

Inspecting the Premises

Currently

A lessor may enter the premises for the purpose of inspecting the premises provided not more frequently than once every four weeks.

From 1 July 2013

A maximum of 4 routine inspections will be allowed in any 12 month period.

Why the change?

This is to give both the tenant and the lessor their equal rights. The right of the lessor to inspect the property and the right of the tenant to enjoy peace and quiet. And also, four inspections within a year coincides with what the industry implements as well as the other State’s laws.

Minimum Security

Security

Currently
  • Owner shall provide and maintain locks or other devices necessary to ensure premises are reasonably secure.
  • Reasonably secure is not defined.
From 1 July 2013

The means to ensure premises are reasonably secured is defined. These are:

  • main entry door – a single cylinder deadlock (if there is a double cylinder deadlock or lockable security screen compliant with Australian standards already fitted, retrofitting of a single cylinder deadlock is not required); that complies with AS 5039-2008
  • all other external doors – a deadlock or, if a deadlock cannot be fitted, a patio bolt lock or a key lockable security screen  that complies with AS 5039-2008
  • exterior windows –must be fitted with a lock that prevents the window from being opened from outside. This does not have to be a keyed lock (if there are window security screens compliant with Australian standards AS 5039-2008; already fitted, retrofitting of window locks or latches is not required); and
  • external lighting – a light at the main entry that can be operated from the inside.

The requirements for locks to entry doors and lockable windows do not apply where the door or window is situated on the second storey or above in apartments and multi-storey homes. 

Exemptions will apply to properties listed on the State Heritage Register and to rural properties. In these instances, the requirement will remain for a reasonable level of security to be maintained.

Why the change?

Security is essential to tenants and the level of security provided by lessors is often a source of disagreement between a tenant and a lessor. This amendment provides a clearer scope of the minimum security level for a premise to be considered as reasonably secured. 

With this change, lessors are given a maximum of two years from 1 July 2013 to meet the required minimum security.