Three years ago, it was proposed that changes should be made to WA’s tenancy laws in order to broaden the rights of tenants. This week, the McGowan Government announced that major amendments to the Residential Tenancies Act 1987 would be drafted to afford renters greater protections and landlords greater clarity. The changes will also streamline bond returns and the dispute resolution process. The changes are due to come into effect midway through 2024, so we thought it would be useful to examine them in more detail, see how they compare to other states around Australia, and explore some of the different reactions to them.

Changes proposed

The Government’s proposed changes include:

• Prohibiting the practice of rent bidding, with landlords and property managers unable to pressure or encourage tenants to offer more than the advertised rent;
• Reducing the frequency of rent increases to once every 12 months;
• Tenants will be allowed to keep a pet or pets in a rental premises in most cases;
• Tenants will be able to make certain minor modifications to the rental premises and the landlord will only be able to refuse consent on certain grounds;
• The release of security bonds at the end of a tenancy will be streamlined, allowing tenants and landlords to apply separately regarding how bond payments are to be disbursed; and
• Disputes over bond payments, as well as disagreements about pets and minor modifications, will be referred to the Commissioner for Consumer Protection for determination.

Property modifications and security bonds

As it stands, WA tenants are allowed to make modifications to a property under certain circumstances, such as affixing furniture to walls to protect children or people with disabilities, but consent from the lessor must be obtained first. Proposed changes include allowing tenants to make minor changes to the property, while landlords are only able to refuse such modifications under particular circumstances. However, tenants may be required to return the property to its original condition upon ending their tenancy. These changes will put WA’s laws on a similar footing as NSW, the ACT and Vic, where reasonable alterations are permitted on the condition that the property is returned to its previous condition at the end of the lease.

In the case of disagreements around modifications, these will be referred to and determined by the Commissioner for Consumer Protection. The Commissioner will also be responsible for resolving disputes over bond payments.

Advocates for these changes suggest that entering into a rental agreement should entitle tenants to make the property feel like it is their own home for the duration of the rental period. Meanwhile, opponents fear that allowing modifications could devalue the lessor’s property and that, in lieu of larger rental bonds, owners will have no option but to use their own resources to return the property to its original state. Instead, they propose that any changes should be agreed on at the time of signing the lease.

Renting with pets

Though there are currently no laws in WA against tenants having pets, it is ultimately at the discretion of the landlord as to whether pets are permitted. As such, if a landlord does not allow pets and their tenant chooses to keep a pet regardless, the tenant’s actions will be considered a breach of the tenancy agreement. Proposed changes will allow tenants to automatically keep pets. Landlords will be able to refuse consent for the tenant to keep a pet, but only with the consent of the Commissioner for Consumer Protection and only when it is reasonable to do so. Landlords will also be able to place conditions on the keeping of a pet. Pet bonds to a maximum of $260 will still be required. Vic, the ACT, Qld and the NT have adopted similar models, whereby tenants must still apply for consent but lessors are not allowed to ‘unreasonably’ refuse. If they do want to refuse, landlords must lodge an application with their state’s Civil and Administrative Tribunal to demonstrate their refusal is reasonable.

Supporters justify these changes on the basis that it balances the needs of landlords with the needs of tenants by maintaining the pet bond while still allowing tenants to experience companionship with their pets and enjoy the mental and physical health benefits that tend to accompany pet ownership. Critics however suggest that the maximum pet bond of $260 is not sufficient and should also be allowed to cover any damage incurred, not just fumigation.

Did you know that there can be benefits to allowing your tenants to keep pets? Discover them here.

Rent increases and rent bidding

The proposed changes also include prohibiting rent bidding, with landlords and property managers unable to encourage tenants to offer more than the advertised rent. Tenants will still be able to offer more than the advertised price if they choose to. To facilitate this change, rents will need to be advertised as a fixed amount, not a range.

Of the changes, Cath Hart, CEO from REIWA says “We understand the difficulties facing tenants at the moment and that the Government needs to strike a balance between investors and tenants. While rent bidding is not a significant issue among properties managed by REIWA 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.”

The Government is also hoping to ease the financial pressure on renters by limiting rental increases, which are currently allowed once every six months, to once every 12 months. Commerce Minister Sue Ellery, who’s responsible for the changes, says that “prohibiting rent bidding and reducing rent increases to once a year will help ease the financial burden on many families”.
Both of these changes will see WA’s rental laws fall in line with those of other states nationally, including NSW, the ACT, and Vic.

What these changes could mean for investors

Research undertaken by Melbourne’s Australian Housing and Urban Research Institute (AHURI) late last year found ‘little evidence that Australian residential tenancies law [had] impacted investment in private rental housing’, instead finding that Australia’s private rental sector had grown further in response to ongoing developments in the regulation of residential tenancies across the country. Though regulatory changes are happening on an uncoordinated, state-by-state basis, the overall effect is the improvement of rental conditions for tenants, which in turn increases the appeal of entering the rental market for prospective renters, driving up demand for rental properties.

Ms Hart has welcomed the changes and commended the Government for recognising the need for legislation that creates an environment conducive to investment while balancing the needs of tenants. She describes how “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”

Do you have an enquiry about the changes to WA’s tenancy laws? Get in touch today.