In July 2024, new laws will bring changes that may impact tenants, property owners and investors in Western Australia. We explain what you need to know.
Phase 2 of the Residential Tenancies Act amendment, recently passed by the WA Parliament, will come into effect on 29 July 2024. These changes will focus on three key areas.
Rent increases limited to once every 12 months
Until now, property investors in WA have been able to raise rents every six months. This has been especially valuable over the last two years, which has helped investors offset some of the additional interest costs we have seen the Reserve Bank impose through a string of rate hikes.
However, from 29 July, investors in WA will only be able to increase rents once every 12 months. This applies to periodic lease agreements (with no end date) as well as fixed term lease agreements signed on or after 29 July 20241.
Six month rent increases included within fixed term lease agreements signed before 29 July 2024, will be able to proceed. The minimum 12-month timeframe between rent increases will apply once the current fixed term agreement ends2.
Pets
Pets can be a divisive issue among property investors, and while the new laws require tenants to formally apply to keep a pet on a rental property, investors can only refuse if it is ‘reasonable’ to do so. This may be the case, for instance, if the property doesn’t have pet-friendly fencing. Investors can also refuse pets where it would contravene a law, including a strata by-law.
An investor can also impose ‘reasonable conditions’ around keeping pets, such as limiting the number of pets, or requiring pets to be kept outside. The property owner can also set rules around cleaning and maintaining the property in relation to keeping a pet.
A pet bond can be used in addition to the regular bond to clean or repair any damage a pet leaves behind. However, the Real Estate Institute of WA advises that while the scope of the pet bond will be increased to cover damage, this will not come into effect until the new bond disposal process is enacted in early 2025.
Rules around tenant modifications
From 29 July, tenants will be able to make ‘minor modifications’ to a rental property provided they have the investor’s permission.
The regulations specify the following minor modifications that tenants can do themselves:
- Picture hook
- Screw for a wall mount, shelf, or bracket
- Wall anchoring device, e.g. for tv or furniture
- Water-efficient shower heads and hand-held shower heads
- LED light bulbs that do not need new fittings
- Window coverings, e.g. curtains or blinds
- Curtain or blind cord anchors
- Adhesive child safety lock on a drawer or door
- Pressure mounted safety gate
- Child safety device on window
- Lock on letterbox and gates – the landlord may ask for a set of the keys
- Wireless doorbell
- Vegetable or herb garden
- Flyscreens on doors and windows
- Draughtproofing.
For other modifications, investors can require the work to be completed by a qualified tradesperson without Commissioner approval. These modifications are:
- Lever style taps
- Phone or internet connections
- Painting a room
- Non-permanent window film
- Security lights, alarms, or cameras – the landlord can ask the tenant to provide the code for alarms.
A condition may be set for the tenant to supply a copy of the invoice for the work completed.
REIWA strongly advocated for a requirement that painting be performed by a professional, so it is positive news for investors that this condition has been included in the regulations.
It is worth stressing that if a modification is on the list of ‘allowable changes’, an investor can only refuse permission if it goes against strata rules, could disturb asbestos, or breaches a heritage listing.
Outside of these possibilities, an investor can only say ‘no’ to modifications if good reasons can be demonstrated to the Commissioner for Consumer Protection. As a guide, this could include changes that make the home unsafe, result in higher maintenance costs, or if the cost to repair or remove the modifications exceeds the bond.
At the end of the tenancy, the tenant must restore the premises, unless the investor or agent agrees for the modification to remain, for example, where a wall has been painted.
Talk to your Momentum team
While these new laws will indeed impact various aspects of tenancy agreements, it’s important to recognise that tenants will be responsible for restoring properties to their original condition. This means that although there may be new procedures to navigate, the overall impact on investors should be manageable.
Investors should be aware that they have 14 days to respond to and act on the tenant’s request for pets or minor modifications. A lack of response within this period implies consent. If a request is declined or the tenant disagrees with the conditions imposed, the tenant may contest the refusal or conditions by applying to the Commissioner. Either party will then have 7 days to appeal the Commissioner’s decision via the Magistrates Court.
It’s essential to understand how your rental property could be affected by the reforms. If you would like to discuss how these changes may impact your investments, please contact our property management team.
1, 2 WA Rent Reforms, Government of Western Australia, 2024