SA’s rental reforms impact investor tenancy terminations

Dec 2023Karen Millers

South Australia has introduced the “biggest overhaul” of the state’s rental laws since the introduction of the Residential Tenancies Act in 1995, Andrea Michaels MP declared.

The primary goal behind these reforms is to enhance tenant security, particularly in light of record low vacancy rates, while ensuring that landlords’ rights remain protected.

The bill to amend the Residential Tenancies Act 1995 will, among other things:

  • Introduce prescribed grounds to terminate or not renew a tenancy.
  • Extend the notice period to end a tenancy from 28 days to 60 days.
  • Allow tenants to have pets in rental homes with reasonable conditions.
  • Protect tenants’ information.
  • Ensure rental properties comply with minimum housing standards.
  • Provide additional support for victims of domestic violence.

Under these reforms, landlords will now be permitted to terminate a periodic tenancy or opt not to renew a fixed-term lease only for specified reasons, including tenant breaches, property sale, renovation, or owner occupancy.

Furthermore, the minimum notice required to end a tenancy will be extended from 28 to 60 days. This adjustment aims to provide tenants with more time to secure alternative housing arrangements.

It coincided with a spout of rental reforms in other jurisdictions including Victoria and Queensland.

PIPA chair Nicola McDougall expressed concern that despite the government’s assurances of protecting investors’ rights, the prescribed grounds for terminating tenancies may adversely impact landlords, potentially leading to more property sales in South Australia.

“Rather than creating more protections for tenants, this will likely see more investors sell in South Australia, which will further deplete the supply of rental properties available in that state,” Ms McDougall said.

While findings from the 2023 PIPA Annual Investor Sentiment Survey initially indicated that South Australia was viewed as the most investor-friendly state, Ms McDougall highlighted that the sentiment might change due to the removal of ‘no grounds’ evictions, causing many investors to feel a loss of control over their assets.

“In fact, this year’s survey found that 43 per cent of respondents cited changing tenancy legislation impacting their control and increasing their compliance and holding costs as one of the main motivations for selling their investment properties,” Ms McDougall said.

“About 7 per cent of respondents said they had sold at least one investment property in South Australia in the past year.”

On the other hand, REBAA SA State Representative Jess Elam believes that the reforms will not significantly dampen investor interest in the state.

Ms Elam argued that the reforms maintain the core reasons for terminating a lease, focusing on breaches, property use changes, and necessary renovations.

She contended that these reasons are frequently cited by landlords for lease termination and emphasised that the reforms aim to strike a balance between tenant rights and landlord interests by introducing specific grounds for termination.

“These subtle differences maintain a balance between tenant rights and landlord interests,” Ms Elam said.

Tenants will be also allowed to keep pets in rental properties in South Australia with reasonable conditions to be set by their landlord such as keeping the animal outside or having the carpets cleaned at the end of the tenancy.

Ms Elam suggests that many landlords are open to this idea, especially if the pet’s previous behaviour in other residences was positive and a formal pet agreement can be established.

Originally Published: Kate Aubrey | Mortage Business | 7 December 2023

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