Attention Landlords! Information you need to know…
29 September 2017
There have been some recent changes in the legislation to the Residential Tenancies Act 1997. To keep you informed of these changes we have outlined the amendments below:
Overview of changes to the Residential Tenancies Act 1997
The Residential Tenancies Legislation Amendment Act 2016 (the amendment Act) modifies the mechanism for releasing the bond money to allow an early opportunity for the resolution of any dispute before an application is made for release of the bond. The amendments include a new provision that puts a positive obligation on the lessor to provide to the tenant an application for payment of the bond money out of the trust account within 3 working days after the termination of the residential tenancy. If the lessor wishes to make a deduction from the bond, the lessor must include in the form the reason for the deduction. The intention of this provision is to give lessors and tenants a better opportunity to negotiate any claim on the bond by the lessor, particularly when operating in combination with new requirement for an end of tenancy condition report. The new provisions will explicitly allow the lessor to deduct the reasonable costs of re-securing a property where a tenant has failed to return keys to the lessor at the conclusion of the tenancy from the bond.
Please note: when submitting lodgements and refunds with ACT Rental Bonds:
- Where lessor/managing agent is claiming part of the bond, a copy of the invoice or reasonable cost quote is to be included with refund form.
- Disputed bond claims from Managing agents need to have the lessors details provided to ACT Rental Bonds i.e. Name and address for dispute correspondence to be sent to lessor also.
- Smoke Alarms
All leased residential properties will be required to have smoke alarms installed. JACS has received feedback from stakeholders that the new provisions about smoke alarms are unclear. As a result of this feedback the Government is proposing to restructure the provisions to remove the references to the building code. The new provisions will be set out in a regulation which will provide that leased properties will need to have a functioning smoke alarm that can be either battery powered or hard wired. The smoke alarms must be placed on or near the ceiling and at least one must be placed near a bedroom. The ACT Emergency Services Authority has developed a fact sheet on smoke alarms to assist landlords and property managers, which is attached. The factsheet notes that mains powered smoke alarms are preferable due to their better reliability.
The amendment Act includes transitional arrangements the effect of which are that all leased residential premises should have smoke alarms installed by the end of 12 months after the amendments commence. There is a corresponding obligation for the tenant to change the battery in the smoke alarm. The requirement applies to new tenancies from the commencement date, but for existing tenancies there will be 12 months to comply from the time of commencement. All residential rental properties will need to be compliant by 24 August 2018.
Tenants will be able to apply to the ACAT for an order to have smoke alarms installed under the specific performance provisions in the Residential Tenancies Act.
- New optional ‘break lease’ clause
The amendment Act adds a new optional ‘break lease’ term that a lessor and tenant may agree to include in the residential tenancy agreement. This term will specify the amount that the tenant must pay if they terminate a fixed term lease early and will provide greater certainty for both tenants and lessors. If the residential tenancy agreement contains a ‘break lease’ term, the lessor will not be eligible to apply to ACAT for compensation under section 84 in the event of early termination by the tenant.
- Break lease and Family Violence related reforms
Terminating a fixed term lease – significant hardship
The amendment Act clarifies that the significant hardship provisions in section 44 of the Residential Tenancies Act may be used to terminate a fixed term residential tenancy agreement where a protected person is living on the premises with the respondent to the protection order.
Significant hardship is determined by the ACT Civil and Administrative Tribunal (ACAT). If a tenant wants the ACAT to make an order under these provisions the tenant needs to file an ‘Application for Resolution of Tenancy Dispute’. If the tenant wants an urgent hearing an ‘Application for Interim or Other Orders’ form should also be filed. The ACAT will usually hold a hearing for an urgent order within 1–7 working days. The tenant may apply to the Magistrates Court for a Family Violence, Personal or Workplace protection order at the same time. Once an interim or protection order is made, the tenant will be a protected person for the purposes of the Residential Tenancies Act.
Lease Termination and New Leases for Protected Persons
In addition to the significant hardship reform at section 44 of the Residential Tenancies Act, there is also a new division 6.5A. This division makes it easier for a protected person under a protection order to apply to ACAT for an order:
- to terminate an existing residential tenancy agreement, or
- to terminate an existing residential tenancy agreement and require the lessor to enter into a new agreement with the protected person.
The ACAT may make the order if satisfied that:
- it is reasonable to make the order, taking into consideration the length of the protection order and the length of time remaining on the term of the existing residential tenancy agreement;
- it is reasonable to make the order, taking into consideration the interests of any other tenants (other than the respondent) under the existing residential tenancy agreement and, in particular, whether the other tenants support the protected person’s application.
Further, for an order terminating the existing agreement and requiring the lessor to enter into an agreement with the protected person and any other person, the ACAT may consider if:
- the protected person or the protected person’s dependent children would be likely to suffer significant hardship if the protected person were compelled to leave the premises;
- that hardship would be greater than the hardship the lessor would suffer if the order were made;
- the protected person and any other person mentioned in the application could reasonably be expected to comply with the terms of a residential tenancy agreement;
- if another person is mentioned in the application—the lessor has been given an opportunity to consider the person’s suitability as a tenant.
- If the ACAT makes such an order the new residential tenancy agreement must be subject to the same rent and frequency of rent payments as the existing residential tenancy agreement and run for a term not longer than the remainder of a fixed term agreement. The ACAT may also determine the liabilities of the respondent, the protected person or any other tenants under the existing residential tenancy agreement in relation to the bond paid under the agreement.
Changing the locks
Where a protected person remains in the rental premises, they may need to take practical measures to secure the property by changing the locks. The standard residential tenancy terms provide that the lessor or tenant may change locks in an emergency without the consent of the other party. However, the terms do not specifically refer to breakdowns in relationships between tenants or domestic violence and personal protection orders. The amendment Act includes a new provision in the standard residential tenancy terms so that a tenant or person residing at the residence who is a protected person under an interim or final order may change the locks. A copy of the key to the changed lock must be provided to the lessor or their agent as soon as possible.
- Fair clause for posted people
The amendment Act makes a change to the optional fair clause for posted people, increasing the period of required notice from 4 weeks to 8 weeks, and includes a requirement that the notice be accompanied by evidence of the fact that the relevant person has been posted either to, or away from, Canberra in the course of their employment.
- Energy efficiency information
There are also amendments directed at ensuring that tenants are better informed about the potential energy consumption costs, for example by adding a requirement that where residential premises do not have an existing energy efficiency rating, that this fact be included in any advertising for the lease of those premises. This new provision will complement the existing requirement that if there is an existing energy efficiency rating for residential premises, then this must be contained in any advertisement for the lease of the premises.
- Condition Reports
The amendment Act introduces provisions that will require an ‘exit’ condition report. This report compliments the requirement for an ‘entry’ condition report. This requirement has been introduced in order to help manage end of tenancy disputes about the condition of the premises. The lessor and tenant should both complete and sign the ‘exit’ condition report. The lessor or tenant may complete and sign the report of they have given the other party reasonable opportunity to be present when the report is completed and signed.
- Uncollected Goods
The amendment Act also introduces some changes to the Uncollected Goods Act 1995 aimed at clarifying uncertainty about the application of that Act to the storage and disposal of possessions left on premises at the end of a tenancy. There are a couple of scenarios under which goods may be left on rental premises by the tenant at the end of a residential tenancy agreement:
- the tenant has agreed with the relevant person (lessor/agent) that they will collect the goods at a later date; or
- the tenant has left the goods with no indication of when they will be collected.
The amendments to the Uncollected Goods Act clarify that the Act applies to goods that are ‘held’ as well as goods that are received. These amendments also ensure that where the goods left on the premises at the end of a tenancy are personal documents (e.g. passports, birth certificates and the like) they are dealt with appropriately. The Uncollected Goods Act currently provides that goods of this type may be disposed of by public auction after three months whereas the amendments will require personal documents to be disposed of only by returning them to the authority that issued the documents or, if that is not practicable, in a lawful manner that does not result in personal information about the owner of the document becoming publicly available. In addition, the amendment Act gives the lessor a right of access to the leased residential premises if the lessor reasonably believes that the premises have been abandoned.
- New Renting Book
The new renting book has been updated to reflect the amendments to the Act. A copy of the new book can be downloaded at https://www.revenue.act.gov.au/__data/assets/pdf_file/0008/1097333/The-Renting-Book-ACT-Government.pdf
If you have any questions regarding these changes, please do not hesitate to contact the office.