Queensland’s new tenancy legislation
New tenancy legislation being introduced in Queensland, following similar legislation being introduced in Victoria and New South Wales, favours tenants in a range of areas and potentially adds costs to an investment.
The reforms, introduced into Parliament earlier this year, could result in some landlords being forced to renovate their rental property if it doesn’t meet required standards.
If the legislation passes (and it would be a major upset if the Queensland Labor Government couldn’t push this through its unicameral parliament, with expectations that it will pass this year and come into effect in late 2022 or early 2023) things such as a working lock on every window and door in the property and window coverings (curtains) on all windows would be part of a set of minimum standards for a property. 
As with other states where rental legislation has been updated there has been movement on the contentious issue of pets in a rental property. Queensland landlords will fare marginally better with the tenant still needing to seek permission, but a landlord can only say no on certain prescribed grounds – for example, if the pet is too large for a small property, or if the property does not have suitable fencing – and if a landlord says no, the tenant can appeal to QCAT.
Where landlords have had small wins on the pet issue is around additional conditions they can include in the lease agreement. Landlords will now be able to require the property be fumigated at the end of the lease and can insist that pets be kept outside.
Also, there’s been a concession on pet damage and the fair wear and tear clause, and that’s that damage caused by a pet doesn’t fall under general wear and tear. So, if a tenant’s dogs scratch the floors, the tenant is unable to claim this as fair wear and tear. This will enable the landlord to access the bond for repairs to the floors, unless the tenant chooses to fix the damage.
The legislation also enables tenants to be able to make minor modifications to the property without approval. This is designed to cover things such as hanging pictures or adding furniture anchors. The legislation is deliberately grey around this issue in defining what is a minor modification and it will likely be tested in QCAT. It’s a source of frustration for landlords who know that properties can quickly deteriorate over things such as marked walls in every room where pictures were hung, or where nails were attached and either poorly patched or not patched at all upon vacating.
Probably the condition of most concern to landlords is the removal of ‘without grounds’ terminations of periodic leases. If a lease has moved beyond its original fixed term and becomes a rolling lease, or periodic lease, the landlord can not issue a notice to leave except in a few limited circumstances, including if they plan to sell, or if they plan to substantially renovate it (and it can’t be safely lived in during renovations) or if a close family member wants to move in. This condition will limit how landlords can manage their property, in some cases, forcing them to keep a tenant that they did not plan to keep.
However, landlords can issue a notice to leave to a tenant if the fixed term agreement is due to expire.
Tenants fleeing domestic violence will now also have the capacity to end the lease with seven days’ notice.
Tight markets need investors
The Queensland rental market, like other rental markets around the country, is very tight. In the southeast corner vacancy rates are around 1 per cent or lower. This means tenants are struggling to find accommodation and rents are under pressure to increase.
This is a clear indication that the region needs more rental properties – i.e. more investors to put property into the rental pool. But when legislative changes make it harder for landlords to run their investments profitably, they inevitably look elsewhere – the share market, for example.
There are many reasons why a person would choose to invest in property instead of other asset classes. Brick-and-mortar assets are trusted by Australians for good reason. Property has a reliable record of increasing in value and there are options to gear property negatively or positively. In addition, there are tax benefits to be had with property investments, such as depreciation.
It’s still time to invest
Even with new laws being ushered in over the coming years, the market in Queensland is performing strongly at present. Investors are in a good position to make substantial capital gains.
Looking into the crystal ball as best we can, it’s unlikely conditions will dramatically shift in the next few years, which means we’ll continue to see a tight rental market and strong demand for more rental properties.
One other consideration. Over the medium to long term, the market may benefit from the emergence of build-to-rent schemes. Queensland is seeing its first build-to-rent scheme launched, a Queensland Government pilot program designed to facilitate long-term rentals and, if a success, could result in more schemes of this nature being delivered.
Property remains one of the safest ways to build personal wealth and establish a retirement nest egg and property investing in Queensland is ripe with opportunity. It simply requires a little more navigating of the details, and more incentivising of investors.
Intuitive Finance – the smart choice
The world of banking and finance can be a pretty daunting one for both novice and sophisticated investors and since our establishment in 2002 we’ve focused on providing outstanding service and business standards.
This approach was vindicated when we were named Victoria’s Best Finance Broker at the 2017 Better Business Awards.
So if you’re considering investing in, or developing, property, why not contact Intuitive Finance’s Brisbane mortgage brokers today to ensure you have the right information and expert support on your side no matter what stage of the property ownership journey you are on.
The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.
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