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How changes to the Residential Tenancies Act will affect investors

Wednesday, 5th Jun 2013

legislation

What are some of the more important changes to the Residential Tenancies Act and how they will impact on landlords?

Renting in Western Australia is governed by the Residential Tenancies Act 1987 (The Act). After a recent comprehensive review by the Department of Commerce, many of these laws will change as of the 1st of July this year.

Over the coming months we will discuss some of the more important changes and, specifically, how they will impact on landlords.

Making changes to a residential tenancy agreement

Previously, the owner/agent and tenant could agree not to comply with specific sections of the Act, as long as the tenancy agreement is in writing and signed by both parties. This process of ‘contracting out’ was discouraged but allowed if all parties understood the changes.

Any tenancy agreements entered into from July 1 must use a prescribed tenancy agreement and the clauses in a prescribed tenancy agreement will not be able to be altered.   You can add additional clauses into a residential tenancy agreement (Part C), but only if these additional clauses don’t diminish or detract from the prescribed agreement or attempt to ‘contract out’ parts of the Act.

For existing residential tenancy agreements entered into before July 1, which contain clauses that ‘contract out’ parts of the Act, the contracting out will continue to apply, but only for the term of that agreement.

Property condition reports

Previously it was strongly advised that a property condition report (PCR) be prepared at the start and end of a tenancy agreement. From July 1, this will be made compulsory.

At the beginning of the tenancy, 2 copies of the PCR must be given to the tenant within 7 days of them moving in. If the tenant disagrees with the contents of the PCR, they have 7 days from receiving the PCR to mark any changes on both copies and then send one copy back to the agent. If they don’t send anything back, they are considered to have agreed with the one you gave them.

At the conclusion of a tenancy, the tenant must be given reasonable opportunity to be present at the final inspection and must receive an updated PCR within 14 days.

Rent increases when you renew a fixed term tenancy agreement

Currently, if a fixed-term tenancy agreement reaches the end of the fixed-term and both parties wish to renew, all conditions including the rent can be renegotiated at the time of renewal. This means that a rent increase could take effect from day one of the renewed agreement.

From July 1, if a fixed-term agreement is being renewed, the rent cannot be increased in the first 30 days after the new agreement begins.

We’ll discuss more changes next month.