Tenancy Reform Bill One Step Closer to Becoming Law – Will an Owner still be able to terminate a lease?

 Remember those Proposed Tenancy Reforms we talked about over the last couple of years?

Well the Bill is now before the QLD Parliament!

The Community Support and Services Committee has now published its Report into the Housing Legislation Amendment Bill 2021 recommending that the Housing Legislation Amendment Bill 2021 be passed. This Bill is presently before Parliament for debate and could be passed before the year is out.

In this series of updates on the reforms “Qld Tenancy Reforms – What An Investment Owner Needs to Know” by the Property Management Team at Clark Real Estate we provide interested investors with some further detail on these proposed reforms. We’ll keep you up to date with the progress of the Bill through Parliament, crucial info you need to know and when the changes are due to come into effect.

Removal of “Without Grounds” Terminations of Tenancies.

One major policy of the current government, which has been a point of contention between tenants and investment property owners, is the provision of an expanded suite of additional approved reasons for lessors/providers and tenants/residents to end a tenancy.

Initially, the proposal was to remove the ability of an owner to terminate a tenancy “without grounds” altogether. For owners, this caused some angst facing the prospect of a fixed term contract turning into a perpetual lease unless one of a limited number of circumstances arose such as wanting to sell or move into the property themselves. Understandably, investors were left feeling as though control of their asset was slipping into the shallow end of a social housing pool.  However, a change has been made so that ‘without grounds’ terminations were still removed but an additional ground added for termination if a fixed term tenancy is due to expire. The relief from owners is audible.

The Queensland Law Society highlighted what investors were arguing,  ‘This is consistent with the fundamental nature of a contract, under which the parties reach agreement at the outset that the contract is for a specified period”.

So the new proposed grounds for termination are:

  • fixed term tenancy agreement is due to expire
  • the premises is to be vacated so that redevelopment (eg conversion from a house into flats) or demolition of the property can be undertaken
  • the premises is to be vacated to allow significant repair or renovation works to be undertaken
  • the premises is subject to a change of use (such as changing from long-term accommodation to short stay accommodation or holiday lettings)
  • the owner or their immediate family needs to move into the premises
  • the premises has been sold and vacant possession is required
  • the premises is to be vacated so that it can be prepared for sale.
In each case, the lessor would be required to give the tenant two months’ notice. However, a fixed term agreement could not be ended before the contracted end date, unless the tenant agrees.
There are also penalties for providing false reasons, restrictions on who are deemed ‘immediate family’ and an inability to rent the premises for a 6 month period after ending a tenancy on the grounds the property was to be sold, change of use or owner occupation. (Housing Legislation Amendment Bill, cl 56, 58, 59, 61, 63, 76, 77 and 80 and cl 88)
It still leaves the question though, how are periodic tenancies to be handled? The very nature of a periodic tenancy is a rolling tenancy. Arguably, the proposed legislation does not sufficiently provide for ending a periodic tenancy which could lead to an unintended consequence of creating a lease in perpetuity. The Committee has recommended that the Department “maintain a close watching brief on the impacts, intended and otherwise” and to collect data on how leases are managed and ended.
We will explore this in more detail in an upcoming update as it may affect the way owners approach a request by a tenant to move onto a periodic tenancy.
Keep an eye out for more information!
At Clark Real Estate we provide a complete property management service focusing on Integrity, efficiency, and communication. Our mature, experienced, and competent property management staff will provide you with honest consultation and make sure your needs are always met. With 98% of tenants paying in advance, maintenance completed within 21 days, and less than 2% of our properties vacant at any time (recorded 0% last quarter) we can guide you in your landlord journey.  
If you want to discover the difference, call us on (07) 3256 1600.