The Real Estate Institute of Western Australia (REIWA) has expressed deep concern over the State Government's plan to include no grounds terminations in the upcoming review of the Residential Tenancies Act 1987.
REIWA's Stance
REIWA President Suzanne Brown clarified that the objection to removing no grounds terminations is not about being anti-tenant or pro-landlord. Instead, it focuses on ensuring the viability of Western Australia's rental market.
According to REIWA, the rental market across the state has not fully recovered from the mass exodus of investors following the COVID-19 pandemic. A further drop in supply would see vacancy rates fall and competition for available properties intensify, putting more upward pressure on rent prices.
Impact on Investors
REIWA acknowledges that this reform is important to investors, who are also facing changes to capital gains tax discounts and negative gearing by the Federal Government. Many REIWA members are already reporting an increase in sales by investors. Every rental property lost is a blow to tenants and rental affordability.
Policy reforms must be based on market evidence to have a real impact. In a delicately balanced market, this reform could do more harm than good, ultimately hurting tenants through fewer options and higher rent prices.
Beyond Supply Concerns
REIWA's concern is not limited to supply reductions. Even without changes to supply, the reform would increase investor risks and costs, which would be detrimental to tenants.
Removing no grounds terminations would reduce investors' options for dealing with tenants who breach agreements or behave in ways that make the relationship unworkable. This could lead to a significant increase in breach notices and subsequent court hearings, as this would become the only means of removing problematic tenants.
The cost of anticipating and dealing with these breaches will be material. There will also be a shift towards more intensive screening of tenants by property managers and owners, adding costs to the letting process and making it harder for people with poor or no references to find a rental property. Rent prices are likely to rise in response to the increased risks and costs to investors.
Long-Term Consequences
In the long term, there will be no winners with this reform. It will introduce more costs to the system, which will be borne by investors, taxpayers, and tenants.
Regarding other reforms announced, REIWA is broadly in favour of minimum standards for rental properties and clarifying the information tenants could be asked to provide, as well as what owners and property managers are required to provide tenants.
REIWA will continue to advocate strongly to ensure any reforms are workable, balanced, and introduce as little friction into the rental market as possible.
