Private Property issue #140 - New tenant rules

Last week, the government changed the tenancy laws. Big changes are coming at the end of January.

Some of these new rules work for landlords. Some work for tenants. Here's a breakdown of the new rules:

#1 – Property investors (basically) have to allow pets

Coming in: late 2025

Soon, property investors can charge a pet bond.

That means if a tenant has a pet, you get more protection. If the pet causes damage, there’s more money available to fix the issue.

But here’s the kicker.

Tenants can only have a pet if the investor agrees to it in writing.

But landlords now can’t unreasonably refuse pets.

In the past, if you didn’t want a pet in your rental, you could say no.

Now, if your tenant wants a pet … and you say ‘no’ … you have to give a reason why. And your answer must be ‘reasonable’.

That leads to the big question: "What's a valid reason?" 

You can point to the species or breed of the pet the tenant wants. You can point to its size or the number of pets, too.

So, let’s say you own a 3-bedroom townhouse. It’d be reasonable (in my mind) to say: “The house is too small for a golden retriever. So I won’t approve that.”

But it’s probably unreasonable to say to a tenant, “You can’t have a cat.”

This ew law forces investors and tenants to reasonably discuss pets. So, I see these rules as a good thing.

#2 – "No cause" terminations are back

Coming in: January 30, 2025

The previous government removed “no cause” terminations. This was controversial.

No-cause terminations are your get-out-of-jail-free card as a property investor.

Let’s say you have a bad tenant. They’re causing the neighbours a lot of hassle. So, you want them to leave.

Under the current rules, you need to give 3 examples (with evidence) over a 90-day period of their bad behaviour. Only then can you ask the tenants to leave.

It’s a faff around.

The rules simplify this. If a tenant acts in bad faith, you can give 90-day’s notice and move on. This rule change lowers your risk as a property investor

#3 – Tenants only have to give 3 weeks' notice when leaving

Coming in: January 30, 2025

Right now, your tenant has to give 4 weeks' notice when they leave. That’s if they are on a periodic (open-ended) tenancy.

This is going down to 3 weeks.

This is fair. If the government gives investors more freedom, tenants should have freer rules, too.

This might sound scary.

But remember that your new tenants can move in faster, too. Rather than giving their landlord 4 weeks' notice for their current place. They’ll be at 3 weeks too.

So yes, your current tenants can leave more quickly. But your new tenants can move in faster, too.

#4 – Fixed-term contracts won’t automatically become periodic anymore

Coming in: January 30, 2025

For the last few years, fixed-term tenancies … haven't been fixed at all.

If a tenant signed a contract to stay for a year, at the end, they could stay forever.

They’d automatically roll into a periodic tenancy (which is open-ended). That’s unless they signed another fixed-term contract.

From early next year, once a fixed term ends, you can give your tenants notice to move out.

This gives you more control over who lives in your property.

How will this impact property investors?

These changes go both ways.

There are positives for landlords. And there are positives for tenants, too.

But the overall news is positive.

As we wrap up 2024, these changes signal a more balanced future for landlords and tenants.