The biggest changes to tenancy law in a decade - what they mean for property investors

The government has made the biggest changes to tenancy laws in a decade. 

They just came into effect on January 30th (the day this article goes live).

As a property manager, these are the biggest changes to the Residential Tenancies Act (RTA) I've seen in years.

Most of these new rules favour landlords. But, some also favour tenants.

In this article, you'll get a breakdown of the new rules, when they come into effect, and how they impact you as a property investor.

What are the new tenancy laws?

Here's what you can expect to see change in 2025. 

#1 – "No cause" terminations are back

Coming in: January 30, 2025

You can now ask your tenant to move out without giving a reason.

You send them an email or letter, give them 90 days' notice, and they move out.

Remember, the previous government stopped property investors from using "no cause" terminations. This was controversial. Because no-cause terminations are your get-out-of-jail-free card as a property investor.

Let's say you have a bad tenant on a periodic tenancy (so, no fixed end date). 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) of their bad behaviour over a 90-day period. 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. Importantly, you can use this rule for all periodic tenancies. This rule applies to tenancies that are already in place. 

This lowers your risk as a property investor.

Just keep in mind that you can only use this rule on a periodic tenancy. You can't use this to ask a tenant to leave in the middle of a fixed-term tenancy. That's one where both you and the tenant have agreed that they can stay there for a set time (e.g. 12 months).

But, tenants do still have some protections - you can't use these new rules for revenge.

That's because of the "retaliatory notice" rules. 

Basically, these rules say if your tenant stands up to you, within their rights, you can't evict them to "make the issue go away".

So, let's say your tenant asks you to fix the broken front door of the property. But you, the landlord, don't fix it.

That tenant is within their rights to take you to the Tenancy Tribunal. And you'll probably get fined.

Now, that makes you salty, so you try to evict them to "teach them a lesson". In this instance, they can take you back to the Tenancy Tribunal. They'll cite the "retaliatory notice" clause and say you're just doing that for revenge. The fine for that is up to $6,500.

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

Coming in: January 30, 2025

Before the rule changes, your tenant had to give 4 weeks' notice when they leave. That's if they are on a periodic (open-ended) tenancy.

This is now down to 3 weeks.

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

But it might sound scary.

Remember, 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.

More from Opes:

• How long does it take to find a tenant? (Article)
• Property managers - everything you need to know (Article)
• How much does property management cost? 5 hidden costs revealed? (Article)

#3 – 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, they could eventually stay forever.

That's because fixed tenancies automatically roll into a periodic tenancy (which is open-ended). 

That's unless they signed another fixed-term contract. (Or you had very specific reason to end the tenancy).

Now, once a fixed term ends, you can give your tenants notice to move out without needing a reason. 

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

You must give the notice of 21 days (3 weeks). Though, there is a 90-day 'ease in' period. So, this part of the rule won't come into place until June. That's to give tenants enough time to adjust to the rules. 

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

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, an extra 2 weeks of rent is available to fix the issue. That's if you decide to charge it.

Tenants are fully liable for all pet-related damage beyond fair wear and tear.

The interesting part I've found is that the pet bond doesn't only have to be used for pet damage.

So, if your tenant has a cat, who's a model citizen, but its owners don't pay rent … then you've got up to 6 weeks of bond to claim from.

I tell you, we have a lot more issues with unpaid rent than we do pet damage.

But here's the kicker … landlords now can't unreasonably refuse pets.

In the past, if you didn't want a pet in your rental, you could generally/usually 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 animals. You can also argue whether they are suitable to the specifics of your property.

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."

However, that's just my view. Expect to see this tested at the Tenancy Tribunal. Once a few cases go through, we should get a better idea of what the Tenancy Tribunal considers reasonable.

This new law forces investors and tenants to discuss pets reasonably. So, these rules are a good thing. 

Pet bonds and these changes don't have a start date. This is held off until the bond centre can update its computer systems.

When do these changes come in?

Apart from pet bonds, all these changes are in force as of January 30, 2025.

Here's the most important part: The changes apply to nearly all existing tenancies.

Whereas previously, most law changes would apply to new contracts signed after January 30. 

However, there is a 90-day ease-in period for fixed-term contracts. 

So, you can't slap your tenants with a 21-day notice and say "3 weeks and you're out" on January 31st.

You can give your tenants 3 weeks' notice starting from 12 June 2025. That's when the 90-day' ease-in' period ends.

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 for the rental market. As 2025 is just getting started, these changes signal a more balanced future for property investors and tenants.