Tenancy Law Changes - Rent Increases & Ending Tenancies

CHANGES COMING INTO EFFECT ON 1st JULY 2023

On 18th April 2023, the Deputy Premier verbally introduced amendments to the Residential Tenancies & Rooming Accommodation Act 2008 (RTRA Act) & Regulation. Despite no stakeholder, industry or committee consultation, the Bill passed on the same date. The changes to the law introduced will affect rent increase provisions as well as amending other provisions in the RTRA Act.

In response, here are some FAQ's from the Real Institute of Queensland (REIQ).

1. WHAT IS THE NEW MINIMUM PERIOD FOR A RENT INCREASE?

From 1st July 2023, rent cannot be increased within 12 months from:
• the day the rent was last increased; or
• the first day the tenant was required to pay rent under the tenancy agreement.

This will apply regardless of when the tenancy agreement started. They will also apply if the same tenant renews or enters into a new tenancy agreement for the same property. For example, if the tenant was on a 6-month tenancy agreement and  renewed this agreement, the rent could not be increased within 12 months from the day the rent was last increased or the first day the tenant was required to pay rent (being the first day of the previous tenancy agreement).

2. WHAT NOTICE MUST BE GIVEN TO INCREASE RENT?

If the lessor wishes to increase rent, a written notice must be given to the tenant. The notice must state the amount of increased rent and the date the increased rent becomes payable.

This date must not be earlier than the later of:
• 2 months after the day the notice is given to the tenant under a residential tenancy agreement;
• 4 weeks after the day the notice is given to the tenant under a rooming accommodation agreement;
• the end of the minimum period.

This means that a notice cannot require rent to be increased before the end of the minimum period of 12 months. The REIQ’s best practice is to issue the notice at least 2 months’ before the expiry of the minimum period so that the rent increase can take effect from the next date.

3. ARE SPECIAL TERMS REQUIRED TO ALLOW FOR THE RENT INCREASE?

The requirements under s91(7) have not changed. This means that rent under a fixed term agreement may not be increased before the term ends unless:
• the agreement provides for a rent increase; and
• the agreement states the amount of the increase or how the amount of the increase will be worked out; and
• the increase is made under the agreement

4. WILL RENT INCREASE TERMS IN EXISTING AGREEMENTS OR RENEWALS BECOME INVALID?

Yes. The transitional provisions that were introduced provide that if a term of a residential tenancy agreement or rooming accommodation agreement in effect on 1 July 2023 is inconsistent with these new provisions, regardless of when the agreement was entered into by the parties, the term is void to the extent of the inconsistency. This means that from 1st July 2023, you cannot increase rent under the terms of an existing agreement unless the rent increase will become payable after the end of the minimum period of 12 months (refer to Q1). This will also apply to tenancy renewals.

5. IS THERE A NEED TO VARY THE TERMS OF THE EXISTING TENANCY AGREEMENTS?

The transitional provisions state that terms will only be invalid to the extent they are not consistent with the new provisions. This means that there may be parts of the rent increase terms that are not void. In some cases, a formal variation may not be necessary however lessors and their agents should seek legal advice about any variations that might be needed.
For renewals, if you issue a new tenancy agreement to a renewing tenant and it contains an invalid rent increase, lessors should seek legal advice about how to validly vary that tenancy agreement.

6. WHAT IF THERE IS A CHANGE OF PARTIES?

These provisions are not affected by a change of lessor (i.e. the property being sold), lessor’s agent, or if a co-tenant is removed from the tenancy agreement. These requirements will continue to apply.

7. DO THESE CHANGES AFFECT HOW MUCH RENT CAN BE INCREASED?

No.

8. WHAT CHANGES HAVE BEEN MADE TO ENDING TENANCIES?

As part of the changes, s277 of the RTRA Act has been amended. These changes will also apply from 1st July 2023. If a Form 12 Notice to Leave or Form 13 Notice of Intention to Leave to end a tenancy agreement under a prescribed ground is issued, a residential tenancy agreement will only end if the tenant has handed over possession of the premises on or after the handover date. This means that if a tenant does not vacate the premises by the handover date, the tenancy agreement will not end.
For example, a Form 12 Notice to Leave is issued to a tenant to end a fixed term tenancy agreement. The handover date is 10th August 2023, however the tenant does not provide vacant possession by this date. The tenancy agreement will not end until such time that the tenant gives possession of the property back to the lessor or lessor’s agent.

9. WHAT HAPPENS IF THE TENANT DOESN’T LEAVE ON THE HANDOVER DATE?

The lessor or lessor’s agent may only be able to end the tenancy by making an application to QCAT under s293 or s294 of the RTRA Act for a termination order. This application must be made within 2 weeks after the handover day.
The lessor or lessor’s agent may only be able to retake possession of the property by obtaining a warrant of possession under s350 of the RTRA Act. If this is necessary, the tenant may potentially stay in the property for several months until a warrant of possession can be carried out.

10. WHAT IF THERE IS ANOTHER TENANT READY TO MOVE IN OR THE PROPERTY HAS BEEN SOLD & SETTLEMENT HAS BEEN SCHEDULED?

Unfortunately, if the tenant decides to move out after the handover date, this will impact any new tenancy for the property or if the property has been sold, it may delay settlement. If a new agreement is already entered and you cannot give vacate possession of the property to the new tenant, this will be a breach of the new tenancy agreement. If the lessor has sold the property and settlement is impacted because the lessor cannot give vacant possession, this may put the lessor in breach of their contract and at risk of termination. The lessor should seek legal advice about their rights under the contract as well as their rights against the tenant/s.

11. DOES THIS APPLY TO A NOTICE TO LEAVE BEFORE 1st JULY 2023?

It is difficult to determine how the transitional provisions will work due to the limited drafting of the new s576 of the RTRA Act. The changes to s277 will not affect the ending of a residential tenancy agreement on a day before 1st July 2023, if the notice is given and the tenant has handed over vacant possession. It is not clear how the provisions will apply to notices issued before 1st July 2023 where the end date is after 1st July 2023. It is not clear if these provisions will apply to notices issued before 1st July 2023 with an end date before 1st July 2023 however the tenant has not handed over vacant possession. These matters will not become apparent until they are tested in QCAT and a determination is given. The REIQ will ensure that this will be updated once this information comes to hand.

 

These FAQ's are general advice only and should not be taken as legal advice.

 

 

 

 

 

 

 

 

 

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