From 6 June 2024, the Contract for Houses and Residential Land (19th edition) and the Contract for Residential Lots in a Community Titles Scheme (15th edition) have been amended to reflect the new tenancy laws within the Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Act 2024.
These amendments include the following obligations on the Seller of a residential property:
- To disclose whether the property has been subject to a Residential Tenancy Agreement or Rooming Accommodation Agreement at any time in the 12 months preceding the Contract Date;
- To disclose the day of the last rent increase in the Contract;
- To provide evidence of the day of the last rent increase at Settlement; and
- To provide warranties that the information supplied to the Buyer regarding a Residential Tenancy Agreement or Rooming Accommodation Agreement is true and correct
Why have these amendments been made?
The amendments reflect the recent changes to Queensland tenancy laws within the Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Act 2024.
Namely, the imposition of a 12 month ‘rent limit’ for rent increases to a rental property. Landlords are restricted from increasing the rent payable over a property within 12 months from the last rent increase. This applies to the property itself and not to specific tenancies.
Tenants are now entitled to request that the landlord, or agent, provide evidence of the day that the rent was last increased for the rental property. The Landlord will be liable for penalty units for failing to provide evidence of the last rent increase within 14 days from receiving the request and if a rent increase is made less than 12 months since the date of the last rent increase.
The changes to the REIQ Contracts help to ensure that the Buyer is clearly aware of the last rent increase date and will not be in breach of the tenancy laws if they impose a rent increase after settlement.
What is a ‘Residential Tenancy Agreement’ and a ‘Rooming Accommodation Agreement’?
A Residential Tenancy Agreement is defined in the Residential Tenancies and Rooming Accommodation Act 2008 as ‘an agreement under which a person gives someone else a right to occupy a residential premises as a residence’. This applies whether the agreement is in writing, wholly oral or wholly implied.
A Rooming Accommodation Agreement is defined in the Residential Tenancies and Rooming Accommodation Act 2008 as being an accommodation occupied by residents in return for the payment of rent.
Each of the residents:
- Has a right to occupy 1 or more rooms; and
- Does not have a right to occupy the whole of the premises; and
- Does not occupy a self contained unit; and
- Shares other rooms, or facilities outside of the residents rooms, with 1 or more of the other residents.
The above definitions are quite broad and Sellers should be aware that a ‘Residential Tenancy Agreement’ or ‘Rooming Accommodation Agreement’ is not limited to a traditional Landlord/Tenant dynamic. This may include renting to friends, family etc. Sellers should discuss any instances of an occupant of the property paying any form of rent with their sales agent or conveyancer before signing a Contract.
What evidence of a last rent increase must be supplied?
Examples of evidence of the day of the last rent increase include:
- a copy of a previous residential tenancy agreement for the premises
- a written rent increase notice for the premises
- a copy of the rent ledger for the residential premises
It is essential that Sellers provide the above evidence to their conveyancer prior to the Settlement Date.
A failure to provide evidence of the last rent increase by the Settlement Date will entitle the Buyer to terminate the Contract.
Are there are any exemption to these rules?
The new laws do allow for some exemptions to the disclosure and 12 month rent limit such as:
- If the Landlord receives funding for the premises under the Housing Act 2003 if the amount of rent payable for the premises is determined by household income (e,g. a community housing provider or a specialist homelessness service)
- The Landlord receives funding for the premises that is the subject of a funding declaration under the Community Services Act 2007 if the amount of rent payable for the premises is determined by household income; or
- The Landlord is the chief executive of the housing department, acting on behalf of the State; or
- The Landlord is the State and the tenant is an officer or employee of the State; or
- The Landlord is the replacement lessor under a community housing provider tenancy agreement; or
- The Landlord is prescribed by regulation to be an exempt lessor.
Key Takeaways
Before signing a Contract of Sale, Seller’s should be mindful of the following:
- Has the property been subject to a Residential Tenancy Agreement or Rooming Accommodation Agreement at any time in the 12 months preceding the Contract Date?;
- Consider the broad definitions of Residential Tenancy Agreements and Rooming Accommodation Agreements and discuss any concerns with your conveyancer;
- Identify the day of the last rent increase and ensure it is disclosed in the Contract;
- Prepare evidence of the day of the last rent increase and provide it to your conveyancer before Settlement; and
- Consider the warranties supplied to the Buyer regarding a Residential Tenancy Agreement or Rooming Accommodation Agreement, in particular, their ability to claim compensation if any information is false.
Buyers of residential property, particularly those looking to use the property as an investment, should be mindful of the 12 month limit on rent increases before signing a Contract.
For more information on these REIQ contract changes, please contact James Dorman on (07) 3233 2910 or by email at james@plastiraslawyers.com.