Landlords want ledger balanced on tenancy agreements

May 2002

The Real Estate Institute of South Australia is prepared to recommend changes to the Residential Tenancies Act following concern over a recent surge in the number of tenants seeking to break lease agreements.

While the real estate industry welcomes the Federal Government's continuation of the First Homebuyer's Grants, this financial windfall has been identified as one of the major reasons behind the growing trend in lease breakages.

"The $7,000 and $14,000 grants have enabled many tenants to break the rent cycle and step out to purchase their own home," said Real Estate Institute of South Australia President Barrie Magain.

"Many of the homes that were previously supplying rental needs have been purchased by first homebuyers and haven't been replaced on the rental market.

"This has led to an extremely tight rental market as low as one per cent in the inner suburbs - and led to the perception that it's an easy matter for a landlord to find a new tenant.

"Even though the existing tenant is aware they will have to foot the cost of advertising for a new tenant, they have the feeling that breaking a rental lease is no big deal."

According to Valerie Walsh, chairperson of the REISA Property Management Committee, the Act needs to better address the rights of landlords when it comes to the ease with which either party might seek to break a lease agreement.

"Currently the advantage lies with the tenant," Mrs Walsh said.

"Landlords have no option to break a lease agreement unless the tenant agrees to relinquish the property, or the tenant breaches the conditions of the lease through non-payment of rent or malicious damage.

"A tenant can appeal to the Tribunal to get out of the lease with far less red-tape and difficulty than card the landlord.

"There might well be tenants lining up for the property, but a good property manager will want to ensure he or she runs the correct checks to find the right tenant and that can take time.

"There's also wear and tear on the property associated with tenants moving furniture in and out. These issues aren't taken into account in the current format of the Act."

Mrs Walsh cited an example of the period of notice required to break a periodical lease on part of tenant and landlord.

"A tenant is required by law to give at least 21 days notice of their intention to vacate the property. The least amount of notice required by the landlord is 60 days and in some circumstances, 90 days," she said.

REISA President Barrie Magain said that despite the perception that most landlords fall into the highest income brackets, the majority of South Australian landlords only own one rental property and are on incomes of $45,000 or less.

"Their real estate investment is their nest egg for the future," Mr Magain said.

"Contrary to popular opinion, landlords aren't all money-hungry, wealthy individuals preying on tenants."

A review of the Residential Tenancies Act last took place in 1995. However, the institute believes there have been substantial changes since that time and, further amendments to the Act are warranted.