Legislative amendments to affect the issuing of Notices to Leave from 1 October 2022

The Housing Legislation Amendment Act 2021 (Qld) (HLAA) will introduce various amendments to the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRAA), Residential Tenancies and Rooming Accommodation Regulation 2009 (Qld) (Regulations) and the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020 (Qld) (COVID Regulations).

Critically, the HLAA implements significant changes to the manner in which a Form 12 Notice to Leave may be issued in respect of a residential tenancy agreement.

Property managers and sales agents alike should familiarise themselves with the new legislative provisions prior to the changes coming into effect on 1 October 2022.

Issuing a Form 12 Notice to Leave after 1 October 2022

Amended notice periods

The HLAA introduces new notice periods which will apply when issuing a Form 12. The new notice periods which will take effect from 1 October 2022 will be set out in the new Schedule 1 of the RTRAA.

Relevantly, the RTRAA will no longer allow a Form 12 to be issued on a 'without grounds' basis.

However, new grounds for the issuing of a Form 12 are to be introduced and will include:

• demolition or redevelopment (2 months and not before end of fixed term);
• significant repair or renovations (2 months and not before end of fixed term);
• change of use (2 months and not before end of fixed term);
• ending of entitlement to student accommodation (1 month);
• State government program (2 months and not before end of fixed term); and
• owner occupation (2 months and not before end of fixed term).

Where the property is to be sold, the notice period will increase to 2 months (having previously been 4 weeks) and, where the property which is to be sold is subject to a fixed term tenancy agreement, the handover date stipulated in the notice must not be before the end date of the fixed term.

Periodic agreements

Following the commencement of the new legislation, a Lessor's ability to bring a periodic tenancy to an end will be far more onerous given the removal of the right to end a tenancy 'without grounds'.

Therefore, where a property manager has, under their management, a rental property which is currently subject to a periodic agreement, the property manager should take early steps to seek their Lessor clients' instructions as to whether they wish to:

• require the tenant(s) to now enter into a fixed term agreement; or
• issue a Form 12 without grounds,

prior to the commencement of the new legislation coming into force on 1 October 2022.

Notice to leave for end of fixed term

The Real Estate Institute of Queensland (REIQ) recommends, as a matter of best practice, that following the introduction of the new legislation, property managers commence issuing notices to leave on grounds of end of fixed term, at the commencement of each fixed term tenancy agreement.

The REIQ has received a number of queries about the lawfulness of this best practice recommendation. The practice is not unlawful and the RTRAA does not prohibit this practice.

The term of the contract between Lessor and tenant is clear insofar as the tenancy agreement stipulates fixed start and end dates. Nevertheless, the RTRAA requires that a Form 12 be issued to the tenant in order to bring the agreement to an end. The issuing of a Form 12 at the outset simply confirms the previously agreed tenancy term and the end date stipulated in the agreement.

The parties are, of course, at liberty to agree to enter into a new tenancy agreement closer to the end date, at which point the Form 12 may be withdrawn.

Although some tenants may be confused to receive a Form 12 at the outset of a tenancy, effective communication of the matters set out above should alleviate these concerns. To that end, a pro-forma document will be made available to Realworks subscribers which effectively communicates to the tenant that the issuing of the Form 12 at the commencement of the tenancy does not remove their right to seek to negotiate entry into a new tenancy agreement at the end of the existing agreement.

Some property managers have expressed concerned that issuing a Form 12 at the commencement of the tenancy may be perceived as retaliatory action. However, if a Form 12 is issued at the outset, it is difficult to see how this practice could fall foul of the parameters set out at section 246A of the RTRAA which would require the Lessor or agent to have taken retaliatory steps in response to a tenant having exercised one or more rights under the tenancy agreement.

In fact, if such an allegation was to be made by a tenant, the practice recommended by the REIQ may actually act as a defence, or at the very least, minimise risk, in circumstances where a property manager can demonstrate that this is standard practice in their agency as opposed to targeted conduct directed at any one particular tenant.

The REIQ has adopted this best practice recommendation to avoid the significant risk associated with missing the 2 month notice requirements (and associated delivery of notice requirements and timeframes).

Property managers may choose not to issue the Form 12 contemporaneously with the fixed term agreement, however, this may give rise to a risk that the fixed term tenancy may default into a periodic agreement if the notice period is not complied with and/or other technical omissions arise in connection with the issuing of the Form 12. If this were to occur, a Lessor may involuntarily end up in a periodic agreement with severely limited grounds for termination.

Of course, even where the Form 12 is issued at the commencement of the tenancy, property managers will still need to take positive steps in order to ensure that the tenant vacates the property at the end of the fixed term agreement if a new agreement is not otherwise entered into between the Lessor and tenant.

Offences under the RTRAA

It is important to note that the HLAA introduces new offence provisions at sections 365A to 365D of the RTRAA.

That is, a Lessor or property manager will have engaged in an offence under the RTRAA if they provide false or misleading information in a Form 12, or where the Lessor or property manager causes the property to be re-let within 6 months of ending a tenancy on grounds of sale, change of use, or owner occupation.

Each offence carries a maximum penalty of 50 penalty units (equating to $7,187.50[1]).

It is, therefore, critical that the ground upon which a Form 12 is issued is truthful and can be properly supported in the event that a tenant seeks to challenge the validity of the notice.

Prohibition Against Retaliatory Action

The amendments to the RTRAA also comprise a new section 246A which is designed to protect a tenant from retaliatory action being taken by a Lessor.

Most notably, section 246A(1)(b) references action taken by the Lessor to end the tenancy agreement or to refuse to enter into a further tenancy agreement at the end of the current agreement after any of the following has occurred:

• the tenant has taken action to enforce one or more of their rights under the tenancy agreement (such as requesting repairs or maintenance, giving the Lessor a notice to remedy breach, seeking reimbursement of costs incurred by the tenant for emergency repairs or applying for an Order under the RTRAA);
• the tenant has complained to the authority or another government entity about an act or omission of the Lessor that adversely affects the tenant; or
• an Order of the Tribunal comes into force in relation to the Lessor and tenant.

Unfortunately, the consequence of section 246A(1)(b)(iv) is that, even where a Form 12 for end of fixed term has been issued prior to any of the above events having occurred, a Lessor's subsequent refusal to enter into a new agreement at the end of the current agreement could see the Lessor exposed to orders setting aside the Lessor's decision to refuse to enter into a new agreement with the tenant.

Pursuant to sections 246A(4) and 246A(5), the Tribunal will have absolute discretion when determining whether the Lessor's action in refusing to enter into a new agreement was 'likely to have been taken' for the purpose of intimidating or punishing the tenant for having taken steps to enforce their rights during the tenancy.

Therefore, where a tenant has taken any of the steps set out above at any time during the tenancy, the Lessor may lose the right to make the decision not to enter into a new tenancy agreement unless the Lessor has grounds to issue a new Form 12 on genuine grounds of sale, owner occupation, breach of agreement or renovations (noting, of course, that it will be an offence under the RTRAA if the Lessor falsely issues a Form 12 on these grounds).

It is, therefore, critically important that property managers ensure that, where such a risk may potentially arise, they inform their Lessor client to seek independent legal advice prior to steps being taken to formally refuse a tenant's request for a new tenancy agreement.

Key Takeaways for Property Managers

With the legislative amendments set to come into force on 1 October 2022, property managers are urged to now review their property management portfolios to identify any properties which are currently subject to a periodic agreement and to take their Lessor clients' instructions as to their intentions for those arrangements and, where appropriate, issue notices to leave without grounds on or before 1 August 2022.

Agencies wishing to adopt the REIQ's recommendations for the issuing of a Form 12 on grounds of end of fixed term at the time of presenting a new fixed term tenancy agreement are urged to utilise the template letter available via the Realworks subscription, which clearly sets out the parties' right to negotiate a new tenancy agreement toward the end of the fixed term should that be their preference.

Property managers should, however, remain mindful of the retaliation provisions set out at section 246A and urge their Lessor clients to seek independent legal advice in the event that the Lessor intends to decline a tenant's request to enter into a new tenancy agreement at the end of the existing tenancy agreement, if the tenant has exercised a right under the agreement at any time during the course of the tenancy.

Key Takeaways for Sales Agents

The legislative amendments pertaining to the issuing of notices to leave will also be relevant to sales agents.

To that end, sales agents are urged to draw the new RTRAA provisions to the attention of their seller clients immediately upon being appointed to list a property for sale which is subject to a residential tenancy agreement.

Where vacant possession is (or may become) a term of the contract of sale, consideration must be given to the notice period which applies when issuing a Form 12 on grounds of sale under section 286, and care must be taken to ensure that the settlement date reflected on the contract of sale is appropriate in the circumstances.

Agents are urged to seek advice via the REIQ Legal Advisory Service or a qualified legal practitioner should they be in any way uncertain as to their obligations prior to the amended legislation coming into force.

Reference

[1] Penalty and Sentences Act 1992 (Qld) s5A; Penalties and Sentences (Penalty Unit Value) Amendment Regulation 2022 (Qld) r4.