Time soon up for periodic leases

THE countdown is on until October 1 and the continued rollout of the Housing Legislation Amendments Act 2021.

While that might not sound like much cause for excitement, its effects will have a huge impact on how landlords can make decisions around their properties, and specifically periodic tenancies. The amendments to the Residential Tenancies and Rooming Accommodation Act which governs residential leases (among other things), brings in some positives but provokes controversy for its removal of “without grounds” termination of periodic residential tenancies.

Currently, a periodic tenancy is one where the original lease period has passed, and the owner and tenant simply continue on under the same terms, without a fixed end date but with the ability to terminate with 14 days’ notice from the tenant or 60 days from the landlord (in most circumstances).

Periodic leases have historically been helpful as a way to offer flexibility on both sides. Great for a tenant that needs a little more time in between moving away, or with changing needs. Great for a landlord that has longer term plans with the property or is watching the market.

Terminating “without grounds” is simply the decision to end a periodic lease without the tenant having breached the terms of their lease – ending on good terms.

Under the new provisions, a fixed term tenancy can still be terminated at its end date, but if the notice period deadline isn’t met and it defaults into a periodic lease it gets restricted, with terminations then limited to the sale of the property, significant renovations, the landlord or immediate family moving in or where there is a serious breach by the tenant. Essentially, outside of those circumstances, a tenant on a periodic lease can stay as long as they like.

With landlords set to be restricted in their dealing of their own property under a periodic lease, it’s likely we’ll see owners far more focused on fixed term end dates, and reluctant to let a fixed term tenancy lapse into a periodic agreement lest they run the risk of losing the right to choose. At the least, this will mean Notices being issued sharply 60 days out. While this might have been seen as a positive for tenants in a tough market, it will remain to be seen whether that goal is achieved.

Tom Quaid is the REIQ Zone Chair for Cairns