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Upcoming changes to Queensland residential tenancies: What CHPs need to know (and do) – Landlord & Tenant – Leases



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Progressive amendments to the
Residential Tenancies and Rooming Accommodation Act 2008
(Qld)
(Act) have been introduced since 2021.
From 1 October 2022, the
Housing Legislation Amendment Act 2021 (Qld)

(HLA Act) will introduce changes to repair orders
and renting with pets, but more importantly will significantly
alter termination rights under residential tenancy
agreements1 – including the removal of notices to
leave without grounds.

These reforms will have a significant impact on all residential
landlords (and tenants), including community housing providers
(CHPs) who deliver important housing opportunities
across Queensland. To date, many CHPs have allowed tenants to
occupy properties on a ‘periodic’ (i.e. month to month)
agreement, however from 1 October 2022 CHPs should consider
shifting to requiring fixed term agreements where a notice to leave
without grounds may previously have been given to a tenant (for
example, for headleased properties, including shorter term
government headleases such as Help to Home).

In this article, we explore the changes that are coming into
effect from 1 October, the implications for headlease scenarios
(commonly used by CHPs) and the issues that should be considered
and addressed – with a summary and key recommendations at the
end.

Ending residential tenancy agreements

Until 30 September 2022

The Act sets out the various notices to leave that a lessor may
give2. Included in these is a ‘notice to leave
without ground’ (
section 291
), which can be given by the landlord at any time
(though cannot be given where doing so would constitute retaliatory
action, or where certain other steps have been taken by the tenant
to protect their rights).

While a notice to leave without ground can be given at any time,
the handover date is the later of 2 months after the notice is
given or the day the fixed term agreement ends (
section 329
).

For current tenancies, a notice to leave without ground (for
both fixed term and periodic tenancies) can be given up until 30
September 2022.

From 1 October 2022

The HLA Act reforms a number of termination rights, but the most
important is replacing the ‘notice to leave without ground’
with a ‘notice to leave for end of fixed term agreement’.
Under the revised section 291, a landlord may terminate a
residential tenancy agreement if it ‘is a fixed term
agreement
and the notice relates to the end of the
agreement’.

The effect of this is that a periodic agreement (including a
fixed term agreement that has become a periodic agreement –
see section 70 of the Act) cannot be terminated without ground.
Rather, it can only be terminated by agreement or as a result of
another notice given under the Act (and a number of additional
grounds have been added)3. A summary of the grounds for
termination, both until and from 1 October 2022, is below.

1231414a.jpg

While the removal of the notice to leave without ground for
periodic tenancies is intended to provide additional certainty to
tenants (to ensure they are not at ‘risk’ of landlords
terminating without reason), we expect to see private landlords
shift to require all tenants to be on fixed term agreements, in
order to preserve their right to end the agreement without needing
to rely on one of the specific grounds for termination.

Where a tenant refuses to enter into a fresh fixed term
agreement (at the end of their existing agreement), we expect that
private landlords will consider issuing a ‘notice to leave for
end of fixed term agreement’ and source a replacement tenant,
which may simply act to drive up rental turnover and instability.
While a landlord is still prohibited from giving such notice where
it would constitute ‘retaliatory action’5, we do
not consider that this would be triggered in these
circumstances.

For CHPs, who provide crucial support to members of the
community requiring housing solutions, we expect that CHPs may not
wish to place all tenancies under fixed term agreements unless
there are sound reasons to do so. CHPs will need to balance
providing stable housing for their tenants against protecting their
own viability and legal responsibilities. CHPs may also have
contractual obligations (for example with the State) which may
impact these decisions.

Headleases

Background

As discussed above, the HLA Act reforms are likely to shift
practices for all landlords, and present some challenges for CHPs
in balancing their objectives and risks. Unfortunately, CHPs will
face a further complication where arrangements involve a headlease
(including under the Community Rent Scheme).

Most headleases, particularly to CHPs, will not necessarily be
governed by the Act or considered a ‘residential tenancy
agreement’, since it will typically not give the CHP the right
to occupy the premises as a residence. Given this, there is wide
variation in the terms of headleases, with each CHP (and
potentially each landlord) having their own form.

Headlease structures are not contemplated by the Act (or the HLA
Act). For example, there is no right under the Act to terminate a
residential tenancy agreement as a result of the ending of a
headlease. Further, a headlandlord’s termination rights under a
headlease will likely differ from a CHP’s termination rights
under a residential tenancy agreement sublease. This distinction is
most important where the headlease requires the CHP to provide
vacant possession at expiry – a provision which is likely to
be included in all headleases.

Inconsistency

This critical disconnect between the headlease and sublease
could leave CHPs in breach of the headlease. For example, where a
landlord validly terminates a headlease after 1 October 2022 and
the CHP has let the premises to a tenant under a periodic lease,
there may be no grounds for the CHP to terminate the residential
tenancy agreement (and provide vacant possession to the
headlandlord).

Even in circumstances where the headlease is drafted to
contemplate termination only in accordance with the Act, there may
be a disconnect. For example, if the headlease is a fixed term
lease and the sublease is periodic, CHPs would still potentially be
unable to terminate the sublease. For this reason, we encourage
CHPs to ensure that the tenure of the headlease and sublease
align.

Further issues

Secondly, some of the new grounds for termination (i.e. for
sale6, change of use7 or owner
occupation8) contemplate the landlord taking an
action (i.e. selling, changing the use or needing to occupy the
premises). In these circumstances, while the headlandlord may be
able to give such a notice, there is an argument that a CHP would
not be able to since it is not taking those steps (but rather the
headlandlord is).

While the Queensland Civil and Administrative Tribunal
(QCAT) may provide relief to CHPs in some of these
circumstances, there is no certainty of this, and QCAT may seek to
protect the tenant. Such processes also divert CHP resources and
can become protracted.

CHP provisions

The Act does contain some specific provisions dealing with
residential premises provided by CHPs, for example additional
termination rights including for serious breach or end of
entitlement under an affordable housing scheme. Of particular note,
a notice to leave for ending of housing assistance9 can
be given where a tenant occupies premises under an affordable
housing scheme10 and ceases to be eligible under the
scheme to occupy the particular premises. This could allow
termination by a CHP where the headlease is terminated by the
headlandlord, as the tenant would have no eligibility to continue
to occupy the particular premises. However, the exact operation of
this provision in such a scenario is unclear and has not been
considered in reported decisions from QCAT or courts.

Summary and recommendations

Fixed term agreements

All CHPs should consider the risks posed by the removal of
notices to leave without grounds, and in what circumstances they
will require fixed term residential tenancy agreements (for
example, where a private headlease is in place).

For circumstances where a fixed term agreement is required, CHPs
should ensure that they monitor the expiry date of agreements and
ensure fresh agreements are entered into prior to expiry, to avoid
the agreement inadvertently becoming periodic.

Headleases

For any CHP who provides residential accommodation under a
headlease (including as part of CRS or Help to Home), CHPs should
review the headlease and consider changes that may be required as a
result of the October 2022 changes in order to minimise risk of
breaching the headlease or the Act. Particular consideration should
be given to:

  • obligations to give vacant possession at the expiry or
    termination of the headlease (private landlords may not be prepared
    to simply accept a novation of any underlying sublease given it
    could leave them with a direct lease to the tenant which may have
    more limited grounds of termination than their headlease);

  • the termination rights in the headlease and how those align
    with the Act – for example:

    • does the headlease provide its own separate grounds for
      termination, or does it seek to align to the Act; and


    • if the headlease aligns to the Act, does it allow an additional
      period above that under the Act (to allow the CHP to give notice to
      its subtenant) and will it still align after the HLA Act amendments
      commence on 1 October 2022;

  • the tenure (i.e. fixed term or periodic) and how that aligns
    with any sublease (or anticipated sublease); and

  • the indemnities given by the CHP under the headlease (e.g. for
    failure to provide vacant possession), and any limitations on those
    (e.g. exclusions where the CHP is prevented from giving vacant
    possession as a result of the Act).

As each headlease is different, each CHP will need to undertake
this assessment itself and the outcome will likely be different for
each (and may even be different for each property).

Reforms

Ideally, the complexities created by these amendments under the
HLA Act for residential tenancies which operate under headlease
arrangements would be addressed by further reforms to the Act. For
example, this could be achieved by amending section 290 of the Act
to clarify that a notice to leave for end of housing assistance can
be given where a headlandlord terminates the headlease.

Of course, CHPs will use their best endeavours to find another
housing option for tenants when a headlandlord withdraws their
property from the rental market. However, it is important from a
best practice perspective that the termination provisions of
headleases and residential tenancy agreement subleases (including
those under programs such as Help to Home) are aligned, in order to
minimise potential breaches.

Footnotes

1 This article focuses on residential tenancy
agreements, however similar provisions apply to rooming
accommodation agreements.

2
Chapter 5, Part 1, Subdivision 2
.

3
Chapter 5, Part 1, Subdivision 2
.

4 Excludes notices relating solely to moveable
dwellings.

5 Section 246A of the Act, introduced by
section 52 of the HLA Act
.

6
Section 286 of the Act
, as amended by
section 56 of the HLA Act
.

7 Section 290E of the Act, as introduced by
section 58 of the HLA Act
.

8 Section 290G of the Act, as introduced by
section 58 of the HLA Act
.

9
Section 290 of the Act
.

10 See definition at
Schedule 2 of the Act
.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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