As we step into the third quarter of the 2024 year, let’s reflect on the key highlights from the MLR and Real-Estate industry during the first two quarters of the year.
Market Status for MLR
The year began with a strong increase in demand for Management Rights, driven by Queensland's thriving real estate market and growing tourism sector. This surge led to numerous new listings in both shorth-stay and long-stay accommodation, as property managers looked to capitalise on the booming market conditions.
The strong demand was of course in high value placements or premium Management and Letting Rights businesses with great yields, well managed operations and high-quality assets.
Even though the market remained active in terms of new listings, there have been challenges in closing deals or even maintaining the listings on the market.
What were the challenges impacting the deals?
- Reduced letting pool numbers
The current property shortage and overpriced housing market are leading factors to a decrease in letting pool numbers. Potential property buyers are now favouring units in strata communities due to their affordability and availability, which impacts the letting pool for Management Rights operators.
- Cashflow pressure from high interest rates
The rise in interest rates is putting significant financial pressure on the cash flow of existing operators. With more funds allocated to interest payments, less capital is available for day-to-day operations. This of course impacts the ability to pay staff, maintain the properties and invest in necessary upgrades or marketing efforts.
- Labour cost and shortage
Short-term operators are facing challenges in finding enough cleaners in the market, resulting in increased labour costs due to higher demand for cleaning services.
Despite these challenges, the MLR industry continues to show resilience and adaptability. As we move further into 2024, it will be interesting to see how these trends and challenges evolve and how the industry responds to them.
Recent Legislative Changes
Regulatory changes and updates have also had a significant impact on the MLR operators and property agents. Recent legislative changes in Queensland's real estate laws have introduced stricter compliance standards and enhanced consumer protections. These amendments have required greater transparency in property management agreements, more rigorous tenant screening processes, and improved dispute resolution mechanisms.
Initially, we have seen the introduction of new Strata Law reform, which was effective from 1st of May 2024. The key changes include:
Terminating Schemes - it is now possible to terminate a community titles scheme with the agreement of 75% of lot owners for economic reasons, streamlining the process for redevelopment of aging apartment blocks.
Pet Ownership - bodies corporate cannot ban pets except in special circumstances, simplifying disputes over pet policies.
Smoking - bodies corporate can enforce by-laws to prohibit smoking in outdoor and communal areas.
Towing Vehicles - new provisions allow for immediate towing of vehicles causing hazards or blocking access without following the lengthy dispute resolution process.
On the same date, 1st of May 2024, the REIQ has released an update to the Property Occupations Act 2014, introducing the new PO Form 6 Appointment forms. All property managers must now use the latest Form 6 for new appointments, partially executed Form 6s, and for those that have expired or need renewal.
By staying informed, updating the policies and investing in staff training, both MLR operators and property agents should navigate these changes effectively and continue to provide high quality services.
2024 Tenancy Law changes
On 23 May 2024, the Queensland Government passed the Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Bill 2024. This bill introduces the Stage 2 rental laws reforms and continuing professional development requirements for property agents in Queensland. The stage 2 rental law reforms will commence in two parts, with the first part of the legislative changes having commenced on 6 June 2024.
What changes will be required for my business?
Rent Bidding
We have seen recently, due to the shortage of rental properties, that tenants have been offering more than the advertised rent and offering to pay months in advance to increase their chances of securing a property and out bidding other applicants. This practice has now been banned, with a lessor or property manager no longer able to solicit, invite, or accept an offer for rent that is more than the amount stated in the advertisement.
Likewise, when a residential tenancy is advertised or offered, a lessor or property manager can also no longer accept an offer from a tenant to pay rent in advance if the amount is more than:
- 2 weeks rent for a periodic agreement or moveable dwelling and rooming accommodation; or
- 1 month rent for a general tenancy
If during the tenancy, the tenant offers to pay rent in advance greater than the statutory limits, then the lessor or property manager can accept these payments and receipt as payment of rent in advance to the tenant’s ledger. However, a lessor or property manager cannot solicit or invite rent in advance greater than the statutory limit during a tenancy.
Rent Increases
The law has changed so that rental increases will be attached to the property, rather than the tenancy and cannot be increased within 12 months after the date the rent was last increased for the property. The 12 month limit applies even if the last rent increase to the property related to a different residential tenancy agreement, there has been a change of tenants occupying the property or there has been a change of ownership of the property.
When new tenancy agreements are prepared, they now must show the date of the last rent increase for the property.
If a lessor believes they would be caused undue hardship because they are not able to increase the rent within 12 months of the last rent increase, they can make an application to the Queensland Civil and Administrative Tribunal (QCAT) for an order.
We recommend for property managers to review their internal processes associated with accepting rental applications, renewing tenancies and carrying out rent increases to ensure they are complaint with the new legislation. Penalties for non-compliance with the new laws can be over $7,000 per infringement.
Continuing Professional Development for all Property Agents
The second part of the legislative changes will commence from 7 June 2025 and will introduce a framework for a continuing professional development (CPD) regime for all property agents in Queensland.
The CPD requirements will be determined by the Office of Fair Trading (OFT) alongside other external advisors and community representatives in the property industry to identity appropriate CPD training sessions for inclusion in the CPD scheme.
Property agents will be required to complete CPD requirements each year and provide a statement to the OFT confirming what CPD requirements have been undertaken when renewing their licence or registration. CPD requirements will need be completed each year to maintain licences for the following:
- Real estate agents
- Real estate salesperson
- Real property auctioneers
- Resident letting agents to maintain
The OFT will provide more information over the coming 12 months on the CPD scheme before the requirement is mandatory.
For More Information
For more information on Management Rights insights or latest regulatory changes, please contact Greg Rankin – Manager or Smiljan Jankovic – Managing Director on (07) 3002 2699 or via email info@agredshaw.com.au.
%20-%20HubSpot.png)
