Not One, but Four! Pet Reforms to Turn Investment Properties Into Zoos

In unveiling the detail in its residential tenancy reforms, the NSW Government has delivered investors another slap in the face. Investors can no longer refuse a tenant keeping a pet in their property and in fact, they must allow the tenant to keep up to four animals – and potentially more.

The regulation behind this ill-conceived and politically-motivated reform was released this week, drastically undermining the case for investing in residential property at a time when the rental market is in crisis, says Real Estate Institute of NSW (REINSW) CEO Tim McKibbin.

“Investors knew these reforms were coming and many have already exited the market in favour of other investments in which their rights are protected. However, now that the ink is on the page, we should brace ourselves for the explosion of investors leaving the market and seeking less risky investments,” Mr McKibbin says.

“Demonstrating how out of touch these reforms are, much is positioned around what is deemed ‘reasonable’. Is that the investor’s reasonable, the tenant’s reasonable or if it goes to NCAT, the tribunal member’s reasonable? Is it a subjective or objective reasonable?

“It appears the parties to any dispute will need a subject matter expert to assist with what is reasonable. I think it is reasonably certain that we can look forward to a lot of expensive disputes.

“What we do know, for instance, is that if it is deemed reasonable to do so, pets can defecate and urinate inside the home.

“The reforms require landlords to provide an environment commensurate with the animal’s requirements. Zoos have the same responsibility. For many landlords this will equate to spending significant amounts of money to meet this responsibility.

“The impacts of these reforms will devastate an already dangerously fragile rental market in New South Wales,” Mr McKibbin says.

According to Mr McKibbin, rightly or wrongly, we know many investors are interpreting these reforms as a message from the NSW Government to sell their investment property now.

“Knowing that an erosion of their rights was coming, investors were leaving the market and choosing other ways to seek financial independence,” Mr McKibbin says.

“It is no coincidence that while this has occurred, the rental crisis has deepened, and vacancy rates hover at less than half the healthy, acceptable rate for tenants.

“But now that the devil in the detail has been revealed, it’s a frightening prospect for tenants. The more investors sell, the more long-term rental properties are lost to the market, and the scenario for tenants gets much, much worse.

“Industry has, at every turn, tried to work collaboratively with Government towards an actual solution to the rental crisis. It is beyond obvious that investors, who make their properties available for tenants to rent, must be part of that solution. Unfortunately for all stakeholders, the voice of reason was not invited to participate.

“Telling an investor they must grin and bear it if a tenant wants to keep four pets is telling them to invest their money elsewhere.

“Government has inadvertently created a huge responsibility for itself. By deliberately encouraging investors to leave the market, it has assumed responsibility for providing an ever-expanding number of tenants with a home.

“How it plans to meet this responsibility is anyone’s guess. But these homes are needed now.

“We know that housing, and the lack of it, has social and economic consequences. It must be clear to even the casual observer that the Government’s quest for popularity is going to be damaging for everyone. The sad irony, the biggest loser will be tenants.

“I’m left wondering if Government realises that landlords also vote at state elections,” he says.