QLD Legislation Laws

How the New Rental Reforms May Impact Your Selling Plans

Many landlords will already be aware of the legislative changes that came into effect in June. These reforms are designed to level the playing field for tenants throughout Queensland. If you're considering selling an investment property in the next few years, these changes could affect your ability to secure the highest possible sale price.

Overview of the Queensland Property Occupations Act Changes

The changes to the Queensland Property Occupations Act came into effect on June 6, 2024, with some retrospective implications. Known as the Stage 2 Rental Law Reforms, these changes are aimed at providing fairer rental conditions for tenants. Many have described the reforms as “rushed,” but the intent is clear: to ensure more transparency and fairness in how properties are advertised and rented.

Key reforms include restrictions on how rental property prices can be advertised, a ban on tenants offering (or landlords accepting) a rent higher than the advertised amount, and a prohibition on tenants paying months of rent upfront to secure a property. The most significant change, however, is the “price freeze.”

The Rent Price Freeze and Its Implications for Sellers

Under the new laws, landlords are unable to increase the rent on their properties within 12 months of a previous rent increase. This rule applies regardless of whether the property has a new tenant, a lease renewal, or even if renovations or improvements have been made to the property.

What’s particularly impactful is that the rent freeze is now tied to the property itself, not just the lease. As such, if the property is sold, the new owner must also honor the rent freeze for the full 12-month period. This could be problematic for landlords looking to sell their investment property, especially if they have long-term tenants paying below market rent.

Impact on Potential Buyers and Sale Prices

Previously, a potential buyer could choose to either honor a lower rent from an existing tenant or increase it to market value at the time of a lease renewal. However, with the new laws in place, if the rent has been recently increased but remains below market value, the landlord cannot raise it further for a full year. This restriction may deter prospective buyers, as the property could be seen as having a lower-than-expected return on investment or present a potential risk to securing finance.

Other Considerations for Selling Your Investment Property

In addition to the rent price freeze, there are several other factors that could impact your ability to sell your investment property for the highest price. At Wade Real Estate, our experienced property managers are dedicated to ensuring our clients’ best interests are met. We proactively reach out to property owners three months before a lease renewal, providing ample time for owners to consider their options.

Wade Real Estate’s Commitment to Both Landlords and Tenants

Finally, it's important to note that while we represent the interests of landlords and sellers, we also understand and respect the reasoning behind these recent reforms. Wade Real Estate’s role is to adhere to the Queensland Property Occupations Act, and we believe the government’s efforts are aimed at creating a fairer and more transparent rental market. While we engage with all parties in real estate transactions—buyers, tenants, and sellers—this article is primarily written for the benefit of landlords and sellers, whom we are hired to represent.