REIWA warns tenancy reforms could force investors to flee

Western Australia's peak real estate body has fired a warning shot at the Cook Government over plans to ban no-grounds rental terminations, saying the move will hurt the very tenants it is designed to protect.

The Real Estate Institute of Western Australia (REIWA) revealed on Wednesday it is seeking urgent meetings with key ministers after discovering that State Government is "set to ban" the practice in the May 7 State Budget. This change is believed to strip landlords of the right to end a tenancy without providing a reason.

REIWA chief executive Blaine Slater said the organisation strongly opposed any changes to no-grounds terminations, arguing investors would simply leave the market if the legislative environment turned against them.

"We know investors are sensitive to change," Mr Slater said.

"We are very concerned about the impact another exodus of investors will have on rental supply, rent prices and tenants."

It is not the first time WA has seen a mass departure of rental investors.

When the COVID-era rental moratorium ended, REIWA estimates roughly 20,000 properties — around 8.4 per cent of supply were withdrawn from the market. The result was soaring rents and plummeting vacancy rates across the state, a crunch from which the market has not fully recovered.

REIWA said the timing of the proposed change could not be worse. Investors are already anxious about potential federal changes to negative gearing and the capital gains tax discount, while interest rates remain elevated.

Add a state-level restriction on tenancy terminations and the organisation fears another wave of sell-offs.

"Current market conditions make it very easy for investors to sell," Mr Slater warned.

Compounding the pressure, REIWA flagged that rising construction costs and extended building timelines, partly attributed to supply chain disruptions linked to the Middle East conflict were further constraining rental supply.

As occurred during COVID, a struggling building industry typically pushes more demand into the rental market.

The Cook Government's push to align WA with tenancy reforms already enacted in most other Australian states follows sustained pressure from advocacy groups and, reportedly, the Federal Government under its Better Deal for Renters agreement.

Commerce Minister Dr Tony Buti, Department of Local Government Director General Lanie Chopping, and Housing Minister John Carey have all been briefed by REIWA on its position.

The May 7 State Budget is expected to provide clarity on the scope of the changes.