RESIDENTIAL TENANCIES (MISCELLANEOUS) AMENDMENT BILL

Committee Stage

In committee.

(Continued from 27 November 2012.)

Clause 4.

The Hon. J.R. RAU: Can I just clarify a matter that has been brought to my attention. I have been advised that yesterday I said, in terms of water supply, it was just the usage, but it is supply and usage. So, can you please mentally amend my remarks yesterday just to cover that off.

The CHAIR: We are on clause 4, as I understand it.

The Hon. J.R. RAU: I am following up on the honourable member for Bragg's questions yesterday. We have noted here that the honourable member asked: who would be required to pay water prescription levies? I am advised the answer is that if the member is referring to the new licensing regime for water resources across the Western Mount Lofty Ranges then this falls under the Natural Resources Management Act. Any levy applicable under that act is defined as a statutory charge (clause 4(8)(e) of the bill) and as such cannot be passed on by a landlord to a tenant. With respect to water charges, I think I have covered that off.

There was another question from the honourable member for Stuart, and that was: can rent be increased in line with land tax notice? This takes us to the rent increases, clause 29, page 14 of the bill. Currently, depending on the terms of the individual tenancy agreement, a landlord can increase the rent every six months. However, the bill is increasing this to limit rent increases to every 12 months. It is possible for a landlord to increase the rent on a rental property in line with an increase in their land tax assessment provided they adhere to the timing limits of a rent increase.

However, the Residential Tenancies Act protects from excessive rent rises by enabling the tribunal to declare the rent payable under a tenancy agreement as excessive and may, by order, reduce and fix the rent payable for the property not exceeding one year. I assume that you would not be necessarily in the category of being excessive for those purposes simply because you passed on a land tax impost, but that would be a matter for the tribunal.

In making such a determination the tribunal considers various matters, including the estimated capital value of the premises as well as the rent for comparable premises in the same or similar localities.

Mr VAN HOLST PELLEKAAN: I appreciate your coming back with that response, minister. The reason I asked particularly about the land tax is because it is listed in clause 4 as one of the statutory charges. I understand what you are saying about: it would then have to be incorporated into a tribunals decision about potentially excessive increases in rent. You said, very clearly, that while it would be a matter for the tribunal you do not expect that just passing on land tax would be considered an excessive increase. The reason I raise this issue is because—

The Hon. J.R. RAU: Perhaps I could clarify that. I was not meaning to convey that you could directly pass on the land tax. What I was saying is that, of course, when you are reviewing the rent for the property you could, in calculating what rent you want, include in your calculations the fact that land tax had been increased as a factor to be incorporated into the rent.

An honourable member interjecting:

The Hon. J.R. RAU: Subject to the excessive rent, yes.

Ms Chapman: What about if the land tax was excessive in the first place?

The Hon. J.R. RAU: I do not think that this would be possible under this government, surely.

Mr VAN HOLST PELLEKAAN: Minister, I did understand that but that is specifically why I asked the question, because you are saying that of course it would be up to the tribunal—so you are not making any commitment on behalf of them and what they might decide in the future—but that you think if the increase is directly related to an increase in land tax, that that would probably be okay in your mind. The reason that I raise it is that it is not that way in commercial tenancies, and land tax increases can relate to a lot of factors outside the specific property that the land tax is attributed to.

You can have a landlord who goes and purchases a whole swag of other properties, and the land tax through the grouping provisions on this one residential property in question can then skyrocket. I would suggest that it would probably not be acceptable to increase it in the rent but it is listed as one of the statutory charges just like water. If your water rates go up, it would be fair that it would be passed on directly, just like all of the other things, but I see land tax as a very different style of charge.

The Hon. J.R. RAU: I now understand the point that the honourable member is making and I do take your point that, in terms of the aggregation provisions in the land tax regime, if you own multiple properties you start moving yourself into higher and higher brackets of taxation so that the land tax is not necessarily calculated by reference to only that specific property. I get the point and I accept that potentially that may mean that substantial increases may not be able to be passed on (in the sense of, incorporated in the rent) and that not be deemed excessive. I accept that that is possible.

I think the guideline of what is and is not excessive is sort of clear from those words that I read out before, that is, regarding examples of comparable properties in comparable streets in that area. Using an example we can imagine where somebody owns just one additional property aside from their own home, and that property is being rented, and it is in a particular street, then arguably the land tax impost on that might be quite small—in fact, potentially there may be none, well, not none, but it would be small. But if that is one of 30 properties that they own, the aggregated land tax bill for that individual when divided amongst the properties might well create a significant land tax impost in that area.

I do not think that it is contemplated here that that could then just be wrapped up in the rent and that that property would be going for $1,000 a week and the property next door would be at the market value of about $400. Obviously I think the landlord would run into problems there and rightly so.