At Holdsworth Real Estate, we believe that a healthy property market relies on a delicate balance between protecting tenant rights and maintaining investor confidence. Currently, there is a significant debate surrounding the potential removal of “no-grounds” lease terminations in Western Australia.

While these discussions are often highly emotional, it’s vital to step back and look at the hard data and the potential long-term consequences for our local rental ecosystem.

The Lesson of Unintended Consequences

History is a stern teacher. We’ve seen how well-intended government interventions can inadvertently squeeze the very people they aim to help.

  • The COVID Rental Moratorium: While it provided short-term relief, it severely impacted investor sentiment. When it ended, we saw a mass exodus of investors from the WA market.
  • Building Incentives: These were designed to stimulate the industry but instead triggered a surge in demand that skyrocketed construction costs and sent many builders to the wall.

Both events contributed to the current supply shortage we see today. As any economics student will tell you: when supply is low and demand is high, prices inevitably rise.

Why “No-Grounds” Matters to the Market

It’s important to clarify the terminology: we aren’t talking about evictions (which require legislated reasons). We are talking about the ability to end or not renew a lease at the end of its term without providing a specific reason.

Removing this flexibility creates a ripple effect of “hidden” costs:

  1. Increased Legal Friction: Currently, many owners opt for a “no-grounds” non-renewal because it is less confrontational. Without it, owners would be forced to issue formal breach notices to remove problematic tenants.
  2. Blemished Records: A non-renewal is neutral. A breach notice stays on a tenant’s record, making it significantly harder for them to secure a home in the future.
  3. Strict Screening: To mitigate the increased risk of being “stuck” with a problematic tenancy, property managers will likely implement much more intensive (and expensive) screening processes. This makes it harder for people with limited references or non-traditional backgrounds to enter the market.

The Bottom Line: What is the Price Tag?

REIWA recently commissioned Synergies Economic Consulting to model the impact of these changes. Their findings suggest that the increased risk and reduced flexibility for housing providers would lead to higher rents.

Earlier modelling indicated a median weekly rent increase of $10 due to these reforms. However, in today’s climate of rising interest rates and extreme supply shortages, that figure is likely to be significantly higher.

Our Perspective

At Holdsworth Real Estate, we want a rental market that works for everyone. We fear that removing no-grounds terminations may be another “well-intended” reform that ends up making life harder—and more expensive—for WA renters.

If you have questions about how these potential legislative changes might affect your investment property or your current tenancy, our team is always here to provide expert, grounded advice.

What are your thoughts on the proposed changes? We’d love to hear your perspective on how we can best support a stable rental market in WA.