Host – Belinda Heit – People and Culture 

Guest – Marc Fidler – Housing Legislation Implementation

Host: Welcome to the Talking Tenancies podcast, brought to you by the Residential Tenancies Authority. I'm your host, Belinda Heit. Join me as we explore everything you need to know about renting in Queensland with experts from the RTA and industry. We're here to help make renting work for everyone.

Further changes to Queensland's tenancy laws commenced on 30 September 2024. These included changes relating to maximum bond amounts, supporting evidence for claims or disputes on a rental bond by a managing party, rent payment methods, utility bills, reletting costs and compliance changes. Today's expert from the RTA to step us through the changes relating to reletting costs is Marc Fiddler. Welcome, Marc.

Guest: Thank you very much for having me, Belinda.

Host: Now, can you tell us about your role at the RTA and what you're responsible for?

Guest: I can, so my role is a Senior Community Education Officer and I'm part of a team that's responsible providing education to all Queenslanders involved in renting about how the tenancy laws apply to them. We do this in a number of ways, including guesting for you today, hosting webinars and running face to face information sessions, just to name a few.

Host: Now, before we dive in, can you explain to us what are reletting costs and why do we have them?

Guest: Yeah. So, if a tenant or resident ends an agreement early, which is generally known as breaking their lease, they may be responsible for reletting costs. These reletting costs are usually charged by probably the owner or manager for their work in finding a new tenant for the property.

Host: So, what has changed in relation to reletting costs?

Guest: There's been a change in the wording to the legislation. So rather than referring to reasonable costs in a break lease situation or where the tenancy agreement ends early, the legislation now refers to a reletting cost, and there's a formula for calculating this too. But before I explain further, it's also important to note that these changes only apply to new tenancy agreements that started after the 30th September 2024, or agreements that have been renewed since September 30, 2024.

Host: So, are there transition periods in place for this change?

Guest: Correct. So, anyone in a tenancy agreement that started before 30 September 2024 who breaks their lease to leave early may be required to pay reasonable costs. But if the agreement started or was renewed after 30 September 2024 and the tenant then breaks their lease; in this situation, the updated legislation will apply and a tenant may then pay reletting costs, and these are calculated differently to reasonable costs.

Host: Alright, so that's good to know. Now, what exactly does this change mean for agreements started or renewed after 30 September 2024?

Guest: Yeah, good question. So, it really means that rather than the tenant paying those reasonable costs separately, which may have or may include advertising compensation for loss of rent or a reletting fee, which is the fee that the property owner pays to an agency or a manager for reletting a property or room, they will be instead liable for a capped reletting cost. The reletting cost a tenant may be required to pay calculated based on how much of the agreement has expired, or the amount of rent payable until a new tenant moves into the property, whichever is the lesser of those amounts.

Host: Now you mentioned earlier, there's a formula for calculating reletting costs. How does that work?

Guest: Yeah, let's get into some examples to help me explain before I do, remember that this information only applies to tenancy agreements started or renewed from the 30th of September 2024.

Host: Right.

Guest: Yeah. So, for agreements of three years or less, which we know are the most common tenancy agreement types, the reletting costs will vary based on how much of the agreed tenancy duration has passed when the tenant vacates, or the cost of rent until a new tenant moves in, whichever is the lower of the two possible amounts. 

So, to explain a little bit further, if less than 25% of the tenancy agreement has expired, then the relating cost will be equal to four weeks rent.

If 25% up to less than 50% of the tenancy agreement has expired, the reletting cost is equal to three weeks rent. 

If 50% up to less than 75% of the agreement has expired, the reletting cost is equal to two weeks rent.

And then finally, if 75% or more of the tenancy agreement has expired when the agreement ends then the reletting cost will be an amount equal to 1 week's rent. 

So, I'll step through an example shortly to illustrate how that calculation works, but if your agreement is more than three years the reletting cost is, again, the lower of two possible amounts. So, either one month's rent for each 12-month period remaining of the term of the agreement, up to a maximum amount equal to six months' rent. Or, the rent payable until a new agreement begins after the premises is relet. And just to be clear, it is the lower of the two possible amounts permitted under the legislation. It's not both and it's not in addition to costs such as advertising or compensation for loss of rent.

Host: So, if I was a managing party, I would not be able to ask a tenant to pay for the cost of advertising the property to find a new tenant plus the reletting cost defined under the legislation.

Guest: Yeah, exactly right. So, if a tenancy agreement is entered into on or after the 30th of September 2024, a managing party can't ask the tenant for any additional costs on top of the reletting cost. So, such as advertising. For managing parties who have been in the industry for a long time, this may involve a little bit of a change of thinking. Instead of, 'the tenant is liable to reimburse for advertising plus reletting fee, plus compensation, rent', philosophy. It's now just the tenant is liable for the reletting costs calculated according to the formula and any possible amounts in the legislation.

Host: OK, got it. Now, can you take us through an example for agreements that have been entered into from 30 September 2024 onward?

Guest: Yeah, Let's have a look. So, let's say a tenant was put on a 12-month agreement that started sometime after the 30th of September 2024, and they decide to leave after five months. 

So, based on that sliding scale I was referring to before, this means that over 25% and less than 50% of the agreed fixed term would have expired. Therefore, the maximum reletting cost is the equivalent of three weeks rent. Thing to remember here though is the reletting cost is the lower of two amounts. So, if a new tenancy commenced one week after the previous tenant moved out, then the reletting cost is actually going to be equal to one weeks rent as that is the lesser amount.

Host: Gotcha. So, it needs to be taken step by step. A person firstly needs to work out what percentage of the agreement had expired when the tenant's agreement ended at the maximum reletting cost allowed under the legislation based on that. Then, they need to calculate the amount of time between a tenancy agreement ending and the start of a new tenancy and the cost of rent that will be payable for that time. Finally, they need to compare the two amounts and determine which one is the lower amount.

Guest: Correct. And for fixed agreements of less than three years, you've got it, so well done.

Host: Oh, thanks Marc, look at me go. I noticed you were clear in that example that it applied to a tenancy that started after 30 September 2024, and you've mentioned transition periods. What happens with agreements that started before 30 September 2024?

Guest: Yeah. Thanks for picking that up. It is an important part of these changes to be aware of as I mentioned at the start there. So, there is a transitional provision that applies to agreements entered into before 30th of September 2024. As long as the tenancy agreement has not been renewed since 30th September 2024, the cost to relet at breaking the lease will be what the legislation refers as reasonable costs. So, remember that reasonable costs could include advertising fees to an agency. Uh, well, manager. Sorry, advertising and or fees to an agency or manager for reletting services and compensation for loss of rent until a new tenant is found.

Host: Oh, good to know. Now, does mitigation of loss still apply?

Guest: It certainly does. So, nothing's changed in the relation to the managing party's obligation to mitigate loss. [For example] a manager or owner, they must still act reasonably in trying to find a new tenant for the property or room as soon as possible.

Host: OK, so I've been wondering though, what happens if there are outstanding costs that have resulted from matters unrelated to the break lease? Can the managing party still ask the tenant to pay for those?

Guest: Yeah, that's a really good question. And the answer is that the reletting costs does not encompass compensation for matters that aren't related to breaking the lease. So, a tenant still may be accountable for costs that are property owner has incurred due to them breaching their agreement or obligation. These might include things such as unpaid rent arrears up until the date of the tenant left, unpaid water or utility bills, or even damage or cleaning that needs to be done at the property where the tenant would still be accountable.

Host: Right. Now, we've discussed a lot so far, and I can imagine there might be some tenants or managing parties who are confused about what the reletting costs should be in their particular situation. Can they contact the RTA to calculate the reletting cost for them?

Guest: Yeah, I'm glad you asked that. So, we understand that these changes may take some time and getting a bit of used to and people might want the RTA to work out for them what the reletting cost should be. However, individual tenancy situations can be complex, so the RTA doesn't provide specific advice on reletting cost calculation services. What we can do though is explain and step through the formula outlined in the legislation, as I was mentioned before, and that that helps parties determine the reletting cost between themselves. 

We can also give examples such as we've done today to help people understand. The RTA has developed an online reletting cost calculator to support calculations, so this tool does enable tenants and property managers and owners who've entered into an agreement on or after the 30th September 2024 to independently calculate reletting costs based on their specific lease terms and rental agreements. 

Now with that though, it is important to note that this calculator doesn't calculate what the reletting cost should be. It actually calculates the percentage of the fixed term that is expired when the tenant hands over vacant possession and what the maximum reletting cost might be in week. So, I'll also add with that, Belinda, that there's some important information and a disclaimer on the website that must be read before using our calculator.

Host: Yeah, that's exactly right it is a helpful resource. If parties are having a dispute about the reletting cost, what can they do?

Guest: So, as you know, and we've discussed in other formats before, a best place to start is with self-resolution. This is often the quickest way to resolve an issue, so talk to each other, listen to what the other person has to say, refer to what the legislation says and see if you can come to some sort of a mutual agreement within the allowances of the legislation. 

For example, if the dispute has come about due to a disagreement over when the tenancy ended, then perhaps refer back to your documentation and written correspondence and try and use that to come to some sort of mutual agreement. If that's not successful and we understand at times that the self-resolution process doesn't always work. Then the next step may be to address the dispute through the bond claim process at the end of the tenancy. One of the parties will need to start that bond process and the other will need to dispute it. If the dispute is still not resolved through conciliation with the RTA's dispute resolution team, then the disputing party will be issued a Notice of unresolved dispute and they will need to apply within seven days to QCAT, which is the Queensland Civil and Administrative Tribunal for a decision. It is important to note though with this that the legislation doesn't allow QCAT to make a ruling of any amounts more than what is allowed under the Act.

Host: Right. OK. It's always good to know that there are options for resolving a dispute. Now, if our listeners would like more information or further resources to consolidate their understanding of the new reletting readsing cost legislation, where can they find it?

Guest: Yeah, the RTA website is the best place to start and it's available 24 hours, seven days a week. So, people can go there to get information whenever it suits them. We have plenty of web pages offering information to help people with their tenancies. We have forms, fact sheets, webinar recordings, short videos and of course podcasts such as this one.

Host: Of course, the RTA website definitely is a great source of information. Well, thank you Marc for joining us today to help us understand the tenancy law changes relating to reletting costs.

Guest: Thanks very much for having me, Belinda. It's been a pleasure.

Host: Thank you for listening to the Talking Tenancies podcast. For more information about the Residential Tenancies Authority, visit rta.qld.gov.au.