Australia: Site Rent Review Update

Whilst the Review of the Manufactured Homes (Residential Parks) Act 2003 (Qld) (the Act) continues, the Commercial & Consumer Tribunal (the Tribunal) has provided some further guidance as to the parameters of Section 71 of the Act and site rent increases performed outside of the terms of home owners' Site Agreements.

Billiet -v- Gray

The relevant facts of this case were as follows:

  • Two Site Agreements were in operation at the Park - one used prior to the enactment of the Act and one used after.
  • Both Site Agreements provided for an annual CPI increase and a market rent review to occur every 3 years.
  • In September 2006, the park owner performed a market rent review, which increased the site rent by $6.00 per week.
  • In September 2007, the park owner performed an annual site rent increase pursuant to the CPI.
  • On 10 June 2008, the park owner notified a proposed site rent increase of $27.50 per week calculated by way of a market rent review issued under Section 71 of the Act.
  • In September 2008, the park owner gave notice of an annual site rent increase pursuant to the CPI of 4.8%. However, the park owner informed home owners not to pay that increase. The evidence was not clear as to how many home owners had paid and had not paid that increase.
  • Seventy home owners did not agree to the proposed site rent increase under Section 71 of the Act. The park owner therefore was required to commence Tribunal proceedings under Section 71(7) of the Act in order to confirm the proposed increase.

The Tribunal considered the previous District Court decision of Palmpoint Pty Ltd -v- The Residents of Bribie Pines Village & Ors and confirmed that:

"His Honour allowed the park owner to make a claim for a market review rental increase outside the terms of the site agreement, even though the site agreement contained a market review clause allowing for a market review every three years. In other words, a park owner can seek a market review rental increase at any time, despite the site agreement providing for a three yearly market review.

Based on this decision the respondents are entitled to make a claim for an increase in site rent, notwithstanding the provision in the site agreement that permits the site rent to be adjusted annually by CPI or every three years pursuant to a market review."

The Tribunal also considered the evidence of a registered valuer as to the market site rent applicable at the Park and found that:

"I accept the evidence of Mr Gees. His report has been carefully prepared and I am satisfied that the market rent for a site at the park is $130.00 per site per week."

The Tribunal then considered each of the factors referred to in Section 70(3)(a)-(j) of the Act. In respect of Section 70(3)(i) of the Act, concerning whether or not the increase is fair and equitable, the Tribunal noted that:

  • All Site Agreements provided for an annual CPI increase and a market rent review to occur every 3 years.
  • The majority of home owners in the Park are pensioners "who have to be very careful with their money".
  • For short term financial planning, those residents would rightly assume that the increases in the Site Agreement would be complied with. Any other increase "would impose a significant burden on their financial position".
  • Many residents provided sworn evidence that the proposed rent increase would adversely affect their lifestyles. The park owner accepted that the proposed increase would have a significant impact on pensioners.
  • The Site Agreement and Section 17(e) of the Act impose a statutory obligation for the park owner to comply with the terms of the Site Agreement.
  • If both the Section 71 market rent review increase and the Section 69 annual increase, both performed in 2008, were allowed, it would be unjust and inequitable.

In conclusion, the Tribunal found that:

"In the circumstances of this case, the fair and equitable issues are very important factors to be considered when assessing this proposed rental increase. I am satisfied that an increase in the market rental to $130.00 per week is unfair and inequitable and especially before the 2009 market review due in September 2009.


I am satisfied that the respondents are entitled to the CPI increase from the date the notice of the increase in 2008. However, I am not satisfied that the respondents are entitled to any further increase at this time."

The Decision illustrates that a park owner must show cogent reasons for utilising Section 71 of the Act to perform an increase in the site rent in a manner other than as provided for in site agreements. It is important that park owners consider this aspect of Section 71 prior to notifying home owners of such an increase.

Review of the Act

By way of further update, we have been informed that the Office of Parliamentary Counsel is currently in the process of drafting an amendment Bill to the Act that will amend the Act following on from the Review. We expect the amended Bill to be completed and released early this year.

Once it has been prepared, the draft Bill will be distributed by the Office of Fair Trading to stakeholders for public comment and further consultation where necessary. This will occur prior to the Bill being presented to Parliament in final form.

© HopgoodGanim Lawyers

Australia's Best Value Professional Services Firm - 2005 and 2006 BRW-St.George Client Choice Awards

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Darrell Jardine
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