NSW rental reforms announced: What’s changed?
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NSW rental reforms announced: What’s changed?

NSW rental reforms announced: What’s changed?

by Sasha Karen | September 21, 2018 | 1 minute read

Amendments to current rental legislation have been introduced to the NSW Parliament and aim to give more power to tenants, which includes the ability in certain cases to break leases without penalty. Here’s a comprehensive list of what the reforms include.

September 21, 2018

Introduced to the NSW Parliament on 20 September by Minister for Better Regulation Matt Kean, the Residential Tenancies Amendment (Review) Bill 2018 is set to give more powers to tenants in New South Wales.

On their introduction to the NSW Parliament, Mr Kean said that the reforms were “common-sense changes” and that they “get the balance right”.

The key changes Mr Kean highlighted include:

  • The ability for tenants to make minor alterations to properties.
  • The introduction of a new minimum standard for properties.
  • The ability for tenants to get rectification orders from Fair Trading for repairs.
  • Restricting rent increases for periodic leases to once a year.
  • The ability for victims of domestic violence to break a lease without incurring a penalty.

“Under these common-sense changes, renting families will be able to make minor alternations, such as installing a picture hook to hang their family photos, and will benefit from a new set of minimum standards to ensure properties are in a liveable condition,” Mr Kean said.

“While our comprehensive reforms get the balance right, Labor wants to tell people how to live their lives by forcing renters into minimum 12-month leases. This hurts students, workers and future home owners who need flexibility.”

Peter Koulizos, chairman of the Property Investment Professionals of Australia, said that while he could see the reforms as a good thing for tenants, he also said they should not be surprised if rents rise in order to cover the benefits.

“The reforms bring a good safety net for tenants and that’s a great thing, but… if the properties have to meet a certain minimum standard to be eligible for renting if rents can be only increased once per year, depending on what the set fee is for breaking a fixed-term lease, then tenants may have to pay higher rents,” Mr Koulizos told Smart Property Investment.

“From a social responsibility point of view, the ability for domestic violence victims to break a lease penalty is a good thing. I can’t image its going to happen that often, but if it does, landlords are human as well, we understand that these things happen from time to time.”

Like Mr Koulizos, Tim McKibbin, CEO of the Real Estate Institute of NSW, said that the domestic violence termination provision is in full support of its inclusion.

“If they are in those circumstances, ... and the Institute is 100 per cent of this position, that person must be able to get out of that environment and to go to another environment where they are safe, and there cannot be any question about that,” Mr McKibbin said to Smart Property Investment.

However, he also said that placing the onus of cost onto the investor was not appropriate.

“If somebody was an investor in one of the big companies, they own shares, and their dividend cheque came along and somebody turned up and said, 'You've just got a $100 dividend, but I'm going to deduct from your dividend because there has been some domestic violence in your suburb,' we would all say in those circumstances, 'No, that's a ridiculous response',” Mr McKibbin said.

“But in the residential environment, when we have an investor in this area; because of the nature, and I think that's the key word, because of the nature of their investment, somehow we've arrived at the conclusion that they should bear the costs attaching to the circumstances of the domestic violence within their investment ... property.”

Additionally, he said the provision regarding minor alterations was based on subjective language and needed further clarity, as well as enters blurred lines as to what an investment property is.

“You can always get lost in the definitions of these things, so that's my first observation. My second observation is you have a person who owns a piece of property. It is their property and they choose to allow people to rent that property for income purposes,” Mr McKibbin said.

“I don't think in those circumstances that they're giving over their entire rights to how that property should be used. That's not what they're saying. They're saying, 'Here is my property and I offer my property to you in it the state it's in and to be used in the state it's in as your home, as your accommodation'.”

“There's a few things that get very blurred in this, and quite often we see people forming the view that a landlord is not an investor, they're somebody that is providing housing or something along those lines, when in truth they're an investor like somebody who buys share in a company, BHP or one of the big companies that there's no question that somebody who buys shares is an investor, but there seems to be questions about whether or not somebody who owns a rental property is an investor. And the facts are that they are.”

He added that through this provision, it highlights how the right of a singular stakeholder in the market can be “eroded”.

“Any reasonable person that is looking at the market generally and the interests of all stakeholders would be concerned about eroding the right of one stakeholder in the market. It worries me each time that it happens,” Mr McKibbin said.

Under the Residential Tenancies Amendment (Review) Bill 2018, the government’s proposed changes to rental reforms in NSW include:

  • If the property is in a strata scheme, the landlord or landlord’s agent needs to pass on a copy of the by-laws before the tenant enters into a residential tenancy agreement.
  • The creation of an offense for a landlord or landlord’s agent if they pass on a completed condition report to the tenant after the signing of the residential tenancy agreement, with a maximum penalty of $2,200.
  • The creation of an offence for a landlord or landlord’s agent if they do not sign an acknowledgement on a residential tenancy agreement, or if a landlord’s agent fails to sign the acknowledgement of the residential tenancy agreement without a statement from the landlord in writing that the landlord has read and understood a rights and obligations information statement.
  • If rent is paid via cheque, receipts are allowed to be sent to the email address of the tenant.
  • Requirements for rent increases do not apply to fixed terms less than two years that specify when, and the amount by, the rent is increased.
  • Rents paid in a periodic agreement are not allowed to be raised more than once a year.
  • New minimum standards for properties have been introduced, which include:
    • basic access to electricity and gas;
    • structurally sound buildings;
    • adequate natural or artificial lighting as well as ventilation; and
    • adequate outlets for lighting, heating and appliances.
  • Liability for damage to properties caused by someone else is not imposed on a tenant, or co-tenant, if a domestic violence offence is involved with the co-tenant.
  • Landlords can have access to premises without the tenant’s consent to take photos or visual recordings of the interior to advertise the property for sale once in a 28-day period, as long as reasonable notice is given and must not include tenants’ possessions in photos or footage.
  • Only landlords can carry out repairs to smoke alarms, with the exception of certain kinds of smoke alarms, with a maximum penalty of $2,200 for failing to repair.
  • In matters involving a Tribunal about repairs, more consideration is given to time frames and reasonable diligence.
  • Tenants who require urgent repairs can get rectification orders from Fair Trading.
  • Landlords will not be able to unreasonably refuse minor alterations, such as picture hooks.
  • The termination of an employee or caretaker residential tenancy agreement cannot be earlier than 28 days after the notice to terminate was given.
  • The termination of other fixed-term tenancies must be on or after the end of the fixed term and no earlier than 30 days after the notice to terminate was given.
  • The termination of periodic tenancies must be no earlier than 90 days after the day the notice was given.
  • Landlords cannot give a termination notice to a tenant solely because of their failure to pay rent, water, electricity, gas or oil charges unless the charge has not been paid for at least 14 days.
  • In matters involving a Tribunal about the termination of a tenancy due to unpaid water charges, the termination is only valid if the landlord has requested payment from the tenant within three months of the bill’s issue.
  • Tenants may give a termination notice if they enter into an agreement by misleading statements that are proven to be concealing certain facts.
  • Tenants may give a termination notice if the property is included on the loose-fill asbestos insulation register during or before the commencement of the tenancy without informing the tenant.
  • Tenants or co-tenants can give a domestic violence termination notice without any penalty if they are a victim of domestic violence, which is defined as:
    • The tenant or co-tenant being a victim of a domestic violence offence where the offender was declared guilty during the tenancy.
    • The tenant or co-tenant has the protection of an active DVO.
    • The tenant or co-tenant is protected against family violence by a domestic violence offender.
    • The tenant or co-tenant has been declared by a competent person to be a victim of domestic violence.
  • The break fee for fixed-term agreements less than or equal to three years is dependent on the percentage of how much of the fixed term has expired:
    • less than 25 per cent: 4 week’s rent;
    • 25 per cent to less than 50 per cent: 3 week’s rent;
    • 50 per cent to less than 75 per cent: 2 week’s rent; or
    • 75 per cent to 100 per cent: 1 week’s rent;
  • The creation of an offence for when a landlord or a landlord’s agent lists a tenant or co-tenant’s personal information in a residential tenancy database if the tenant or co-tenant terminated a tenancy due to domestic violence, with a maximum penalty of $2,200.
  • The creation of an offence for database operators to charge fees for giving copies of personal information in a residential tenancy database to that person.
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