NSW rental reforms announced: What’s changed?

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 it’s 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: