Proposed changes to NSW rental laws
The rental sector has become a topic of keen interest and concern nationwide, with record low vacancy rates and prices skyrocketing to unprecedented heights in recent months. In NSW alone, roughly 2 million people are currently renting, according to the Australian Bureau of Statistics (ABS) 2021 census data. This significant number underscores the importance of a balanced and fair rental market in ensuring stable housing for a sizeable portion of the state’s population.
The NSW state government has recently closed submissions for its public opinion survey on how to improve NSW rental laws1, and, on a national level, we saw housing take centre stage, with several key issues being discussed as the government seeks to address some of the challenges facing the sector as we move forward.
Let’s delve into those issues and see how what could be in store for landlords and renters over the coming months.
Grounds for eviction
Traditionally, NSW landlords have had the flexibility of ‘No grounds’ evictions. This provision allowed them to evict a tenant at the end of a fixed-term lease or during an ongoing lease without specifying any reason. Such eviction rights exist even if the tenant has been diligent in their rent payments, maintained the property in good condition, and the property was set to continue as a rental.
The national cabinet has proposed a transformative step, namely that landlords should provide legitimate grounds for evictions. This move seeks to offer renters a greater sense of stability and security in their homes, thus fostering a more transparent and accountable landlord-tenant relationship.
Retaliatory Evictions
Protection for tenants against retaliatory evictions was another key discussion point. In simple terms, a retaliatory eviction is when a landlord moves to evict a tenant following a complaint or legal action initiated by the tenant. The national cabinet advocates for provisions that would empower tenants to appeal against such retaliations, ensuring their legal rights are protected.
Standardisation of Rental Increases
The fluctuating nature of the rental market sometimes leads to multiple rental hikes within a year. While current NSW regulations offer some protection against frequent hikes, especially during fixed-term agreements, the national cabinet is moving towards even greater standardisation. They propose a universal rule of no more than one rental increase within a 12-month span for both fixed and ongoing tenancy agreements.
Ban On Rent Bidding
In a significant step towards ensuring clarity and transparency, NSW implemented stringent legislation against rent bidding in late 2022, which has since been expanded. It’s now obligatory for landlords or their agents to advertise residential rental properties at a fixed price and refrain from inviting or soliciting rental offers higher than the advertised amount, a practice that is set to be implemented nationwide.
Break Lease Fees: National Standardisation on the Horizon
Breaking a lease can often come with hefty financial implications for tenants. As it stands in NSW, a structured fee system is implemented based on the duration of the agreement served. Specifically: - Four weeks rent is charged if less than 25 per cent of the lease duration has expired. - Three weeks rent is levied if 25 per cent or more (but less than 50 per cent) of the agreement has elapsed. - Two weeks rent is applicable if the tenant has completed 50 per cent or more (but less than 75 per cent) of the lease term. The national cabinet’s initiative aims to standardise these fees across Australia, promoting a uniform understanding and expectation for both tenants and landlords.
Simplifying the Rental Application Process
The rental application process has, at times, been critiqued for its complexity and potential invasiveness. To streamline this experience, the national cabinet proposes introducing a prescribed application form. This measure would not only standardise the application format but also cap the number of documents a landlord or agent can request. Specifically, they will only be permitted to ask for a maximum of: - Two documents proving identity, - Two documents demonstrating the ability to pay, and - Two documents attesting to suitability. In addition to this, safeguarding tenants’ personal information is prioritised. The proposals are that the data of unsuccessful applicants be destroyed three months post-application, while the data of those who secure a tenancy should be disposed of three years after the tenancy concludes.
Regulating Short-term Rentals
The explosive popularity of short-term rentals has added a unique dynamic to the property market. However, there’s growing consensus on the need to regulate this sphere, with the aim of easing pressures on the longer-term rental market. The national cabinet is actively considering strategies to achieve this balance.
Setting Minimum Quality Standards
Beyond financial concerns, the quality of the living environment is paramount. With this in mind, the cabinet is championing the phased introduction of minimum quality standards. These benchmarks will ensure that rental properties, regardless of price or location, meet the essential needs and well-being of their tenants.
Supporting Renters Facing Domestic or Family Violence
One of the most commendable inclusions in these considerations is a distinct focus on providing greater protection for those suffering from domestic or family violence. Recognising the unique challenges they face, specific measures are being crafted to offer protection, flexibility, and support during such trying times.
In conclusion
These potential shifts in the rental landscape signify a comprehensive attempt at refining and balancing the sector and with further discussion likely to arise once the NSW government has analysed the results of its public survey, we may well see more changes in coming months. The proposed changes, reflective of both tenant and landlord interests, aim to promote fairness, clarity, and stability in a market known for its dynamism. As professionals at DiJones, we are well poised to navigate this evolving landscape, and remain committed to guiding and supporting our community through every step, ensuring that the future of the rental landscape is both promising and equitable for all.
(1) https://www.haveyoursay.nsw.gov.au/improving-nsw-rental-laws?utm_source=FT_endtenancy&utm_medium=web
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