If you are a landlord, you may have heard that new NSW rental laws are being introduced. As they will significantly impact every tenancy, it’s important you are aware of what these changes are. You should also take the time to understand what the new rules will mean for you and your rental properties.
To help with this, we want to provide an overview of the new NSW rental laws. As part of this, we will outline the rationale for the changes and the timeline for their implementation. We will also explore what the new NSW rental laws will actually mean and provide practical examples of their implementation.
Why are the NSW rental laws changing?
The Residential Tenancies Amendment Bill 2024 was introduced to Parliament on 15 October 2024 and passed on 24 October 2024. It was developed in response to years of advocating from community groups, tenants, and housing advocates. Considered a “historic win for renters“, the new NSW rental laws are designed to reduce costs, and increase stability, for tenants.
New NSW rental laws: Effective from 31 October 2024
A couple of notable changes came into effect a few days after the new NSW rental laws were passed. Specifically, from Thursday 31 October 2024, there were new rules that:
Limited rent increases to once a year
Under the new NSW rental laws, there must now be a minimum period of 12 months between rent increases. This restriction applies to all new fixed-term and periodic leases that were signed on or after 31 October 2024. Fixed-term leases signed before this date, that are for less than 2 years, continue under the previous rules, until expiration.
The new NSW rent increase rules are designed to give renters greater certainty about the cost of a tenancy. They mean that you cannot implement a rent increase for at least 12 months after a new lease starts. They also mean you cannot implement a rent increase more than once in any 12-month period during a tenancy.
For example, say you and a new tenant sign a new lease today at $700 per week. Under the new NSW rent increase rules, that tenant’s rent must remain $700 per week until this date next year. Even if the initial lease is only for 6 months, rent cannot be increased for at least 12 months.
Restricted additional fees at the start of a tenancy
New restrictions have also been introduced on the fees that can be charged at the start of a tenancy. Specifically, you are no longer allowed to charge tenants for:
- the cost of preparing a new lease agreement, and
- administrative fees related to conducting background checks.
However, there are still some costs a tenant can be required to pay at the start of a new tenancy.
New NSW rental laws: Upcoming changes
Further changes will be implemented in the first half of 2025, once the supporting regulations have been developed. This will include:
Ending No Grounds terminations
Under the new NSW rental laws, termination of a lease agreement will only be permitted on specific grounds. This means that you will no longer be able to end a lease without providing a reason. And, once the new rules have been implemented, the only allowable reasons for terminating a tenancy will be:
- The tenant has breached the lease conditions, damaged the property, or not paid rent.
- The property has been sold or is being offered for sale with vacant possession.
- Significant repairs or renovations are required, or the property is going to be demolished.
- You plan to use the property for another purpose, like as a place of business.
- You or a family member intend to move into the property.
- The property is part of a special program, and the tenant no longer meets the requirements to live there.
When ending a lease, supporting documentation will need to be provided with the termination notice, proving the stated grounds. If this evidence is not provided, or the evidence is not considered sufficient, penalties will apply.
Depending on the reason you choose to terminate a tenancy, exclusion periods may also apply. For example, if you claim renovations are required, there will be a minimum period before the property can be leased again.
Increasing notice periods for ending leases
If you choose to terminate a lease agreement, you will be required to provide more notice of this decision. This change will only apply to fixed-term leases and the notice period will depend on the length of the agreement. Specifically, under the new NSW rental laws, the notice you need to provide will increase from 30 days to:
- 60 days for lease terms of 6 months or less, and
- 90 days for lease terms of more than 6 months.
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Making it easier for tenants to keep pets
The new NSW rental laws will formalise the process for tenants requesting to keep a pet. They will also prohibit landlords from refusing applications for pets, except for in specific situations.
Broadly speaking, the new process for a tenant wanting to keep a pet will be:
- The tenant submits their request using a prescribed pet application form.
- The Landlord has 21 days to review the application and respond in writing, and can choose to:
* approve the application without conditions
* approve the application with conditions, or
* refuse the application. - If no response is provided within 21 days, automatic, unconditional approval is granted.
- If the tenant disagrees with the landlord’s decision (refusal or conditions), they can contest it through NCAT.
It’s expected that the new rules will result in a significant increase in number of tenants keeping pets. This is largely because landlords will only be able to refuse pet applications for specific reasons, including:
- There are already too many animals living at the property.
- The type of pet being proposed is unsuitable for the type of property.
- The potential for damage exceeds the bond amount.
- The landlord lives at the property.
As such, you should be prepared for the increased likelihood of pets in your properties. As part of this, depending on the types of properties you own, you may want to consider pet-proofing them.
Requiring fee-free rent payment methods
The new NSW rental laws will also impact the ways tenants can pay their rent. Under the new rules, all landlords and agents will need to provide at least one electronic, fee-free payment method.
Other options can still be provided, and renters can choose to pay other ways (e.g. through an app). However, tenants cannot be required to use a particular service to pay their rent.
Want more information?
If you would like to discuss the new NSW rental laws, and how they will affect you, contact Local Agency Co. Our experienced property management team are experts in interpreting rental laws and are up to date on all the latest requirements.
CLICK HERE TO SPEAK WITH AN EXPERIENCED LOCAL PROPERTY MANAGER