From Monday 23 March, there were a number of changes to the Residential Tenancies Act NSW for both tenants and landlords. The laws governing residential rental properties in NSW have been revised.
Described as the “biggest shake up of rental laws in more than two decades”, the new regulations are designed to increase protections for tenants and reduce disputes over repairs and maintenance. The new legislation also helps make the obligations and rights of tenants and landlords clearer.
While your property manager should make sure you’re meeting your new requirements, it’s important to know what’s expected of you as a landlord. To help you with this, here’s a summary of the changes to the NSW residential tenancy laws outlined in the new regulations.
Change #1: Clarification of ‘fit for habitation’
As a landlord, you are required to provide a property that is ‘fit for habitation’. To better explain what this means, the new Tenancies Act NSW include a set of minimum basic standards which state that, for your property to be rented out, it must: be structurally sound, have adequate light, have adequate ventilation, have an electricity or gas supply, have adequate plumbing and drainage, have access to hot and cold water for drinking, washing, cleaning and have a bathroom that allows privacy.
Change #2: Smoke alarms
Under the Residential Tenancies Amendment, landlords are responsible for making sure all smoke alarms installed in their rental property work. As part of this, you must:
- check that all smoke alarms are working at least once a year
- replace removable batteries at least once a year
- repair or replace any defective smoke alarm within two days of being notified that it’s not working, and
- make sure all smoke alarms are no more than 10 years old.
To help with this, your tenants will be required to notify you if their smoke alarm is not working or needs its battery replaced. Also, if you are unable to repair or replace a defective smoke alarm within 2 days, your tenant will be able to fix it themselves and request reimbursement for any associated costs (with appropriate evidence).
Change #3: Making ‘minor’ modifications
Currently, your tenant must seek your written approval of any modifications (installing fixtures, undertaking renovations, etc.) they want to make. However, if the modifications are ‘minor’, it is considered unreasonable for you not to approve them.
To help make this clearer, the new Residential Tenancy NSW include a list of ‘minor’ modifications. This list can be found in Section 22 (page 12) of the new regulations.
If your tenant requests a ‘minor’ modifications, such as child safety gates, installing hooks, inserting fly screens, installing or replacing blinds or curtains etc, they must pay for it, unless you agree otherwise. They are also responsible for removing or rectifying it at the end of their tenancy – if this is not done to a satisfactory standard, you may seek compensation through the NSW Civil and Administrative Tribunal (the Tribunal).
Please note, this change does not apply if your property is on the loose-fill asbestos insulation register or is a heritage listed. Also, some restrictions apply if your property is part of a strata scheme or residential land lease community.
Change #4: Break lease fees
From 23 March 2020, all new rental agreements that are for a fixed-term of less than 3 years will include break lease fees. This means that, if your tenant wants to move out before the lease is up, they will need to pay a fee of:
- 4 weeks rent if less than 25% of their lease has expired
- 3 weeks rent if between 25% and 50% of their lease has expired
- 2 weeks rent if between 50% and 75% of their lease has expired
- 1 week’s rent if more than 75% of their lease has expired
These new laws exclude all leases signed prior to the date that the new changes take effect.
Change #5: More information to be provided to prospective tenants
As a landlord, there is a list of ‘material facts’ you must advise a tenant of, before they sign a lease – like if you’re in the process of selling or if your bank is trying to take possession of the property. You will also need to tell your tenants if the property is part of a strata scheme where major repairs will be carried out on common areas during the lease period. Other information you will need to advise a prospective tenant is if a fire safety order has been issued.
If your property is part of a strata scheme, you will also need to give your tenants a copy of their by-laws and let them know if strata renewal committee has been established.
If you fail to notify your tenant of any of these ‘material facts’ before they move in, they will be able to end their lease without having to pay break lease fees. While they will be required to give you at least 14 days’ notice, they will also be able to apply to the Tribunal for reimbursement of the costs associated with ending their lease.
Change #6: Water efficiency
To help prevent water wastage, the new requirements state that:
- From 23 March 2020, landlords will need to check all taps and toilets for leaks before any new tenancy starts and any time other water efficiency measures are installed, repaired, or upgraded.
- From 23 March 2025, all toilets in rental properties will need to be dual flush and have at least a 3-star water efficiency rating.
Change #7: Repair and maintenance dispute resolution
Under the new regulations, NSW Fair Trading will be able to help resolve issues related to property maintenance and repairs. As part of this, you will be able to ask Fair Trading to investigate damage caused by the tenant. Conversely, your tenant will be able request Fair Trading investigate if you have failed to keep the property in a reasonable state of repair.
However, before Fair Trading can get involved, a written request must be sent to try to resolve the issue.
Other changes to the Residential Tenancies Act NSW
There are a range of other minor changes in the new regulations, including:
- The standard tenancy agreement form will be updated to reflect the revised obligations and requirements.
- The condition report template will also be updated to reflect the changes. In addition, condition reports will:
- be able to be provided to tenants electronically
- need to be completed within 7 days of the tenant taking possession of the property, and
- incur a penalty if the completed report (two hard copies or one electronic copy) is not provided at the start of the tenancy
- Rent increases for periodic (continuing) leases will be limited to once every 12 months
- Tenants will be able to access the information held about them in tenancy databases, for free.
- Clarification of the rules regarding taking advertising photos and video of the property, particularly when a tenant’s possessions are visible.
Please note: This is only a summary of the revised Residential Tenancies Act NSW – we recommend you read the new regulations to fully understand all of your requirements and obligations.