NSW Rental Reforms: A New Era for Tenants and Investors
On 24 October 2024, the NSW Parliament passed the Residential Tenancies Amendment Bill 2024, marking a significant shift in the rental landscape for tenants and landlords alike. These reforms aim to enhance tenant rights and modify rental practices, which will directly impact property investors.
Key Changes in Tenancy Laws
End of No-Ground Evictions:
The Bill abolishes 'no grounds' evictions, meaning landlords can no longer terminate a tenancy without providing a valid legal reason. This applies to both fixed-term and periodic agreements.
Annual Cap on Rent Increases:
Rent can now only be increased once per year, providing more stability for renters.
New Grounds for Eviction:
Landlords must now provide one of the following valid reasons for eviction:
Significant renovations, repairs, or demolition.
Change in the use of the property (e.g., no longer rented).
Owner or family member intends to occupy the property.
Sale of the property requiring vacant possession.
Tenant is no longer eligible for affordable or transitional housing.
Tenant is no longer enrolled in purpose-built student housing.
Property needed for NSW Government key worker housing scheme.
Employment or caretaker agreements have ended.
Breach by the tenant (including non-payment of rent).
Sale of premises requiring vacant possession.
Notice Period Adjustments:
The notice period for terminating fixed-term agreements is extended:
60 days for leases shorter than six months.
90 days for agreements longer than six months.
The notice period for periodic agreements remains at 90 days.
Pet Ownership:
Tenants will have the right to request permission to keep pets. Landlords must respond within 21 days. If no response is given, permission is automatically granted. Disputes over refusals can be taken to the NSW Civil and Administrative Tribunal (NCAT).
Rental Payment Methods:
Landlords are required to provide a fee-free option for rent payments, including bank transfers and Centrepay, ensuring tenants can pay rent without incurring additional fees.
Background Check Fees:
Landlords and agents can no longer charge prospective renters for background checks when applying for a rental property, addressing concerns over rental application fees.
Portable Bonds Scheme:
Set to be operational in 2025, this scheme allows tenants to transfer their current rental bond to a new property, alleviating the need to pay a second bond upfront.
Implementation Timeline
While the Bill has been passed, the laws will not take effect immediately. The associated regulations detailing the implementation of these changes will be drafted and debated over the summer. We anticipate these laws becoming effective in early 2025.
Who Will Be Affected?
These changes apply to all tenants under the Residential Tenancies Act 2010 (NSW), encompassing both fixed-term and periodic tenancies. However, different regulations may apply to student accommodation, boarding houses, and other living arrangements. Tenants in Residential Land Lease Communities are also covered under these reforms.
As these reforms come into play, property investors need to adjust their strategies and practices to comply with the new laws. This presents both challenges and opportunities in managing rental properties while ensuring tenant satisfaction. At MCA Buyer’s Agency, we are committed to keeping our clients informed and assisting them in navigating these changes.