The biggest change to the NSW tenancy legislation since 2010

Property management

The NSW Parliament recently passed the Residential Tenancies Amendment (Review) Bill 2018, in a move to give tenants more powers and protection, including minimum standards for properties, and the ability for tenants to make minor alterations to a rental property.

The reforms mirror similar changes to legislation in Victoria and Queensland, with a definite trend toward giving tenants more security when they live in rented accomodation.

If you are a property investor, read this article to find out what the new legislation means for your obligations as a landlord and your relationship with your tenants.

Summarising the changes to the Residential Tenancies Act 2010

NSW Residential Tenancies Act 2010

To summarise, the changes to the Residential Tenancies Act 2010 focus on:

  • The ability for tenants to make minor alterations to a rental property
  • A new minimum standard for properties
  • The ability for tenants to get rectification orders from Fair Trading for repairs
  • Restricting rent increases to one a year for periods less than 12 months
  • Protection for victims of domestic violence to break a lease without incurring a penalty
  • Mandatory set fees for breaking a fixed-term lease early

Let’s take a look at these individually, and what impact they could have on landlords.

Minor alterations to a rental property

Tenants can make minor alterations to a property without requesting permission from you. This includes small modifications like putting picture hooks into walls – though they are obliged to rectify these when they terminate the lease and move.

Minimum standards for rented properties

There are also seven new requirements that must be met before a property can be rented out. These conditions must also be met for the duration of the tenancy. These include that the property:

  1. Is structurally sound
  2. Has adequate natural or artificial lighting in each room, except storage rooms or garages
  3. Has adequate ventilation
  4. Is supplied with electricity or gas and have adequate electricity or gas outlets for lighting, heating and appliances
  5. Has adequate plumbing and drainage
  6. Is connected to a water supply with hot and cold water for drinking, washing and cleaning
  7. Contains bathroom facilities, including toilet and washing facilities, which allows user privacy
rental property requirements

Rectification orders from NSW Fair Trading

One of the amendments to the legislation is the ability of NSW Fair Trading to issue a rectification order to resolve disputes between tenants and landlords over repairs and maintenance and property damage caused by tenants.

Practically speaking this would occur when a dispute arises between you and your tenant that cannot be settled. Fair Trading then mediates, and if they are unable to resolve the matter they can issue a rectification order directing who is responsible for making payment, typically by a due date.

Read: When things go wrong – dispute resolution and avoiding tribunal

Rent increases pegged

Under the new legislation rent increases are pegged. You are not permitted to increase your tenants rent more than once during a lease of 12 months or less.

Protections for domestic violence victims

There is also much needed protection for tenants who need to break their tenancy to escape a violent partner. They will now be able to terminate their tenancy immediately if they are subject to domestic violence.

Mandatory set fees for breaking a fixed-term lease early

There are now mandatory set fees for breaking a fixed-term lease early. This applies to leases that are 3 years or less, or are entered into after the new laws start. The break fees are:

  • 4 weeks’ rent if 75% or more of the lease remains
  • 3 weeks’ rent if between 50% and 75% of the lease remains
  • 2 weeks’ rent if between 25% and 50% of the lease remains
  • 1 week’s rent if 25% or less of the lease remains

Read: Rental bonds for landlords and tenants – rights and responsibilities

Landlords responsibilities: rental repairs and maintenance

landlord responsibilities

Unsure of your obligations as a landlord when it comes to repairs and maintenance of your tenanted property?

As one of the primary sources of conflict between landlords and tenants, knowing what your obligations are regarding repairs and maintenance is essential.

Landlords are generally responsible for all repairs and maintenance to a rental property. You are obliged to, ‘maintain the rented premises in a reasonable state of repair relative to the age of the premises.’ But you are not obliged to fix everything, and there are timeframes and rules around what is considered urgent, as well as repairs which are discretionary.

If there are urgent repairs required tenants should give you notice of these, and you are obliged to have these fixed in a reasonable timeframe – ideally as quickly as possible. If your tenant organises to have urgent repairs carried out you must reimburse them within 14 days, and they are obliged to provide you with receipts.

Items such as faulty plumbing are a landlord’s responsibility, but only if they occur as part of normal wear and tear. If your tenant causes a problem due to their negligence or oversight, they will be responsible for the cost of repairs.

Read: Rental repairs and maintenance: who’s responsible, the landlord or tenant?

How can a property manager help?

A property manager will always have the edge over self managing your investment property.

Why?

Aside from being more experienced, they will also be across all the latest legislative changes and red tape associated with property management. They can help you make sense of new laws, and deal with tough issues such as property damage and rental arrears – and be better placed to handle these situations professionally and dispassionately.

Property managers are also there to handle both urgent and non-urgent repairs quickly and efficiently – and respond promptly to your tenants requests.

Need help making sense of NSW tenancy legislation? Give one of propper’s team members a call on 1300 622 751 for more info about our management services, or download our free investment guide.

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