Mark your calendar: New NSW residential tenancy laws start 23 March 2020
Tenancy laws in NSW are changing, with updates in effect as of 23 March 2020. The well overdue changes include amendments to both the Residential Tenancies Act 2010 and the new Residential Tenancies Regulation 2019.
Below, you’ll find an overview of the upcoming changes. If you are a private landlord in NSW, it’s essential that you become familiar with these updates and make any alterations necessary to your documentation and processes.
To make things even easier, we have created a cheat sheet especially for NSW self-managed landlords.
Changes to NSW residential tenancy laws
On 23 March 2020, new tenancy laws will come into action in NSW. These changes are designed to improve the renting experience for tenants while ensuring landlords can successfully manage their properties.
In summary, the updates aim to:
- Minimise disputes over repairs and maintenance
- Enhance protection and security for tenants
- Clarify the rights and obligations of both tenants and landlords
These outcomes will be achieved with changes to the following tenancy legislation areas:
- Minimum standards
- Smoke alarm obligations
- Changes of a ‘minor nature’
- Mandatory set break fees for fixed-term agreements
- Information disclosure requirements
- Information that must be disclosed to strata tenants
- Solutions for tenants for breaches to information disclosure requirements
- Water efficiency measures
- Rectification order process
- Standard form of agreement
- Condition report
We’ll look at each of these in more detail below.
Although landlords are required to provide a rental property that’s ‘fit for habitation,’ there is currently no clarification as to what, precisely, that entails. From 23 March 2020, all rental properties will have to meet the following seven minimum standards at the start of and throughout the tenancy agreement:
- Structurally sound
- Sufficient natural or artificial lighting everywhere except storage rooms and garages
- Adequate ventilation
- Connection to electricity or gas for lighting, heating, and appliances
- Sufficient plumbing
- Connection to a water supply for hot and cold water adequate for drinking, washing, and cleaning
- Private bathroom facilities, including toilet and washing facilities
Do keep in mind that the above standards do not automatically render a property ‘fit for habitation’ – these are baseline standards.
Smoke alarm obligations
All landlords in NSW must ensure that smoke alarms are installed in their rental property and are in working order. Landlords that do not comply will face a penalty.
Details on when a landlord is required to repair or replace a smoke alarm and when a tenant should repair or replace a smoke alarm are outlined in the new Residential Tenancies Regulation 2019.
Changes of a ‘minor nature’
Renters are allowed to install fixtures or make alterations to the property with the landlord’s written consent or if their agreement allows it. If a tenant requests to make changes to the property of a ‘minor nature,’ the landlord must not withhold permission without reason.
The Residential Tenancies Regulation 2019 includes a list of the types of alterations of a ‘minor nature’ that landlords cannot unreasonably withhold consent for. Even if a requested alteration is on this list, tenants must still obtain written permission from the landlord.
Tenants are responsible for any damage they cause to the property except for fair wear and tear. If they have made any alterations to the property, they must:
- Remove any fixtures, if applicable
- Compensate the landlord for any damage caused to the property following alterations
Tenants cannot remove fixtures that were paid for by the landlord.
Mandatory set break fees for fixed-term agreements
New mandatory set fees when a tenant breaks a fixed-term agreement early will apply to all agreements that are three years or less and entered into from 23 March 2020.
The fees are as follows:
- Four weeks rents if 25 per cent or less of the lease has expired
- Three weeks rent if between 25 and 50 per cent of the lease has expired
- Two weeks rent if between 50 and 75 per cent of the lease has expired
- One week rent if 75 per cent or more of the lease has expired
Information disclosure requirements
Landlords or agents must not make false or misleading claims or conceal material facts from a tenant before they sign an agreement. The new laws expect the existing list of material facts and information that tenants must be told prior to commencing an agreement. What’s more, the new laws also offer a remedy for tenants to enact in the event material facts are not disclosed.
Information to be disclosed to strata tenants
Before an agreement is signed, a landlord or agent must now provide a copy of the strata scheme’s by-laws.
Solutions for tenants for breaches to information disclosure requirements
From 23 March 2020, if a landlord or agent doesn’t comply with their information disclosure obligations, tenants can end their agreement with 14 days’ notice. Tenants can also apply to the Tribunal for an order to end the tenancy.
Water efficiency measures
A landlord can only pass on water usage charges to the tenant if the property:
- The property is separately metered
- The property meets the water efficiency measures
- The cost is no more than the amount payable as per the water supplier’s bill
New laws include additional water efficiency measures, such as:
- Taps and toilets on the property must be checked at the commencement of the agreement for any leaks
- All toilets must be dual flush with a minimum three-star rating according to the Commonwealth Water Efficiency Labelling and Standards (WELS) scheme
Rectification order process
From 23 March 2020, NSW Fair Trading will have a greater ability to resolve disputes between tenants and landlords over repairs, damage, and maintenance. The new rectification order process will be more supportive of both tenants and landlords, allowing them to resolve disputes by working with Fair Trading.
More information about this process will become available when the new laws start.
Standard form of agreement
The standard form of agreement has been altered to reflect new rights and obligations between landlords and tenants. You can find the updated agreement in the new Residential Tenancies Regulation 2019 – this must be used from 23 March onwards.
The condition report has also been updated to reflect new laws. Other improvements to the condition report include:
- Condition reports can be provided to tenants electronically
- If a landlord or agent fails to provide two hard copied or one electronic copy of the filled-in condition report, they will be penalised
You can find the updated report in the new Residential Tenancies Regulation 2019 – this must be used from 23 March onwards.
Do the new laws apply to existing tenancy agreements?
Some of the new laws will not apply to tenancy agreements entered into before 23 March 2020. This includes:
- Mandatory break lease fees
- New requirements around condition reports
- New information disclosure obligations.