NSW Rental Reforms – what you need to know

NSW Rental Reforms - what you need to know

The REINSW refers to the upcoming NSW rental reforms as “sweeping changes”. So exactly what is changing and how much of an impact will those changes really have on you, your landlords and tenants?

All states and territories in Australia have now responded to demand for minimum housing standards for tenants. As a result we have seen rental reforms being rolled out nationally, with each state and territory at different stages of the process. Now it’s NSW’s turn. On March 23 the new Residential Tenancy Laws will come into effect. We explain the 10 key changes below.

1. Minimum Housing Standards

The new Minimum Housing Standards are designed to protect tenants and enforce compliance by landlords. They are also designed to clarify the statement ‘fit for habitation’ in reference to the rental property, which until now, has been a grey area. To make it crystal clear, 7 minimum standards will be introduced:

  1. The property must be structurally sound.
  2. There must be adequate lighting (natural or artificial) in each room (except any garaging or store rooms).
  3. There must be adequate ventilation.
  4. The property must be supplied with adequate electricity or gas outlets for lighting, heating and appliances.
  5. The plumbing must be in working order and drainage must be adequate.
  6. There must be an adequate supply of hot and cold running water for consumption, cooking, washing and cleaning.
  7. The property must have private bathroom and toilet facilities.

So, by March 23, all rental properties in NSW must comply with the 7 minimum standards. As a property manager, you must ensure that the standards are met at the start of each tenancy and maintained by way of repairs and maintenance, throughout the tenancy. Maintenance Manager will help make this task easy. Ask us how.

2. New smoke alarm rules

From March 23 all smoke alarms in rental properties must be in working order. This will be the responsibility of the landlord and property manager to check at the start of a new tenancy and annually thereafter. Tenants will have a responsibility here too. They will need to notify the landlord or property manager as soon as they discover that a smoke alarm is not working, even if it is only to change a battery. Click here for full details on the new smoke alarms laws.

3. All agencies must appoint one Licensee in Charge

All agencies must appoint one Licensee in Charge and notify NSW Fair Trading (this should have been done by March 1, 2020). From March 23, only the Licensee in Charge will be able to approve trust account transactions.

4. Separate trust accounts for sales and rental monies

From March 23 the Licensee in Charge of your agency must ensure there are 2 separate trust accounts, one for rental money and the other for sales money. They must also ensure that money from rentals and sales are paid into the appropriate accounts.

5. Minor changes to the property will be permitted

From March 23 tenants will be permitted to make minor alterations, additions or renovations to the property, with the majority related to safety and security. Examples include the installation of child safety gates, window safety devices and securing furniture to a wall to prevent it falling onto a child. While the tenant will need to obtain written consent from the landlord for any changes, the landlord will not be allowed to unreasonably withhold consent if the change is on the prescribed list.

6. Mandatory set Break Lease fees for fixed term agreements

If a tenant breaks a fixed term lease of 3 years or less from March 23, new mandatory set fees will apply. For example, a tenant would have to pay 2 weeks’ rent when breaking their fixed term lease agreement if 50% or more but less than 75% of the term has expired. Click here to view the full list of set fees that will apply.

7. More transparency and clarity

From March 23, tenants must have free access to their own personal information held on the database. Furthermore, the landlord or property manager must ensure the following before a Tenancy Agreement is signed by the tenant:

  • That a tenant moving in to a Strata Title property be given a copy of the strata scheme’s by-laws and advise them if a strata renewal committee has been established for the scheme.
  • There must be complete transparency about any plans to sell the property or any potential for mortgagee possession.
  • That no facts are withheld and no misleading statements are made about the property.
  • That they obtain the tenant’s written consent before publishing photos or video of the premises, including property interior shots that may show the tenant’s possessions.

Failure to comply with the above will enable a tenant to end their Tenancy Agreement with 14 days’ notice or by applying for an Order to End the Tenancy through Tribunal.

8. Water charges and water saving measures

From March 23 a landlord will only be able to pass on water charges if the property is separately metered, meets water efficiency measures and the charges don’t exceed the amount payable by the landlord. Click here for more information on the water efficiency requirements stipulated under the new laws.

9. Removal of modifications

If a tenant has made minor modifications, as described in Point 5 above, they are responsible for removing any additions they installed themselves and fixing any residual damage caused to the property as a result. Alternatively they may have to compensate the landlord for any damage caused. Click here for more information.

10. New condition report and updated requirements

The condition report has been updated to reflect the new laws (available in the new Regulation) and requirements around condition reports have been improved and modernised. For example, a condition report will be able to be provided to a tenant electronically. InspectSafe will make this process easy as it documents and stores everything electronically, including all photos. Ask us how. The new condition report must be used from March 23.

Moving forward made easy

With mandatory changes just around the corner, now is the time to act. We’re here to help. We have the tools and resources available to make managing these changes efficient and 100% compliant. Contact the team at Maintenance Manager, PropertySafe and InspectSafe on 1300 155 888 to learn more.