TENANCY LAW REFORM: NSW Pass Several Changes to Rental Laws, Keep No-Grounds Eviction

On 17 October NSW Parliament passed a series of amendments to the Residential Tenancies Act 2010, designed to increase protection and certainty for renters, while ensuring that landlords can protect their investment and effectively manage their properties.The amendments give effect to the majority of the recommendations of the statutory review of the Residential Tenancies Act 2010 and includes additional reforms.

What are the Reforms?
The reforms further improve protections for victims of domestic violence, and improve tenants’ renting experience by making it easier for tenants to make a rental property a home and reducing disputes over repairs and maintenance.

Protections for Domestic Violence Victims
Tenants who need to escape a violent partner will be able to terminate their tenancy immediately and without penalty in circumstances of domestic violence.
Tenants who are victims or a co-tenant who is not the perpetrator will not be held accountable for property damage that occurred during a domestic violence incident.
Landlords and their agents will also be prohibited from listing a victim of domestic violence on a tenancy database if they terminated their tenancy in circumstances of domestic violence.

Minimum Standards
Rented properties will have to meet 7 minimum standards at the start of a tenancy to be fit for habitation. These are baseline standards and are not an exhaustive list of whether a property is fit for habitation.
These are:
1. Structurally sound property
2. Adequate natural or artificial lighting in each room, except storage rooms or garages
3. Adequate ventilation
4. Supplied with electricity or gas and have adequate electricity or gas outlets for lighting, heating and appliances
5. Adequate plumbing and drainage
6. Connected to a water supply service or infrastructure for the supply of hot and cold water for drinking, washing and cleaning
7. Contains bathroom facilities, including toilet and washing facilities, which allows user privacy.
These standards must be maintained throughout the tenancy (by way of repairs).

Rectification Orders
NSW Fair Trading will have new powers to resolve disputes between tenants and landlords over repairs and maintenance and property damage caused by tenants. This will include the ability to issue rectification orders.

Rent Increases
The reforms will help reduce tenants’ fear of retaliatory rent increases by limiting them to once every 12 months for periodic leases.

Other Changes
• introducing mandatory set fees for breaking a fixed-term lease early. The break fee will apply to all new fixed-term leases that are 3 years or less that are entered into after the new laws start. The break fees are:
o 4 weeks’ rent if 75% or more of the lease remains
o 3 weeks’ rent if between 50% and 75% of the lease remains
o 2 weeks’ rent if between 25% and 50% of the lease remains
o 1 week’s rent if 25% or less of the lease remains
• making it easier for tenants to get repair orders from the NSW Civil and Administrative Tribunal
• providing that only landlords can carry out repairs to smoke alarms, except for certain kinds of smoke alarms and repairs. A penalty will apply for landlords who fail to repair a smoke alarm
• a new definition for separately metered premises to reduce disputes between tenants and landlords about who pays for electricity, gas or water usage charges
• clarifying the rules around taking photos and videos during inspections and publishing them to advertise the property for sale or re-lease, especially where the tenant’s possessions are visible
• stopping tenancy database operators from charging tenants to access their own personal information held on the database
• introducing a penalty to the landlord or agent if they do not provide a tenant with a property condition report at the start of the tenancy.

When will the new laws start?
The Government will consult widely with all affected stakeholders and the community during the development of the regulations, including an appropriate start date for the reforms.

Reaction to the Changes
Despite a number of these changes being positive for renters, experts and tenants advocates have warned that the reforms did not go far enough in providing security of tenure for tenants and protecting to right of tenants to keep pets.

“The NSW reforms take a good step … but really fall down around no-grounds evictions,” said Associate Professor Wendy Stone from the Centre for Urban Transitions at Swinburne University.

“It really doesn’t provide a mechanism for change.”

Though these changes will help address concerns around affordability and liveability, Dr Stone said little had been done to address the third key factor — rental security. She and other experts said reforms would be undermined without the final piece of the puzzle; scrapping the landlord’s right to kick out a tenant for no reason, outside of a fixed-term lease.

“We have to get the fundamentals right and we haven’t,” said Tenants’ Union of NSW senior policy officer Leo Patterson Ross.

“Take minimum standards, renters will now be entitled to adequate ventilation, but not all will ask when the risk is still open for a landlord to evict them for it.”

While many of the reforms in Victoria had been made to catch up to NSW, Mr Patterson Ross said, there were some real advances. The Labor government in Victoria also made rentals pet-friendly by default, something missing in NSW. Dr Stone said with one-third of people renting, and a growing proportion of Australians renting for life, a large share of the population was automatically missing out on well-being benefits inherent in pet ownership. Both Dr Stone and Mr Patterson Ross want the government to revisit making changes to no-grounds evictions and pets, and look to limiting rental increases. But others argued the amendments had potentially shifted the balance too far in the favour of renters.

Real Estate Institute of New South Wales president Leanne Pilkington was concerned about the impact changes would have on landlords who already feel there is a heavy weighting in the tenants’ favour, at the NSW Civil and Administrative Tribunal (NCAT) and through current legislation. The opposition spokeswoman for innovation and better regulation Yasmin Catley will be looking to make amendments based off the opposition’s policy, which proposes ending no-ground evictions and introducing minimum 12-month tenancies that can stretch up to five years.

“It doesn’t matter how much you twinkle around edges, if you allow people to hang a picture, or put up curtains, that’s all [immaterial] if people don’t have security of tenure,” she said.

While Mr Kean previously said no-ground evictions undermined renters’ rights, he made no apologies for respecting the property rights of investors and not adopting the “extreme left wing agenda of the Andrews Labor government”.

“Tenants have told us that retaliatory rent increases are a bigger issue for them and that’s why we have taken a measured approach by limiting rent increases in periodic leases to once every 12 months,” he said.

In the 2017-18 financial year, NSW Fair Trading received 2847 complaints from tenants, of which about 35 per cent related to repairs and maintenance issues, 16 per cent to rent and charges and just over one per cent were related to tenancy terminations.

Mr Patterson Ross said most tenants saw little point in attempting to fight “without grounds” evictions as they had no rights. He said limited data on the reasons behind termination of tenancies made it difficult to track.