Landlords: This Is How You Could Be Affected By The Changes To NSW Rental Laws

As you may or may not be aware, there is a proposed bill to amend the Residential Tenancies Act that at time of writing is currently being reviewed in legislative council.

The amendments are predominantly focused on advancing the rights of tenants under the Act.

There are many amendments being assessed, however I have dissected what I believe to be the most important points below and how they may affect you as a landlord, assuming it gets passed.

Proposed amendment: A tenant can make minor alterations (such as installing a picture hook) without approval from the landlord, and also related: Landlords cannot unreasonably refuse minor alterations.

Effect on landlords: Moderate to Major

• The terms of this amendment would need to be made very clear. What’s classified as a ‘minor’ alteration? Do they have to let the landlord/agent know, even if they’re not asking permission? Who pays for it? Will the tenant be required to ‘make-good’, i.e. return it back to its’ original condition?

Proposed amendment: Your investment property will have to meet minimum living standards with regards to structural soundness, adequate lighting and ventilation.

Effect on landlords: Minor to Major (depending on how you maintain your property)

• Again, the terms of this amendment would have to be made specific, and a universal means of assessing the criteria would need to be developed. However, your property should be meeting these targets anyway. It could spell trouble for landlords leasing out a section of their home as a studio.

Proposed amendment: Rent increases for periodical tenancies are restricted to once per year.

Effect on landlords: Minor to Moderate

• This would make rent increases in periodical tenancies the same as rent increases in fixed term tenancies, which is not such a bad thing as most landlords wouldn’t be issuing more than one increase per year anyway.

Proposed amendment: Liability for damage caused by someone other than the tenant will not be imposed on the tenant if a domestic violence offence is associated with the damage.

Effect on landlords: Moderate to Major

• There are a few proposed amendments to the bill that relate to helping victims of domestic violence, which, as far as I’m concerned is a good thing. Who pays for the damage in these cases has not been clarified as yet.

Proposed amendment: Relaxed laws on breaking a lease when the tenant is a victim of a domestic violence offence.

Effect on landlords: Moderate to Major

• Continuing from above, this proposed amendment would allow the tenant to break a lease if they are a victim of domestic abuse. The offender would need to be found guilty of a domestic violence offence before the victim can break their lease without penalty.

Proposed amendment: Tenants who require urgent repairs can apply for a rectification order from NSW Fair Trading if the landlord does not repair.

Effect on landlords: Minor

• Why are you delaying/refusing ‘urgent’ repairs anyway?

Proposed amendment: Updating the break-lease fee based on how much of the fixed term has elapsed.

Effect on landlords: Moderate to Major

• This proposed amendment would be an update to the current break-lease fee. The proposed amendment stipulates the following break-lease fee structure:
• Less than 25% of the fixed term has elapsed = 4 weeks’ rent
• 25% to less than 50% of the fixed term has elapsed = 3 weeks’ rent
• 50% to less than 75% of the fixed term has elapsed = 2 weeks’ rent
• 75% to 100% of the fixed term has elapsed = 1 weeks’ rent

This updated break-lease fee structure heavily favours the tenant when compared to the current structure (less than 50% elapsed = 6 weeks’ rent, more than 50% elapsed = 4 weeks’ rent). If this amendment gets through its’ effects could be quite significant should your tenant decide to break their lease.

Wrapping up

This amendment has been put forward solely to benefit the tenant, so of course it’s not fantastic news for the landlord. However, all things considered it will not be too traumatic for you as a landlord if the bill gets passed.

Sure, if you don’t maintain your rental property or you are slow to conduct necessary repairs then this could be a big wake up call for you.

If you as a landlord aim to keep your rental property in good condition, are diligent with repairs, keep your tenants on fixed-term leases, and at least have an ounce of respect for tenant rights, you should be able to wear these proposed changes without much stress.

The only significant change is the proposed ruling behind supporting victims of domestic abuse - something I think we can all agree is a change in the right direction.