What do the National Cabinet announcements on 'A Better Deal for Renters' mean for NSW Landlords?
Shortest newsletter ever!!
However, as a Landlord, four changes will make our Residential Tenancy Law very different from what we currently have. I explain them and their impact in this quick 10-minute read.
Stay calm; we’ve got this.
National Cabinet Announcements on ‘A Better Deal for Renters’
An older client of ours has rung us several times concerned that the Government will reintroduce Protected Tenancies and rent freezes. She grew up with the rents of her parents’ investment properties being controlled and not being able to evict tenants. The thought of repeating that experience is just too frightening. I doubt we will go back to those days, but we will have some challenges with this new wave of tenancy reform.
Consistency in Tenancy legislation across the states and territories
Consistency is a hope more than a prophecy. Getting the states to mirror legislation is tough, and with laws that really would make sense harmonising, like taxation and employment, the states still won’t do it. Each state has its own politics, even across the same parties. Pretty much every Prime Minister has, at some point, left a meeting of State and Territory leaders mumbling about herding cats and needing whiskey or a gun.
What will continue to happen is that Queensland, NSW, and Victoria will look at each other to see what laws have been put in place and how well they have worked or not. For example, the new NSW Rental Commissioner is an idea copied from Victoria. Bond boards are similar, and versions of the New South Wales Consumer and Administrative Tribunal apply in most states.
The Rent Commissioner will be the one we (as agents) need to watch. Her brief is to make it ‘Fairer for Tenants’.
This one falls into the ‘You win, I lose’ camp. Increasing a tenant’s right to stay in a property can only be done at the expense of an owner’s freedom to issue notice. The big one here is the ending of No Grounds Notice to Quit. A no-grounds notice is a termination notice from a landlord to a tenant during a Periodic lease. In NSW, we are allowed to terminate periodic leases without giving a specified reason.
In the ACT, that power has been removed. An owner can terminate a tenancy to sell a property, move into it or renovate. They have to provide proof, and if they are found to have fabricated ‘facts’, they are liable to penalties and compensation. In Victoria and Queensland periodic leases can no longer be terminated without a reason though you can still terminate a lease at the end of the initial fixed term.
You can bet that we will have some version of this law. There might also be a push to have longer leases as the norm rather than 6- and 12-month terms. How they achieve that, I don’t know, but they keep talking about it.
In NSW, we have had minimum standards for rental property for many years. The only change I expect is that the laws around mould will tighten up. Right now, tenants must prove that a mould problem is caused by the property rather than their behaviour. When these claims go to tribunal, tenants are fine at proving the mould exists and that it has caused them a loss or health issues. However, they usually struggle to prove the property and not them caused the mould.
The ‘if in doubt, it’s the owner’s fault’ rule always applies at the tribunal. We can prove pipes, walls and ceilings/roofs aren’t leaking. Design issues such as bathrooms, laundries without exhaust fans, and kitchens without range hoods that extract steam to the outside can be a challenge.
A change in legislation around minimum standards may make proving the problem is caused by the tenant quite a bit harder, particularly for older unrenovated properties.
Limitations to tenant information
They have suggested that certain types of information cannot be asked of a tenant or as part of our reference checks. In particular, whether there has been a dispute between a tenant and a past landlord or agent. We always ask agents, “Has an applicant been challenging to deal with”?
Our new Rental Commissioner says this is something that should be changed in our Tenancy Act. That will score points with the Tenants Union and Greens party.
We have far more issues with tenants who are difficult to deal with than tenants who fail to pay rent, and removing our ability to know if a tenant is likely to be difficult is concerning.
How will we adapt?
In summary, very little will change because of these announcements. But changes to our Tenancy law driven by the NSW Rent Commissioner are inevitable.
The days of a property being ‘good enough’ for a tenant are ending. You’ll need a property in good condition to avoid issues and attract the tenants you want.
Tenant turnover will increase. If we have issues with a tenant in the first six months of the lease, we will need to give notice before the fixed term expires. The approach will have to become,
If in doubt, move them out.
There won’t be an option to wait and see. Once the initial fixed-term lease period of the lease expires, our ability to terminate a problem tenancy will effectively expire with it.
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Author: Stephen Jackson