New Residential Tenancy Laws for NSW

03 March 20

NEW RESIDENTIAL TENANCY LAWS FOR NSW


All building managers conducting permanent letting need to take note!


Changes to the residential tenancy laws in NSW start on 23 March 2020.


What are the changes?


According to the NSW Government, the changes are designed to improve tenants’ renting experience while ensuring landlords can effectively manage their properties.


The changes also aim to reduce disputes over repairs and maintenance, increase protection and certainty for tenants, and clarify the rights and obligations of tenants and landlords.


The key changes include:


1. Minimum standards to clarify ‘fit for habitation’


Landlords are currently required to provide the rented property in a reasonable state of cleanliness and ‘fit for habitation’. The changes introduce 7 minimum standards which clarify the meaning of ‘fit for habitation’. They are:


(a) Structurally sound property;
(b) Adequate natural or artificial lighting in each room, except storage rooms or garages;
(c) Adequate ventilation;
(d) Supplied with electricity or gas and has adequate electricity or gas outlets for lighting, heating and appliances;
(e) Adequate plumbing and drainage;
(f) Connected to a water supply service or infrastructure for the supply of hot and cold water for drinking, washing and cleaning;
(g) Contains bathroom facilities, including toilet and washing facilities, which allow user privacy.


All NSW landlords will need to ensure that their rented properties meet the minimum standards to be fit for habitation by 23 March 2020.


These standards must be met at the start of each tenancy and must be maintained throughout the tenancy (by way of repairs).


2. New smoke alarm obligations for landlords


From 23 March 2020, all NSW landlords will need to ensure that smoke alarms installed in the rented property are in working order. A penalty will apply for landlords who fail to comply.


3. Changes of a ‘minor nature’


Tenants are currently allowed to install fixtures or make alterations, additions or renovations if they have the landlord’s written consent, or if the residential tenancy agreement permits it. If the tenant’s request for a fixture or alteration, addition or renovation is of a ‘minor nature’ then the landlord must not unreasonably withhold consent. The tenant must pay for the fixture they install or for any alteration, renovation or addition to the property that they make, unless the landlord agrees otherwise.


4. Damage and removing modifications


Tenants are still responsible for any damage they cause to the property. The existing requirements on liability for damage and removing any alterations, additions, renovations or fixtures still apply.


At the end of the tenancy, a tenant is responsible for leaving the property in the same condition as at the start of the tenancy, except fair wear and tear. This includes making sure any alterations, additions or renovations are removed and also fixing any damage caused to the property. A tenant can choose whether to remove any ‘fixtures’ they have installed, provided they repair or compensate the landlord for any damage caused by removing the fixture. A tenant cannot remove any fixtures if the landlord paid for them.


Landlords may apply to the NSW Civil and Administrative Tribunal (the Tribunal) to seek compensation from the tenant for the costs involved if the work is not done to a satisfactory standard, or if the work is likely to adversely affect the landlord's ability to let the premises to other tenants if it is not corrected.

 

5. New mandatory set break fees for fixed term agreements


Mandatory set fees when a tenant breaks a fixed-term agreement early will apply to all new fixed-term agreements that are 3 years or less. This applies to agreements that are entered into from 23 March 2020 onwards.


The break fees are:


 4 weeks’ rent if less than 25% of the lease had expired;
 3 weeks’ rent if 25% or more but less than 50% of the lease had expired;
 2 weeks’ rent if 50% or more but less than 75% of the lease had expired;
 1 week’s rent if 75% or more of the lease had expired.


Using the example of a 12 month tenancy agreement, a tenant would only be required to provide two weeks’ rent to their landlord (that is, an amount equal to two weeks’ rent) to end their agreement early, if 7 months (or 58%) of the agreement had expired.


6. Strengthened information disclosure requirements


A landlord or agent must not make false or misleading statements or knowingly conceal certain material facts from a prospective tenant before they sign an agreement.
Before signing an agreement, a landlord or agent must also tell a tenant of any proposal to sell the property if the landlord has prepared a contract for sale, or if a mortgagee (ie bank or other lender) is taking Court action for possession of the property.

7. New material facts


In addition to the current material facts, from 23 March 2020, a landlord or agent will also need to disclose if the property:


 has been used for the manufacture or cultivation of a prohibited drug or prohibited plant in the last 2 years;
 is in a strata scheme where scheduled rectification work or major repairs will be carried out to common property during the fixed term of the agreement;
 is part of a building to which a:
 notice of intention to issue a fire safety order, or a fire safety order, has been issued requiring rectification of the building for external combustible cladding, or
 notice of intention to issue a building product rectification order, or a building product rectification order, has been issued requiring rectification of the building for external combustible cladding, or
 development application or complying certificate application has been lodged for rectification of the building for external combustible cladding.


8. New information to be disclosed to prospective strata tenants


From 23 March 2020, before a tenancy agreement is signed, a landlord or agent will need to give a tenant a copy of the strata scheme’s by-laws. They will also need to inform the tenant if a strata renewal committee is currently established for the scheme. These changes provide greater protection for prospective strata tenants and are additional requirements to the general disclosure obligations.


9. Remedies for tenants for breaches to information disclosure obligations


From 23 March 2020, a tenant will be able to end their tenancy agreement by giving at least 14 days’ notice if the landlord or agent fails to comply with any of the information disclosure obligations. A tenant can also apply to the Tribunal for an order to end the tenancy. The Tribunal will also have the discretion to order the landlord to compensate the tenant for any costs incurred as a result of ending the tenancy agreement.


10. Water efficiency measures


For a landlord to be able to pass on water usage charges to the tenant, the residential property must be separately metered, meet the water efficiency measures, and the charges must not exceed the amount payable by the landlord (according to the water supplier’s bill or other evidence).


11. New standard form of agreement


The standard form of agreement has been updated to reflect the rights and obligations between landlords and tenants under the new laws.


12. New condition report


The condition report has been updated to reflect the new laws, including the minimum standards and smoke alarm requirements.


13. Other changes include


 rent increases for periodic (continuing) leases will be limited to once every 12 months;
 a new definition for separately metered to reduce disputes between tenants and landlords about who pays for electricity, gas or water usage charges.
Do the laws apply to existing residential tenancies?
Some of the new laws will not apply to existing agreements entered into before 23 March 2020. For example:
 new mandatory break lease fees only apply to new fixed-term agreements that are 3 years or less;
 new landlord information statement requirements only apply when entering into a new residential tenancy agreement;
 new requirements around condition reports apply when the tenancy agreement is given to the tenant for signing;
 new information disclosure obligations apply before entering into a new residential tenancy agreement.

Article Written by Col Myers of Small Myers Hughes Lawyers
Resort News – March 2020 

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice. 

Additional Documents

Click here to download: 2020_03_Mar___New_residential_tenancy_laws_for_NSW.pdf

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