Important Rental Law Changes in NSW: What Landlords Need to Know
The rental landscape in New South Wales (NSW) has undergone significant reforms, introducing new laws designed to create a fairer and more balanced market. While these changes provide greater protections for tenants, they also introduce new responsibilities and challenges for landlords.
Whether you’re an experienced property investor or just starting out, it’s crucial to understand how these reforms impact your rights and obligations. Failure to comply could result in fines, disputes, or legal complications.
Key Changes to Rental Laws and Their Impact on Landlords
1. New Rules for Ending a Tenancy
Landlords must now provide a valid reason for terminating a tenancy for both periodic and fixed-term leases. Acceptable reasons include:
- Lease breaches such as property damage, unpaid rent, or other violations.
- The property is being sold or listed for sale with vacant possession.
- Major repairs, renovations, or demolition require the property to be vacant.
- The property is being repurposed (e.g., converted into a business space).
- The landlord or a family member intends to move into the property.
- The tenant’s housing is tied to employment, which has ended.
- The tenant no longer qualifies for affordable or transitional housing.
- The property is designated for key worker housing and must be made available for a key worker (e.g., teacher, health worker, or police officer).
Evidence supporting the reason for termination must be provided when issuing a termination notice.
These changes are expected to take effect in the first half of 2025. Penalties will apply if the reason provided is not genuine. If a landlord states they are selling or completing work on the property, it cannot be marketed for lease for 6-12 months (confirmation pending).
2. Extended Notice Periods for End of Lease
The notice period for tenants in fixed-term leases will increase:
- 60 days’ notice for leases of six months or less.
- 90 days’ notice for leases longer than six months.
Notice periods for periodic leases remain unchanged being 90 days notice. This extension allows tenants more time to secure alternative housing.
3. Pets in Rental Properties
Landlords can no longer unreasonably refuse tenants with pets. This shift acknowledges the increasing demand for pet-friendly housing.
Impact on landlords: While this may broaden the tenant pool, landlords may have concerns about potential property damage. Adjusting screening processes for applicants when applying for properties.
Increases
To address rising living costs, the government is limiting rent increases to once every 12 months (previously every six months). Any proposed increase must be justified with market evidence.
Impact on landlords: You will need to adjust your expectations and ensure that any increase aligns with comparable market rates.
5. Background Checks
Agents and landlords cannot charge tenants for background checks when applying for a rental property.
Impact on landlords: If you haven’t already factored this into your budgeting, you may need to account for the cost of background checks during tenant screening.
6. No Additional Fees for Rent Payments
Landlords must offer tenants an electronic payment method without additional fees, such as direct bank transfers or Centrepay (a Commonwealth Government service). Tenants cannot be required to use a specific payment platform or app unless they agree.
These changes will take effect in the first half of 2025.
Impact on landlords: Additional fees for certain payment methods will no longer be allowed. Negotiation with tenants on preferred payment options will be key.
Why You Need a Knowledgeable Property Manager
With these new regulations, rental property management is becoming more complex. Navigating legal obligations is critical, and this is where we can help.
From rental agreements and inspections to rent increases and lease terminations, we ensure compliance with current laws, minimizing your risk of disputes or penalties.
Rent increases must now follow stricter guidelines, and we can help implement them effectively while remaining within the law. Our professional relationships with tenants also allow us to negotiate fair rental terms and provide market-supported rent adjustments.
Please see the link for further details regarding these changes provided by Fair Trading.
On 24 October 2024, the NSW Parliament passed major reforms to residential tenancy laws through the Residential Tenancies Amendment Act 2024.
