Changes to NSW Residential Tenancies

Legislation has been passed that makes comprehensive changes to the laws that govern Residential Tenancies in NSW which came into effect on 23 March 2020.

These changes are important for Landlords, Tenants and Managing Agents to be aware of and understand and are contained in the Residential Tenancies Amendment (Review) Act 2018 [NSW] (“Act”) and the Residential Tenancies Regulation 2019 [NSW] (“Regulation”).

Some of the reforms include:

Main Changes

• The agreement for a tenancy and condition report must be as set out in the forms in the Regulation.
• There are mandatory terms for long term Leases.
• Rent increases must be limited to once per year during a periodic agreement when the fixed term has passed.
• Landlords must obtain tenants’ prior written consent to publish photographs or video recordings of premises, including property interiors for advertising purposes which may show tenants’ possessions.
• Tenants may make minor alterations, fixtures, additions and renovations with the landlord’s consent, but the landlord cannot unreasonably withhold consent if the alteration, fixture or addition is one from a prescribed list in the 2019 Regulation.
• Repairs and replacements of hardwired smoke alarms must be carried out by an authorised electrician.

Water Efficiency Measures

• If water usage charges are to be passed onto the tenant, then there are certain water efficiency measures that are required for residential premises including:
  • for shower heads—a maximum flow rate of 9 litres a minute
  • on and from 23 March 2025, for toilets—a dual flush toilet that has a minimum      3-star rating in accordance with the WELS scheme within the meaning of the Water Efficiency Labelling and Standards Act 2005 of the Commonwealth
  • for internal cold water taps and single mixer taps for kitchen sinks or bathroom hand basins—a maximum flow rate of 9 litres a minute
  • at the commencement of the residential tenancy agreement and whenever any other water efficiency measures are installed, repaired, or upgraded, the premises are checked and any leaking taps or toilets on the premises are fixed
  • Note: Taps and shower heads having a maximum flow rate of 9 litres a minute have a 3-star water efficiency rating.

Ending a Tenancy

• Non-payment of water usage or utility charges may now result in tenancy termination (in addition to non-payment of rent) if more than 14 days in arrears.
• Tenants have the right to break their lease if it is signed after 23 March 2020. Tenants will pay a break fee of:
  • 4 weeks rent if less than 25% of the fixed term has expired.
  • 3 weeks rent if 25% or more but less than 50% of the fixed term has expired.
  • 2 weeks rent if 50% or more but less than 75% of the fixed term has expired.
  • 1 week’s rent if 75% or more of the fixed term has expired.
• Victims of domestic violence will be able to terminate their tenancy without penalty.

Prohibition on Terms in Lease

• A residential tenancy agreement must not contain any of the following terms:-
  • a term having the effect that the tenant must use the services of a specified person or business to carry out any of the tenant’s obligations under the agreement; or
  • if there is no restriction on the landlord to use a specific utility provider—a term which requires a tenant to use a specific utility provider.

Interest on Rental Bonds

• Interest will now accrue on rental bonds at the rate payable by the Commonwealth Bank of Australia on an Everyday Access Account balance of $1,000.

Disclosure of Material Facts

• The Landlord and Managing Agent are required to disclose certain material facts about the Premises which include but are not limited to:-
  • if the premises have been in a flooding, bush fire or other natural weather event within the last 5 years
  • the residential premises are subject to significant health or safety risks that are not apparent to a reasonable person on inspection of the premises
  • the premises are listed on the Asbestos Register (LFAI Register)
  • the premises have been the scene of a serious violent crime within the last 5 years
  • the premises have been used for the purposes of the manufacture or cultivation of any prohibited drug or prohibited plant within the last 2 years
  • the tenant will not be able to obtain a residential parking permit in an area where only paid parking is provided because of the zoning of the land or another law applying to development on the land
  • if the premises comprise or include a lot in a strata scheme—scheduled rectification work or major repairs (including replacement of roofing, guttering or fences) to be carried out to common property during the fixed term of the residential tenancy agreement; and
  • the premises are part of a building in relation to which a fire safety order has been issued or a rectification order regarding external combustible cladding.

If you have any questions, please contact us.