New renting laws coming soon

The Residential Tenancies Act 2010 passed through both Houses of NSW Parliament in June 2010, without any amendment to the proposed bill. This new law doesn't apply yet, and we're told by Fair Trading NSW that it won’t come into play until sometime later this year. There's plenty of time to get settled in and have a good look at what's going to change, and this will occupy some of our time on the Brown Couch over the coming months. But for now, here's a quick look at the world of renting in NSW, as we soon will know it...

(Sausages: a little bit like a law. Apparently)

New developments

Tenancy Databases - taming the wild frontier...

Under the current law tenants have little recourse to challenge incorrect or unfair "bad tenant database" listings, but the new law will allow the Tribunal to order their removal. Landlords and real estate agents may be liable to compensate tenants for unlawful listings, and database operators may be fined for not following the rules. The government should be congratulated on this important improvement for tenants in NSW.

Share-housing - the end of uncertainty...?

A person who lives in a shared house, and is not named as a tenant, will need a written sub-tenancy agreement in order to come under the new Act's coverage (unless the head-tenant lives elsewhere). Under the current law, oral agreements between named tenants and their housemates are sometimes recognised as residential tenancy agreements, and sometimes not, depending on the facts in each case and how the Tribunal is constituted. The blanket removal of share house residents from the Act’s protection is alarming. Anyone living in shared accommodation should seek immediate advice to make sure they are prepared for this change.

Share-housing - the end of uncertainty...

The often fluid nature of shared housing arrangements will finally be recognised, with share-house occupants able to add and remove names from a residential tenancy agreement with relative ease. Under the current law, a co-tenant who moves out can never really be sure they wont be held responsible (as in liable) for damage or rent arrears caused by remaining tenants. The new law will also make it easier for tenants to sublet or transfer part of their tenancy. Tenants will still require permission, but landlords wont be able to 'unreasonably' refuse anymore, unless the tenant wants to move out and sub-let the entire tenancy.

Domestic violence - kick abuse to the curb...

When two or more tenants are named on the agreement - something that's not unheard of in domestic relationships - leaving violence can result in substantial debt, because you can't leave your residential tenancy agreement. Changes to co-tenancy laws will benefit those wishing to flee violence, by enabling them to end their liability to the landlord when they leave... Excluding a violent tenant can also be difficult. Under the new law a violent tenant may be excluded from a home, and their tenancy agreement will be automatically terminated, when an AVO is made against them. Remaining occupants may elect to continue or end the tenancy depending on their circumstances, even if they are not named on the original tenancy agreement, and regardless of whether the tenancy is still in its fixed term.

Termination for rent arrears - you pay, you stay, but mind you don't do it again...

Currently, there is nothing in the law to save a tenancy when rent arrears are paid at the last minute - it's entirely at the landlord's discretion. A tenant in arrears, and facing eviction, might choose to put whatever money they have available to other purposes (like moving house). Landlords might take a cynical approach to offers of payment, and decline to negotiate. The new law will see tenancies continue as long as arrears are paid, or payment plans strictly followed, even if the Tribunal has already ordered termination. The catch? If the tenant has "frequently failed to pay” rent, the Tribunal can order termination anyway. To be honest it all looks a little clumsy, and we'll be watching with interest to see how the Tribunal handles this one.

Terminating fixed term agreements – getting a better deal…

Tenants will be able to terminate fixed term agreements, without the need to compensate the landlord, if they are offered a social housing tenancy or a place in an aged care facility. They will also be able to end a fixed term agreement if the landlord puts the place up for sale – now that’s going to make things interesting.

Tinkering with the old bits

Aside from these initiatives, the Residential Tenancies Act 2010 will do little more than meddle with what we already know and love. Much of this is for the better, but it’s not all good news.

Termination without grounds

No grounds notices of termination will still be the bane of tenants’ lives. The required period of notice will be extended from 60 days to 90 days (that’s good) but the Tribunal will lose its discretion to consider the circumstances of the case before terminating a tenancy without grounds (that’s bad). The notion of a “retaliatory eviction” will be strengthened and tenants will be able to make a proactive application to the Tribunal to have a termination notice deemed retaliatory (that’s good) but the Tribunal will lose its discretion to consider the circumstances of the case before terminating a tenancy without grounds (that’s bad). Regardless of all the good things the new law will do for tenants, a landlord’s unfettered right to end a tenancy with no justification has been absolutely affirmed and strengthened by this law. This is disappointing.

Goods left behind

There will be some definite improvements to the law concerning goods left behind at the end of a tenancy, but landlords may be happier about these than their former tenants. Under the current law, landlords’ requirements are so onerous that they are rarely complied with – and they can often get away with it because obtaining compensation for lost goods is next to impossible in the Tribunal. The new law attempts to fix both of these problems by relaxing landlords’ obligations, and allowing tenants to claim compensation when the landlord does the wrong thing. The problem is that the rules have been relaxed so much that doing the wrong thing could be virtually impossible. We’ll be keeping a close eye on this one, too.

Landlord access

There will be several changes to the law insofar as it allows a landlord (or their representative) to come onto the property without the tenant’s permission. The most significant of these changes will be in relation to showing prospective buyers through when the property is for sale. The law will encourage parties to agree to no more than two “periodic inspections” each week – if no agreement is reached then the landlord may access the property without the tenant’s consent, limited to twice a week and requiring 48 hours notice. This is an improvement on the current law, which allows landlords to access the property on a reasonable number of occasions, provided reasonable notice is given.

Water charges

Landlords won’t be able to charge tenants for water usage unless the property is equipped with “water efficiency measures”. It will be left to the regulations to define what this means, but the Minister for Fair Trading has indicated (when introducing the bill to Parliament) that a low-flow shower head and a quick once-over by a plumber to fix any leaking pipes will probably suffice. The real fun to be had here will be in monitoring what, if anything, landlords do to ensure their properties are “water efficient” before passing their water bills on to tenants.

Paying the rent

Landlords and real estate agents will no longer be able to insist on “fee-for-service” rent payment methods, but will have to offer tenants at least one method of payment for which they will incur no unexpected costs. This should stamp out the dubious practice of reducing rent payment methods to a single option, being a direct debiting agent who not only charges the tenant for each transaction, but often requires complete and unsupervised access to their bank account as well.

Alterations

Tenants will be able to make “minor” alterations to rented premises, but only if their landlord gives them permission. Unlike the current law, landlords will not always be able to “unreasonably” refuse – but there will be a long list of things for which unreasonable refusal may still be given. This will include painting and making structural changes, or making changes that will be impossible to undo. Tenants will have to pay for any damage they cause by making alterations to rented premises.

Giving notice

Tenants will no longer have to give their own notice of termination if they want to move out before a termination date given by the landlord. This will save tenants the burden of having to pay double rent for longer than is absolutely necessary, and will allow a great deal more flexibility in timing relocations than the current law provides for.

Rent increases

The Tribunal will no longer distinguish between primary and secondary considerations when looking at excessive rent increases - comparable market rents will be just one of several factors for the Tribunal to look into. The flip side is that affordability is to be expressly ruled out as a consideration.

Break fees

The break fee did not survive the final cut – at least not to the extent that it was initially proposed. In the new law, the break fee will be an optional term, to be agreed to at the beginning of a tenancy. If you opt in, it applies. If not, the current system of breach, loss and mitigation applies. The break fee, or alternatively any compensation calculated according to the landlords actual loss, will only be payable by a tenant who abandons a fixed term tenancy. There will be no option for tenants to give notice during a fixed term, and then pay the break fee as compensation, as was initially proposed.