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Amendments to current rental legislation aimed to give tenants more power have passed the NSW Parliament without any changes.

What does this mean for property investors?

Passing on 17 October, the Residential Tenancies Amendment (Review) Bill 2018 aimed to give tenants more powers in order to “get the balance right” between investors and renters, according to Minister for Better Regulation Matt Kean.

The key changes, according to Mr Kean during the announcement of the Bill, include:

  • The ability for tenants to make minor alterations to properties.
  • The introduction of a new minimum standard for properties.
  • The ability for tenants to get rectification orders from Fair Trading for repairs.
  • Restricting rent increases for periodic leases to once a year.
  • The ability for victims of domestic violence to break a lease without incurring a penalty.

The president of the Real Estate Institute of NSW Leanne Pilkington noted while previous lobbying efforts for rental reform have been adopted in whole or partially, other aspects have been ignored, such as minor alterations, break fees, domestic violence and rent increases among others.

Peter Koulizos, chairman of the Property Investment Professionals of Australia, saw the passing of these reforms as the creation of “the new playing field”, but will cause some property investors to pull out of the market.

By doing so, he said rental supply will diminish and rents would then rise.

“There probably will be a drop off in the number of people that become property investors because this won’t be seen as attractive to them,” Mr Koulizos said to Smart Property Investment.

Despite this, he saw some sections of the reformed legislation as concerning – especially the section regarding break fees for fixed terms up to three years.

“What they’re saying is, if they’ve been there for three quarters of the time, then they’ll only need to pay one week’s rent,” Mr Koulizos explained.

“What I would prefer to see is, a fixed-term agreement is a contract. Now, if you can’t meet the requirements of that contract, that’s okay, but you still need to pay the rent until a new tenant is found, and that’s the rule that we have in South Australia.”

He also agreed with the inclusion allowing victims of domestic violence to break a lease without penalty, but he believed the perpetrator should be held responsible for any damage to the property as a result of domestic violence.

“There needs to be the opportunity for the investor to go for the person that caused the damage,” Mr Koulizos said.

“Now that’s probably through some other court rather than the residential tenancies court, but we understand that these things happen from time to time, but the wrong thing has been done by the person that caused the damage, so they need to be liable for the damage.”

While the reforms have passed, the bill is not yet in effect – this will occur after the NSW governor, David Hurley, gives his assent; a date for which has not been announced.

As reported previously, the proposed passed changes included in the Residential Tenancies Amendment (Review) Bill 2018 for NSW include:

  • The creation of an offence for a landlord or landlord’s agent if they do not sign an acknowledgement on a residential tenancy agreement, or if a landlord’s agent fails to sign the acknowledgement of the residential tenancy agreement without a statement from the landlord in writing that the landlord has read and understood a rights and obligations information statement.
  • Requirements for rent increases do not apply to fixed terms less than two years that specify when, and the amount by, the rent is increased.
  • Rents paid in a periodic agreement are not allowed to be raised more than once a year.
  • New minimum standards for properties have been introduced, which include:
    • basic access to electricity and gas;
    • structurally sound buildings;
    • adequate natural or artificial lighting as well as ventilation; and
    • adequate outlets for lighting, heating and appliances.
  • Tenants who require urgent repairs can get rectification orders from Fair Trading.
  • Landlords cannot give a termination notice to a tenant solely because of their failure to pay rent, water, electricity, gas or oil charges unless the charge has not been paid for at least 14 days.
  • Tenants may give a termination notice if they enter into an agreement by misleading statements that are proven to be concealing certain facts.

Sasha Karen, Smart Property Investment,  18 October 2018