If you own an investment property in NSW, you’ve likely heard about the state government’s significant changes to tenancy laws, particularly regarding no-grounds evictions. These changes are expected to take effect early 2025 and are aimed at improving tenants’ rights and sense of security in an increasingly competitive market. But what kind of impact will they have on landlords?
Please read below to find out more about no-grounds evictions, changes to NSW eviction laws, the laws on pets, rent increases and how these changes could affect you.
What are no-grounds evictions?
No-grounds or no-fault evictions enable landlords to terminate a tenancy without needing to provide a reason. These evictions can be issued at any time throughout an ongoing lease or at the conclusion of a fixed-term lease, giving landlords the flexibility to regain possession of their properties without justifying the decision.
Whether or not a tenant has adhered to all of the terms of the lease agreement does not currently affect your ability to issue an eviction.
What are the upcoming changes to eviction laws in NSW?
The Minns government is cracking down on no-grounds evictions as a means of delivering on its election commitment to make rental laws fairer. When this law is in effect, NSW will join other states and territories that have implemented similar measures, including Victoria, Queensland, South Australia and the ACT.
Under the changes, in order to evict your tenants, you would be obliged to meet specific criteria. You may issue an eviction if:
- you are selling or intending to sell your property with vacant possession
- you or your family members are moving into the property
- lease conditions have been breached, such as non-payment of rent or property damage
- significant repairs, renovations or demolition of the property are required, or
- your property is no longer to be used as a residential rental.
Additionally, you can evict a tenant if they are no longer eligible for an affordable housing program or, in the case of student accommodation, they are no longer a student.
Landlords, take note: if eviction is due to planned repairs or renovations, the property cannot be re-listed for rent for at least four weeks after the termination of the tenancy!
Will there be any changes to termination notice periods?
Yes, the proposed reforms include changes to the notice periods landlords must provide when evicting tenants. The rationale behind this is to give tenants more time to secure alternative accommodation in the event of an eviction.
For fixed-term leases of less than six months, the notice period may increase from 30 to 60 days. If your fixed-term lease is over six months in length, you may see an increase from 60 to 90 days.
Changes to the laws on pets:
- The RTA Bill allows tenants to keep pets in rental properties with the landlord’s consent, where tenants have used an approved form for consent.
- The landlord will have 21 days to respond to the tenant’s pet application, in writing, otherwise consent will be deemed to have been granted without conditions.
- Landlords will only be permitted to refuse consent on certain specified grounds (including overcrowding of animals at the premises, unsuitability of the property, potential damage that would cost more to fix than the rental bond, where a landlord lives at the rental property, legal restrictions and where a tenant refuses to agree to the landlord’s reasonable conditions).
- Consent may be granted subject to “reasonable conditions” (for example, preventing certain types of animals to be kept indoors, end of lease professional carpet cleaning (if reasonable for the type of animal and premises) and professional fumigation (for a mammal) if the animal is kept indoors, other reasonable conditions specific to the keeping of the animal at the premises, type of animal and the premises, and as prescribed by the Regulation.
- Certain conditions are prescribed to be “unreasonable” including increasing rent or the rental bond, requiring a form of security, or a condition which is a prohibited term under the lease or prescribed by the Regulation to be unreasonable.
- Disputes over pet consent can be taken to NCAT.
- Provisions relating to consent to keeping an animal in a rental property will automatically form part of a residential tenancy agreement.
Other proposed changes:
- Rent will only be able to be increased once every 12 months (regardless of the type of lease (fixed term or periodic)).
- Tenants will need to be offered Centrepay and “approved electronic bank transfer methods” as ways to pay rent. An approved electronic bank transfer method is a free electronic transfer from the tenant to the landlord or landlord’s agent’s bank account.
- Landlords or agents will not be able to charge prospective tenants for background checks or the preparation of a lease.
- The NSW Rental Commissioner will sit on the Rental Bond Board.
What are the penalties for non-compliance?
The exact details of the penalties for landlords providing false or misleading reasons for eviction have not yet been ironed out. However, the NSW government has stated that other jurisdictions are a good indicator of what to expect. Premier Chris Minns has expressed confidence that the penalties his government are putting in place and their means of enforcement will be sufficient to deter landlords from abusing the system. So, at the very least, a pretty hefty fine could be on the cards.
How will the new rules be enforced?
There won’t be an official government body actively monitoring your compliance with these new tenancy laws. Instead, enforcement will rely on individual complaints. That means that if a tenant believes they were evicted for illegitimate reasons, they can file a complaint with NSW Fair Trading, and a further investigation will follow. In cases where disputes arise between landlords and tenants, mediation can be sought through the NSW Civil and Administrative Tribunal, or NCAT.
So, how will these changes affect the way my investment properties are managed?
The proposed end of no-grounds evictions represents a major shift in the tenancy laws that we have all operated under for many years now. For landlords, ultimately this change will require careful planning and an acute understanding of what constitutes legitimate grounds for ending a tenancy to avoid potential penalties and disputes.
At Holmes St Clair, we are here to ensure your investment continues to thrive under the new regulations. Our experienced property managers are committed to keeping you well-informed about key legislative changes as they arise, so if you have any other questions about how these reforms may affect your rental properties, please contact us.