What Are The Changes To Residential Tenancy Laws In NSW Which Start on 23 March 2020?

After significant development, which we first wrote about back in November 2018, NSW Fair Trading has now announced changes to NSW residential tenancy laws which will commence from 23 March 2020.

The changes have been developed primarily to improve the experience of tenants when renting, and to ensure landlords can more effectively manage their properties. The updates aim to reduce disputes over repairs and maintenance and clarify the rights and responsibilities of both landlords and tenants. 

Each of the changes are covered below, including new smoke alarm obligations, allowance for tenants to make changes of a minor nature, changes to break fees and more as sourced from information published on the NSW Fair Trading website. The changes are effective from 23 March 2020. 

​Minimum Standards To Clarify "Fit For Habitation"

​Landlords are currently required to provide a rented property in a reasonable state of cleanliness and "fit for habitation". The changes introduce 7 minimum standards which clarify what is meant by the term "fit for habitation". These minimum standards are:

• Structurally sound property
• Adequate natural or artificial lighting in each room, except storage rooms or garages
• Adequate ventilation
• Supplied with electricity or gas and has adequate electricity or gas outlets for lighting, heating and appliances
• Adequate plumbing and drainage
• Connected to a water supply service or infrastructure for the supply of hot and cold water for drinking, washing and cleaning
• Contains bathroom facilities, including toilet and washing facilities, which allow user privacy.

All NSW landlords will need to ensure that their rented properties meet the minimum standards to be fit for habitation by 23 March 2020. Fair Trading notes that rented properties are already required to be fit for habitation and should already meet these basic standards.

Additionally, just because a property meets these minimum standards, this does not by default mean that the property is "fit for habitation". Other elements of a property may deem it to be unfit for habitation even if these minimum standards are met. 

These standards must be met at the start of each tenancy and must be maintained throughout the tenancy through repairs as required. 

​New Smoke Alarm Obligations For Landlords

​From 23 March 2020, all NSW landlords must ensure that smoke alarms installed in the rented property are in working order. A penalty will apply for landlords who fail to comply.

The existing provision that allows landlords to enter the property without consent has been extended to specifically include inspecting or assessing the need for repairs to, or replacement of, a smoke alarm if proper notice has been given to the tenant.

Information for landlords  

To ensure smoke alarms installed in the rented property are in working order, a landlord must:

• Carry out annual checks to ensure all smoke alarms installed at the property are in working order
• Replace a removable battery in all smoke alarms in the period specified by the smoke alarm manufacturer (for a removable lithium battery), or otherwise annually
• Repair or replace a smoke alarm that is not working within 2 days of becoming aware that it is not working
• Replace a smoke alarm with a new smoke alarm within 10 years from the manufactured date, or earlier if specified by the smoke alarm manufacturer.

Information for tenants  

• Tenants will need to notify the landlord if a repair or a replacement to a smoke alarm is required, including replacing a battery in a smoke alarm.
• A tenant can choose to replace a removable battery in a smoke alarm, but they will need to notify the landlord if and when they do this. 
• A tenant may only repair or replace a smoke alarm if the landlord fails to repair or replace a smoke alarm within the prescribed time (as detailed above). 
• Tenants are entitled to reimbursement for the costs of a repair or replacement of a smoke alarm if they provide appropriate evidence. These provisions do not apply to social housing tenants.

Allowance To Make Amendments Of A "Minor Nature"

​Tenants are currently allowed to install fixtures or make alterations, additions or renovations if they have the landlord’s written consent, or if the residential tenancy agreement permits it. The tenant must pay for the fixture they install or for any alteration, renovation or addition to the property, unless the landlord agrees otherwise. If the tenant’s request for a fixture or alteration, addition or renovation is of a "minor nature" then the landlord must not unreasonably withhold consent.

The new Residential Tenancies Regulation 2019 makes clear a list of the kinds of alterations which are considered of a "minor nature" and therefore to which it would be unreasonable for a landlord to withhold consent:

• (a) securing furniture to a wall of premises, other than a tiled wall, if it is necessary for the safe use of the furniture,
• (b) fitting a childproof latch to an exterior gate of a single dwelling,
• (c) inserting fly screens on windows,
• (d) installing or replacing an internal window covering,
• (e) installing cleats or cord guides to secure blind or curtain cords,
• (f) installing child safety gates inside the premises,
• (g) installing window safety devices for child safety,
• (h) installing hand-held shower heads or lever-style taps for the purpose of assisting elderly or disabled people,
• (i) installing or replacing hooks, nails or screws for hanging paintings, picture frames and other similar items,
• (j) installing a carriage service for connecting a phone line or accessing the internet and any facility or customer equipment associated with the provision of the service,
• (k) planting vegetables, flowers, herbs or shrubs if--
  • (i) existing vegetation or plants do not need to be removed, and
  • (ii) for shrubs—the shrubs will not grow to more than 2 metres in height,
• (l) installing, on the residential premises to which the residential tenancy agreement relates, a wireless removable outdoor security camera. Note that the Surveillance Devices Act 2007 regulates the installation, use and maintenance of surveillance devices.
• (m) applying shatter-resistant film to windows or glass doors,
• (n) making a modification that does not penetrate a surface, or permanently modify a surface, fixture or the structure of the premises.

Importantly, NSW Fair Trading states that "Even if the fixture, alteration, addition or renovation is included in the above list, tenants are still required to get the landlord’s written consent to the change".

Damage and Removing Modifications

​At the end of the tenancy, a tenant is responsible for leaving the property in the same condition as at the start of the tenancy, with an allowance for fair wear and tear. This includes making sure any alterations, additions or renovations are removed and also fixing any damage caused to the property. 

For ‘fixtures’, a tenant can choose whether to remove any ‘fixtures’ they have installed, provided they repair or compensate the landlord for any damage caused by removing the fixture. A tenant cannot remove any fixtures if the landlord paid for them.

Landlords may apply to the NSW Civil and Administrative Tribunal (the Tribunal) to seek compensation from the tenant for the costs involved if the work is not done to a satisfactory standard, or if the work is likely to adversely affect the landlord's ability to let the premises to other tenants if it isn’t corrected.

New Mandatory Set Break Fees for Fixed Term Agreements

​New mandatory set fees will apply when a tenant breaks a fixed term lease early. The new break fees will apply to all new fixed-term agreements that are 3 years or less in duration, and will apply to all agreements entered into from 23 March 2020 onwards.

The new mandatory break fees are:

• 4 weeks rent if less than 25% of the lease had expired
• 3 weeks rent if 25% or more but less than 50% of the lease had expired
• 2 weeks rent if 50% or more but less than 75% of the lease had expired
• 1 week rent if 75% or more of the lease had expired.

Strengthened Information Disclosure Requirements

​A landlord or agent must not make false or misleading statements or knowingly conceal certain material facts from a prospective tenant before they sign an agreement. The list of current material facts is available in the information statement (checklist for new tenants) that a landlord or agent must give a tenant before the tenant enters into a tenancy agreement.

The news laws expand the list of current material facts and information that prospective tenants must be told before entering into an agreement. The new laws also provide a remedy for tenants when material facts and information are not disclosed.

New material facts

In addition to the current material facts, from 23 March 2020, a landlord or agent will also need to disclose if the property:

• has been used for the manufacture or cultivation of a prohibited drug or prohibited plant in the last 2 years
• is in a strata scheme where scheduled rectification work or major repairs will be carried out to common property during the fixed term of the agreement
• is part of a building to which a:
  • notice of intention to issue a fire safety order, or a fire safety order, has been issued requiring rectification of the building for external combustible cladding, or
  • notice of intention to issue a building product rectification order, or a building product rectification order, has been issued requiring rectification of the building for external combustible cladding, or
  • development application or complying certificate application has been lodged for rectification of the building for external combustible cladding.

New information to be disclosed to prospective strata tenants

​From 23 March 2020, before a tenancy agreement is signed, a landlord or agent will need to give a tenant a copy of the strata scheme’s by-laws. They will also need to inform the tenant if a strata renewal committee is currently established for the scheme. These changes provide greater protection for prospective strata tenants and are additional requirements to the general disclosure obligations.

Remedies for tenants for breaches to information disclosure obligations

​From 23 March 2020, a tenant will be able to end their tenancy agreement by giving at least 14 days’ notice if the landlord or agent fails to comply with any of the information disclosure obligations. A tenant can also apply to the Tribunal for an order to end the tenancy. The Tribunal will also have the discretion to order the landlord to compensate the tenant for any costs incurred as a result of ending the tenancy agreement.

Water Efficiency Measures

​For a landlord to be able to pass on water usage charges to the tenant, the residential property must be separately metered, meet the water efficiency measures, and the charges must not exceed the amount payable by the landlord (according to the water supplier’s bill or other evidence).

The new laws include additional water efficiency measures, including that all taps and toilets on the property need to be checked at the start of a tenancy so that any leaks are fixed. Taps and toilets must also be checked whenever any other water efficiency measures are installed, repaired or upgraded and any leaks fixed. This requirement applies to existing and new tenancy agreements from 23 March 2020.

From 23 March 2025, all toilets in rented properties must be dual flush with a minimum 3-star rating in accordance with the Commonwealth Water Efficiency Labelling and Standards (WELS) scheme. 

Landlords who intend to replace or upgrade existing toilets in their property should consider installing dual flush toilets with a minimum 3-star WELS rating to meet the water efficiency requirements by 23 March 2025.

New Rectification Order Process

​From 23 March 2020, NSW Fair Trading will have new powers to resolve disputes between tenants and landlords over repairs and maintenance and property damage. This includes the ability to issue rectification orders. The rectification order process will support tenants and landlords to resolve disputes about property repairs and damage in a tenancy by working with Fair Trading.

Landlords will be able to apply to Fair Trading to investigate whether a tenant has caused or allowed damage to the property and has refused or failed to repair, or not satisfactorily repaired, the damage without a reasonable excuse.

Tenants will be able to apply to Fair Trading to investigate whether the landlord has failed to provide and maintain the property in a reasonable state of repair.

A landlord or tenant must first make a written request to the other party to try and resolve the issue and can then apply to Fair Trading if the issue is not resolved.

More information about the application process will be available when the new laws start.

​Condition Report Changes

​The condition report has been updated to reflect the new laws, including the minimum standards and smoke alarm requirements. The requirements around condition reports have also been improved by:

• Allowing a condition report to be provided to tenants electronically
• Introducing a penalty if a landlord or agent does not provide a tenant with two hard copies or one electronic copy of the completed property condition report at the start of the tenancy
• Providing that tenants complete and return the condition report within 7 days of taking possession of the property (instead of from when they receive the condition report), but only if the tenant has received the condition report.
• The new form of condition report is available in the new Regulation and must be used from 23 March 2020 onwards.

Additional Changes

Additional changes include:

• Rent increases for periodic (continuing) leases will be limited to once every 12 months
• A new definition for separately metered to reduce disputes between tenants and landlords about who pays for electricity, gas or water usage charges
• Changes to make it easier for tenants to get repair orders from the NSW Civil and Administrative Tribunal
• Clarifying the rules around taking photos and videos during inspections and publishing them to advertise the property for sale or re-lease, especially where the tenant’s possessions are visible.  
  • Specifically, the Residential Tenancies Amendment (Review) Act 2018 states that a landlord or landlord’s agent must not publish any photograph taken or visual recording made of the interior of residential premises in which any of the tenant’s possessions are visible without first obtaining the written consent of the tenant.
    
  • However, a tenant must not unreasonably withhold consent required to be obtained under this section unless the tenant is in circumstances of domestic violence. 
    
  • A photograph or visual recording is published if it is --
    (a)  publicly exhibited in, on, over or under any building, vehicle or place (whether or not a public place and whether on land or water), or in the air in view of persons being in any street or public place, or
    (b)  disseminated by means of a website, email or other electronic communication, or
    (c)  in the case of a photograph--
    (i)  inserted in any newspaper, periodical publication or other publication, or
    (ii)  contained in any flyer or other document sent or delivered to any person or thrown or left on premises occupied by any person.
    
  • A photograph or visual recording is not published if it is disseminated solely between the landlord and the landlord’s agent for purposes relating to carrying out an inspection of the residential premises, maintenance or repairs.

Further information can be found on the NSW Fair Trading website.