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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:
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:
Information for 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:
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:
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:
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:
Additional changes include:
Further information can be found on the NSW Fair Trading website.
We provide expert property management in Newcastle and Lake Macquarie. Based in Charlestown NSW, we have been delighting property investors with our personal, professional service since 2011. If you found this article helpful or enjoyable, please subscribe or share it with someone else who may benefit.
Carnelian Property Management Newcastle NSW
We are a family-owned and run Charlestown real estate agent offering expert property management across Newcastle and Lake Macquarie.