As of March 23, new residential tenancies laws commenced aimed at improving tenants’ renting experience while ensuring that landlords can effectively manage their properties.
Changes to the Residential Tenancies Act 2010 and the new Residential Tenancies Regulation 2019 will reduce disputes over repairs and maintenance, increase protection and certainty for tenants, clarify the rights and obligations of tenants and landlords and improve transparency between these two parties.
Key changes include:
- NSW landlords must ensure that their rental property meets 7 minimum standards to be ‘fit for habitation’
- New and improved disclosure obligations on landlords and their agents, including disclosure of material facts, and strengthening the remedies for tenants when these obligations aren’t met
- Landlords must ensure that smoke alarms are in working order. A penalty will apply for landlords who don’t comply
- Making it easier for tenants to install fixtures or make alterations, additions or renovations that are minor
- Mandatory set fees when a tenant breaks their lease will apply to all new fixed-term agreements that are 3 years or less
- Limiting rent increases to once every 12 months for periodic (continuing) leases
- New powers for NSW Fair Trading to resolve disputes between tenants and landlords. This includes powers to investigate and issue rectification orders to require landlords to carry out repairs and maintenance, or tenants to fix damage.
SCA (NSW), are authoring a complete blog series to discuss each of the changes in detail, including what they were vs what they are now.
Break Lease Fees:
When a tenant signs a fixed-term agreement, they are committing to stay for the full term.
If a tenant wants to move out before the end of the fixed term, there could be costs involved.
A tenant should give the landlord as much notice as they can if they need to end the agreement early.
A tenant should also make it as easy as possible for the landlord or agent to show the property to potential new tenants.
Breaking a fixed-term agreement signed from 23 March 2020:
For agreements of 3 years or less:
Mandatory break fees may apply which is payable based on the stage of the agreement.
A break fee is a penalty a tenant agrees to pay if they move out before the end of the fixed term.
If the mandatory break fee applies, the set fee payable is:
- 4 weeks’ rent if less than 25% of the agreement has expired
- 3 weeks’ rent if 25% or more but less than 50% of the agreement has expired
- 2 weeks’ rent if 50% or more but less than 75% of the agreement has expired
- 1 weeks’ rent if 75% or more of the agreement has expired.
For agreements more than 3 years:
A landlord may still seek compensation by applying to the NSW Civil and Administrative Tribunal (the Tribunal).
These costs may include loss of rent, advertising and a letting fee if the landlord uses an agent.
The landlord or agent may negotiate an agreed amount of compensation with the tenant.
If the tenant and landlord are unable to agree on the amount of compensation, the landlord may claim from the bond or apply to the Tribunal for an order that the tenant pays the landlord a certain amount of compensation.
The landlord will need to show the Tribunal what (reasonable) steps they took to minimise their losses (e.g. advertising for a new tenant without delay).
Breaking a fixed-term agreement signed before 23 March 2020:
The former rules apply, and parties should check their agreement under ‘Additional terms’ to see if the agreement includes the optional break fee clause.
Optional break fee included in the agreement:
The optional break fee clause will apply if the break fee clause has not been deleted from the tenancy agreement. The break fee payable will be either:
- 6 weeks rent if the tenant leaves in the first half of the fixed-term agreement, or
- 4 weeks rent if the tenant leaves in the second half of the fixed-term agreement.
The same optional break fee clause applies for fixed-term agreements of more than 3 years unless the tenancy agreement specifies a break fee of another amount.
Optional break fee not included in the agreement:
The optional break fee clause will not apply if the break fee clause has been deleted from the tenancy agreement.
A landlord may still seek compensation by applying to the Tribunal.
These costs may include loss of rent, advertising and a letting fee if the landlord uses an agent.
The landlord or agent may negotiate an agreed amount of compensation with the tenant.
If the tenant and landlord are unable to agree on the amount of compensation, the landlord may claim from the bond or apply to the Tribunal for an order that the tenant pays the landlord a certain amount of compensation.
The landlord will need to show the Tribunal what (reasonable) steps they took to minimise their losses (e.g. advertising for a new tenant without delay).
Breaking a fixed-term agreement without penalty:
In some circumstances, a tenant can break a fixed-term agreement early without penalty.
A tenant can give 14 days’ written notice to end an agreement early without penalty if:
- They have accepted an offer of social housing (e.g. from DCJ Housing)
- They need to move into an aged care facility or nursing home (not a retirement village)
- A landlord has put the property on the market for sale during the fixed-term, and the tenant was not told before signing the agreement that the property would be sold
- If the property becomes listed on the Loose-fill asbestos Insulation register during the tenancy or was previously listed without the landlord or agent disclosing that information to the tenant.
- A tenant still needs to pay the rent until they hand back possession of the property.
Ending a tenancy because of domestic violence:
A tenant can end their fixed-term or periodic tenancy immediately, without penalty, if the tenant or their dependent child is in circumstances of domestic violence.
A tenant or their dependent child is in circumstances of domestic violence if they:
- Were the victim of a domestic violence offence during the tenancy
- Are protected by an in-force provisional, interim or final Domestic Violence Order (DVO)
- Are protected against family violence by an in-force family law injunction
- Have been declared by a medical practitioner to be a victim of domestic violence perpetrated by the relevant domestic violence offender during the current tenancy.
To end a tenancy in circumstances of domestic violence, a tenant will need to give:
The landlord or the landlord’s agent a domestic violence termination notice and attach one of the following permitted forms of evidence:
- Certificate of conviction for the domestic violence offence
- Family law injunction
- Provisional, interim or final Domestic Violence Order
- Declaration made by a medical practitioner in the prescribed form.
- Each co-tenant a domestic violence termination notice.
A minimum notice period is not required. The termination notice must include a termination date, which can be on the same day that the notice is given or a date after the notice is given.
A domestic violence termination notice does not need to be given in person.
Our next topic will cover changes to smoke alarms.
Stay tuned.
SCA (NSW), are here to help our members transition to the new laws.
If you would like to read about all the changes for tenants and landlords alike, please visit the Department of Fair Trading’s website here.