The Issue

What is this about?

The NSW Government is remaking the Residential Tenancies Regulation 2010 (current Regulation) to progress the recent reforms to the residential tenancy laws which aim to improve the renting experience in NSW. Some examples include:

• making it easier for tenants to make certain minor alterations
• requiring landlords or their agents to inform prospective tenants of any drug crimes to do with the rented property
• clarifying how and when a landlord must carry out a repair to a smoke alarm, and when tenants may replace a battery in a smoke alarm; and
• updating the standard form of residential tenancy agreement and condition report.

A proposed Residential Tenancies Regulation 2019 (the proposed Regulation) has been developed to replace the current Regulation and to enable the provisions of the Residential Tenancies Amendment (Review) Act 2018 (the Amendment Act) to start.

To seek feedback on the detail related to the reforms, the proposed Regulation and a Regulatory Impact Statement have been released for comment.

We are seeking feedback on the proposed Regulation. We would also like to get your input on the time needed for landlords, tenants and real estate agents to comply with and transition to the new requirements. This feedback will help confirm the start date for the reforms.

What has happened so far?

A statutory review of the Residential Tenancies Act 2010 (the Act) was undertaken during 2015-2016 and a report on the statutory review was tabled in Parliament on 23 June 2016. The report made 27 recommendations to modernise and improve the Act.

On 17 October 2018, the NSW Parliament passed the Residential Tenancies Amendment (Review) Act 2018 (the Amendment Act), which introduced a range of reforms and improvements to the Act. The Amendment Act implements the majority of the recommendations of the statutory review, and other reforms aimed at improving the renting experience.

Most of the reforms in the Amendment Act have not yet started as regulations need to be developed to support the changes. Reforms relating to domestic violence started on 28 February 2019.

Key changes to the Act include:

• introducing minimum standards that a rented property must meet to be considered ‘fit for habitation’
• limiting rent increases to once every 12 months for periodic leases
• introducing mandatory set break fees which will apply to all new fixed-term leases that are 3 years or less
• improving landlord disclosure obligations and strengthening the remedies for tenants when these obligations are breached
• introducing an obligation on landlords to repair non-working smoke alarms
• giving NSW Fair Trading power to investigate and issue rectification orders to require landlords to carry out repairs and maintenance, or tenants to rectify damage.

Visit the New residential tenancy laws page for information on the full package of reforms.

What changes are proposed for the Regulation?

The Regulation provides the administrative detail to support the operation of the Act.

The proposed Regulation has been prepared to support the changes to the Act, implement some of the remaining recommendations of the statutory review and modernise the current Regulation.

Changes to the Regulation include:

• expanding the list of material facts that landlords or their agents must not knowingly conceal from a prospective tenant to include drug crimes
• prescribing the manner and the period for landlords to carry out repairs to a smoke alarm, and prescribing the conditions under which a tenant may replace a battery in a smoke alarm
• establishing a list of minor alterations that a tenant can carry out, where it would be unreasonable for a landlord to withhold consent, and specifying which alterations may be carried out by a qualified person
• providing mandatory terms that cannot be modified or excluded from fixed-term tenancy agreements of 20 years or more
• increasing the limit on the monetary jurisdiction of the NSW Civil and Administrative Tribunal
• providing an option for a 5-year fixed term in the standard form of agreement to encourage landlords and tenants to consider longer term leases
• updating the standard form of residential tenancy agreement and condition report
• expanding the list of offences under the Act for which penalty notices may be issued and increasing the penalty amount that may be imposed
• simplifying clauses to make it easier to read and to improve consistency.

The Regulatory Impact Statement explains the objectives and rationale of the proposed Regulation and its impacts.

Next steps

The Department is seeking feedback on the proposed Regulation and the timing for implementing the new laws. Consultation will be open from 5 July 2019 to 2 August 2019.

Once the consultation period has closed, feedback will be considered and all potential options assessed.

The Regulation is expected to be finalised and published on the NSW legislation website in September 2019. It is proposed that the remaining provisions in the Amendment Act and the new Regulation will start on 2 December 2019, to give landlords and tenants sufficient time before the new laws start. Minimum standards for rented properties are likely to start 6 months later so that landlords have enough time to prepare.

The final start date for the new laws (including the minimum standards) will be confirmed through the consultation process.