The Residential Tenancies Amendment Act 2024 introduces significant reforms aimed at improving housing stability, transparency, and fairness for tenants while outlining clear compliance obligations for landlords. Changes accompanied by the amendment are as follows:
- Ensure residential tenants are offered a convenient and free way to pay rent,
- Ensure prospective tenants cannot be charged for background checks,
- Enable residential tenants to obtain consent to keep animals and to set out the grounds for a landlord to refuse consent,
- Require a landlord to have a valid reason to end a residential tenancy,
- Specify the grounds on which a landlord may terminate a residential tenancy by termination notice,
- Limit rent increases to once every 12 months for all leases,
- Create offences including an offence for a landlord wrongly giving a termination notice,
- Specify when a tenant may vacate premises after a termination notice is given and before the termination date,
- Make the NSW Rental Commissioner a member of the Rental Bond Board.
Below, we break down the key changes, the implications, and how Longton Legal can help landlords and agents navigate through these new requirements effectively and with precision.
1. Rent Payment Methods: Fee-Free Options
The Changes:
Schedule 1[6] – Section 35 requires a landlord or landlord’s agent to allow rent to be paid in certain convenient ways that do not incur additional charges. This does not prevent a landlord or landlord’s agent offering additional ways to pay the rent. These changes will mandate landlords (and their agents) to offer tenants at least one fee-free payment option, such as:
- Bank transfer to the landlord’s account.
- Centrepay, operated by the Commonwealth.
Landlords cannot require rent to be paid via fee-incurring platforms.
Implications:
While this change promotes fairness for tenants by eliminating unnecessary transaction fees, it may limit the landlord’s ability to utilize fee-incurring platforms that could offer additional convenience. Landlords and agents must now ensure compliance by providing a fee-free option, as failure to do so can result in fines of up to 50 penalty units. While a landlord or landlord’s agent is not prevented from offering a tenant alternative methods of payment in addition to the prescribed ways, landlords are prohibited from requiring the tenant to use a single specified method of payment.
2. Statutory limit on amounts payable by tenants
The Changes:
Schedule 1[5] – Section 23 clarifies that limits on the amounts payable by a prospective tenant before a residential tenancy agreement is entered into apply even if the prospective tenant does not apply for tenancy of the residential premises, or does not enter into a residential tenancy agreement for the premises. These changes include limits on requests of payments from a tenant, before or when the tenant enters into the residential tenancy agreement, other than:
- A holding fee
- Rent
- Rental Bond
- An amount for the fee, if any, payable for registration of a residential tenancy agreement under the Real Property Act 1900
Furthermore, section 23(2) prohibits a person from requiring or receiving from a tenant an amount for:
- The preparation of a written residential tenancy agreement, or
- the conduct of a background check.
Implications:
These changes provide greater financial protection and clarity for prospective tenants by explicitly limiting the payments that can be requested before entering into a residential tenancy agreement. These prohibitions apply even if tenants do not proceed with the tenancy. As the landlords will need to absorb these expenses, costs associated with tenant onboarding may impose greater operation burdens to landlords as it necessitates adjustments to leasing procedures to avoid disputes for penalties.
3. Pets: Streamlined Rules for Landlords and Tenants
The Changes:
Schedule 1[9] – Part 3, Division 8 inserts a proposed division that deals with the keeping of pets on rented residential premises. While Schedule 1[2]–[4] make consequential amendments, the bulk of changes regarding pets are proposed under Part 3, Division 8. Under said proposed changes, tenants can request to keep an animal on the residential premises with the landlord’s consent.
- A tenant who has entered into a residential tenancy agreement for residential premises may keep an animal at the residential premises with the landlord’s consent.
The proposed section stipulates that a tenant does not need the landlord’s consent to keep an assistance animal, as defined in the Disability Discrimination Act 1992 of the Commonwealth.
Proposed section 73C also specifies the requirements for an application by a tenant for the landlord’s consent under proposed section 73D, which requires a landlord to respond to the tenant’s application within 21 days. The application must be:
- made in the approved form, and
- made jointly by all co-tenants, and
- given to the landlord or the landlord’s agent
Said consent can only be refused on reasonable grounds specified in 73F, such as:
- The property is unsuitable for the pet (e.g., insufficient space or fencing).
- The anticipated damage exceeds the rental bond
Failure to respond will be construed as automatic approval.
Furthermore, it is worthy to note that the landlord may give consent subject to reasonable conditions about keeping the animal at the residential premises. Proposed section 73E specifies the scope of reasonable conditions that may be imposed on a consent. These conditions, however, cannot include the increase of rent or rental bonds, and cannot require any form of security, or be prescribed by the regulations as an unreasonable condition. Proposed section 73G provides for applications to the Tribunal by a tenant in relation to applications under the proposed division.
Implications:
The amendments limit the ability of a landlord to deny a tenant the right to keep a pet, and in exchange allow the landlord to impose certain conditions to ensure a satisfactory level of property maintenance. However, there are statutory limits as to what these conditions may entail, with specific provisions disallowing certain conditions. It will be increasingly crucial for landlords to impose conditions that are in line with statute to avoid any penalties.
4. Ending ‘No Grounds’ Terminations
The Changes:
Schedule 1[12] – Subdivision 1 Section 84 removes provisions that previously allowed for no-grounds termination of a residential tenancy agreement by a landlord, and includes a proposed subdivision that sets out all the grounds that enable a landlord to give a termination notice. That is, it is now an offence for a landlord or landlord’s agent to give a termination notice knowing the termination notice or the ground for termination is not valid. Under Sections 87E–87M, termination notices must now cite specific, genuine grounds, including but not limited to:
- Breach of tenancy agreement
- The property is being sold
- Significant repairs or renovations are planned, requiring the premises to be vacant
- The landlord or a family member will occupy the property
- The premises will no longer be used as rented residential premises.
The subdivision that sets said grounds for termination applies to both fixed term and periodic tenancies.
Schedule 1[17] and [18] – Section 111(2), Section 111(4) authorise the Tribunal, in relation to a dispute about a termination notice, to make a declaration about the giving of the notice or the grounds for giving the notice. The Tribunal must not make a termination order if it declares the notice was not properly given or the grounds for giving the notice are not genuine. There are, however, subsections that do not apply to termination notices given under exemptions such as section 105B.
Implications:
These changes significantly restrict the ability of the landlord to end residential tenancy agreements at their discretion. Termination notices issued without genuine grounds will result in penalties of up to 100 penalty units for individuals and 650 penalty units for corporations. There are, however, subsections that do not apply to termination notices given under exemptions such as section 105B. Thus, it is crucial for landlords to seek professional legal advice in dealing with conflicts arising in residential tenancy agreements.
5. Further Statutory Obligations on Landlords
The Changes:
(1) Schedule 1[12] – Subdivision 1 Section 87 introduces “tenancy exclusion periods” where it is an offence for a landlord, who issues a termination notice on a prescribed ground, to relet a property within a certain amount of time unless they have obtained the Secretary’s approval. Statute will now impose different exclusion periods for different grounds of termination, and specific timeframes of such exclusion periods are specified in the amendment, including but not limited to:
- 4 weeks for renovation
- 6 months for demolition and sale
- 12 months for no longer being used as residential premises
These exclusion periods have been introduced to prevent the misuse of termination grounds, and will impose heavy penalties for landlords and agents that are in breach.
(2) Schedule 1[7] –Section 41 prevents rent being increased more than once in any 12-month period, and omits the section previously allowing for rent increases under fixed term agreements. Furthermore statute will treat, where a tenant is renewing the lease, a lease and subsequent lease to be a ‘single agreement’. That is, where a tenant is renewing the lease, the one-per-year limit on rent increase will continue to apply.
Implications:
While tenants gain stronger housing stability, landlords face stricter obligations to justify terminations and seek increase in rent. Both changes impose strict penalty units for landlords and agents that are in breach. Breach of exclusion periods will result in penalties of up to 100 penalty units for individuals and 650 penalty units for corporations. There are, however, subsections that do not apply to termination notices given under exemptions such as section 105B. Thus, landlords will need to navigate through complex legal frameworks to identify specific areas of the law that allow for termination, as certain grounds of termination -although lawful- may render the premises ineligible for rent for up to 12 months. Landlords must also carefully plan rent increases, as any rent increase within the 12-month period is invalid, risking enforcement actions. It is crucial for landlords to strategically align rent reviews with legal timeframes when handling rent increase disputes.
How We Can Help You Stay Compliant
The Residential Tenancies Amendment Act 2024 introduces substantial changes that landlords, property managers, and tenants must understand and implement. As tenants and landlords prepare to face one of the biggest changes to residential tenancies, early preparation is key. Here at Longton Legal, we can provide services to make this transition as easy as possible for landlords. The scope of services we offer include but are not limited to:
- Legal advice on termination notices, early exits, and exclusion periods.
- Lease agreement reviews to ensure compliance with pet rules, rent increases, and payment methods.
- Representation in NCAT for disputes regarding pets, terminations, or rent compliance.
Contact us today to ensure compliance and minimise risks under the new rental law regime. We’re here to guide you through these changes with confidence and clarity.
