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NSW residential tenancy laws overhaul

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NSW residential tenancy laws overhaul

Recently the NSW Residential Tenancy Law was completely restructured. These changes became effective on 31 January 2011 pursuant to the Residential Tenancies Act 2010 (Act)

Who does the Act apply to?

The new laws apply to all existing and new residential tenancies regardless of whether those tenancies are under a written or oral agreement. Pre-existing leases do not need to be amended however where there are inconsistencies between the terms of a lease and the terms of the Act, the Act prevails.

Are there any leases not covered by the Act?

The Act does not apply to all rented accommodation in NSW. Examples of some of the types of accommodation that the

Act does not apply to include:

• aged-care or retirement villages
• serviced apartments, hotels, motels and backpackers hostels
• holiday parks
• boarding and lodging agreements
• arrangements giving a person the right to reside for up to 3 months for a holiday.
• Tenancy agreements which are part of an option to buy arrangement

Important Changes to Rights of Tenants under the Act

The rights of tenants under the Act have been broadened and include the following:

• Tenants are to be provided with a copy of the NSW Fair Trading’s New tenant checklist before they sign a residential tenancy agreement. Fines apply if this is not done.
• Tenants are not to be required to pay a holding fee until their tenancy application has been approved. If the tenant changes its mind about the tenancy after it has paid the holding fee it loses that fee.
• Before the tenant signs a lease, the landlord is required to disclose:
– if a contract for sale has been prepared for the property
– if a mortgagee has commenced court action to take possession of the property; and
– certain material facts about the property.
• A material fact is defined as information about the property that would be relevant to a tenant’s decision to live in the property eg, if there are any significant health or safety risks, or if the property has been subject to a serious flood or storm in the last 5 years
• Failure to disclose this mandatory disclosure information may allow the tenant a means of getting out of the tenancy and seeking compensation from the landlord.
• Landlords and their agents are no longer permitted to charge tenants a lease preparation fee or to have lease agreements which contain compulsory carpet cleaning clauses (unless the tenant is permitted to keep a cat or dog in the property).
• The amount of bond that a tenant can be required to pay is now capped at 4 weeks for all properties including those which are furnished. The bond cannot be increased during the term of the lease in line with rental increases.
• The new time limit for lodgement of bond monies with Fair Trading is 10 days from the date of payment.
• The Act stipulates that tenants have to be given at least one way to pay their rent that does not attract a fee eg, by direct transfer into the agent’s bank account.
• The Act caps the amount of rent in advance that can be requested at 2 weeks. Previously, where the rent was over $300 per week a tenant could be asked to pay one month in advance.
• Tenants are not permitted to be charged for water usage unless the property has had water efficient measures installed. Landlords under pre-existing leases who wish to continue charging for water usage have 12 months from the start of the new Act to install water efficient measures.

Alterations to the Landlord’s Property & Subletting

Prior to the formal introduction of the Act, there had been conjecture that tenants would be permitted to make alterations to a property without first having to obtain the Landlord’s approval. This is NOT the case.

Tenants are still required to obtain written permission before carrying out any alterations to a property. What has changed is that landlords must not unreasonably refuse requests from a tenant to make a minor change to the property eg installing child proof locks on windows, pay television connections, installing picture hooks etc. A landlord cannot unreasonably refuse a tenant’s request to sublet part of the premises or bring in a co-tenant.

Sale of Property

The Act now requires that where residential premises are to be sold, the tenants must be given 14 days notice prior to the first inspection. The Landlord’s agent will be permitted two inspection periods per week (and more by agreement) on days and at times agreed with the tenant. The tenant is entitled to ask for compensation by way of a rent reduction during the inspection period to compensate them for being inconvenienced.

Ending Tenancy

Landlords are now required to give at least 30 days notice if they want the tenant to move out when the lease expires (up from 14 days). Where a property is sold after a fixed lease term has expired, Landlords are now required to give at least 90 days notice (up from 30 days). Tenants are now permitted to leave at any time after receiving notice of termination and they are only required to pay rent until they move out and hand the keys back to the Landlord.

What happens with goods left behind

Under the Act, rubbish left behind by a tenant when they vacate a property can be disposed of immediately. Any other goods left behind by a tenant must not be disposed of unless the landlord has taken reasonable attempts to notify the tenant that their goods will be disposed of unless collected within a certain period. General items left behind must be held for at 14 days eg furniture and items of clothing. Personal documents such as passports, birth certificates, bank books and photos have to be kept for at least 90 days.