Australia: Changing landscape for landlords and tenants

Changing landscape for landlords and tenants

Planned amendments to NSW rental laws form part of a broader landscape of residential tenancy reforms.

Key takeaways

• Recent and proposed changes to residential tenancy laws in most states and territories are beginning to affect landlord-tenant relationships.
• Reforms generally codify, and in some cases increase landlords' obligations to provide safe and secure housing for tenants.
• If you own residential investment property or are contemplating renting out property, being aware of the changes in your state or territory will help you make informed decisions about managing your property.

The newly elected New South Wales Government is set to introduce changes to residential tenancy laws. The changes, promised during the election campaign, include further reforms to bans on secret 'rent bidding', streamlining the process for tenants wanting permission to keep a pet, and a bond portability mechanism, and addressing bond portability.These amendments occur in the context of reforms affecting landlords and tenants in all states and territories.Being aware of the changes in progress or planned in your state will help you make informed decisions about managing your property.

Regulating rental relationships

Residential tenancy reforms are occurring in the context of policy discussions around housing security and affordability, and their effects on health and wellbeing. Given Australia's high proportion of privately owned rental property, as opposed to institutional landlords, changes can be politically sensitive. However, governments in all states and territories appear to be taking a more proactive approach to regulating rental standards and conditions.While reforms vary between jurisdictions, there are some common themes:

Minimum standards for rental properties

Most jurisdictions have now stipulated minimum standards for a property to be deemed 'fit for habitation'. Again, the requirements vary. As well as general structural soundness, some standards address mould and dampness, security, window coverings, bathroom facilities, access to cooking and laundry, heating and ventilation.Changes that commenced on 1 April in the Australian Capital Territory set minimum energy efficiency standards for rental properties. Minimum standards are also due to commence in Queensland for new tenancies from 1 September 2023.

Repairs and modifications

Many jurisdictions now provide grounds on which tenants can request urgent repairs or approach the relevant civil and administrative tribunal for an order requiring repairs. For example, changes in Victoria from 2021 provide that if the repair is not completed within the stipulated timeframe, tenants may be able to repair the property and require the landlord to repay the costs.Some jurisdictions also allow tenants to make minor modifications without seeking permission. Rules vary about permissible modifications, from picture hooks and doorbells to modifications for safety such as grab rails or securing furniture to walls to avoid risk of injury.

Pets in rental properties

Keeping pets in rental properties is also under review in many jurisdictions.For example, Queensland introduced changes in 2022 to make it easier for tenants to request permission to keep a pet. Landlords are required to respond within 14 days and may only refuse on certain specified grounds including that the premises are unsuitable, or that the request would contravene strata or council by-laws. They may also approve subject to reasonable conditions.In the Northern Territory landlords who object are now also required to lodge an application with the Northern Territory Civil and Administrative Tribunal.The NSW Government has proposed a process similar to Queensland, allowing 21 days for landlords to respond.

Secret rent bidding

Many jurisdictions have now introduced bans on secret 'rent bidding'. Generally, these stipulate that rental advertisements must state a fixed price and cannot ask for offers or suggest a price range. Landlords and estate agents are banned from soliciting or encouraging offers higher than the advertised price. In most cases, prospective tenants may offer to pay over the listed price. Such an offer generally cannot be disclosed to other prospective tenants, as doing so might constitute 'encouragement'.New South Wales introduced changes in December 2022 that prohibit this practice for estate agents. Further proposed changes will require any offers above the advertised price to be disclosed to all prospective tenants.

Caps on rent increases

On 1 July, Queensland will become the latest state to limit rent increases to once every 12 months for periodic agreements. Similar provisions already apply in other states including New South Wales, Victoria and Tasmania. The Greens have proposed wider rent freezes, though this does not yet appear to have gained government support.

Terminating tenancies

Provisions in jurisdictions including the Australian Capital Territory, Victoria and Queensland now require landlords to give a valid reason for terminating a tenancy. In those jurisdictions, a notice to vacate can no longer be issued for no specified reason.Another suite of changes addresses safety of those experiencing or at risk of domestic violence. In some jurisdictions tenants are permitted to break a lease without penalty on grounds including domestic violence.

Further reforms set to strengthen tenants' rights

Further changes are expected as housing ministers develop proposals to strengthen renters' rights for National Cabinet to consider later in 2023.As well as the New South Wales amendments, Western Australia began a consultation on residential tenancy reforms in 2019. Queensland is also consulting on a further round of reforms.Issues under discussion include further changes to the rental bond process to balance landlords' right to retain the bond for repairs with tenants' needing to access the bond for a new tenancy.

Watch this space

If you own a rental property, are considering letting a property or purchasing an investment property, these changes may affect you. We see some key issues to consider:

• It will be important to make sure your property complies with minimum rental standards, which may mean planning renovations or maintenance to bring it up to standard.
• Be aware of changes to your rights, including your ability to terminate a lease. This may be important, for example, if you plan to move into the property or let it to a family member.
• Rental properties will need to be carefully and actively managed so you can respond promptly to issues such as repairs or pet requests. That may mean checking arrangements with your property manager.
• It is always prudent to check your insurance coverage is appropriate.
• If you are purchasing or renovating a rental property, think about suitability for pets as the trend towards pet-ownership in rental properties looks set to continue.