First Reading
Bill introduced on motion by Mr Anoulack Chanthivong, read a first time and printed.
Second Reading Speech
Mr ANOULACK CHANTHIVONG (Macquarie Fields—Minister for Better Regulation and Fair Trading, Minister for Industry and Trade, Minister for Innovation, Science and Technology, Minister for Building, and Minister for Corrections) (14:30): I move:
That this bill be now read a second time.
I am pleased to introduce the Residential Tenancies Amendment Bill 2024. This bill will introduce the most significant changes to rental laws since the current Residential Tenancies Act became law in 2010. This bill is the next step in fulfilling the Minns Labor Government's commitment to make renting fairer, by ending no-grounds evictions for fixed-term and periodic leases, and making it easier for renters to keep pets. The bill will also limit how often rent can be increased, ban renters from being asked to pay for background checks, and ensure renters have a free and convenient way to pay their rent.
The changes build on the momentum we started immediately after forming government, when we passed the Residential Tenancies Amendment (Rental Fairness) Bill 2023 to fix loopholes in rent‑bidding laws and facilitate a portable bonds scheme. Around one‑third of the New South Wales population are renters, and renting is becoming a longer-term option for more people of all ages and life circumstances. For many years, renters have lacked the stability and security to enable them to make a rental property into a home. Renters who are forced to move regularly cannot forge strong links to a community and often need to move away from schools, family and friends.
Unexpected moving costs can also add to cost-of-living pressures. Further, the very existence of an ability to end a tenancy without a reason makes renters fearful of asserting their rights or even raising any issues with their landlords. How can a renter feel comfortable requesting a much-needed repair or raising concerns about the safety of their home with the threat of a no-grounds eviction hanging over them? For this reason, ending no-grounds evictions is the foundational reform to enable all other rental reforms, and to support the rights and requirements under the Act to operate effectively.
Let me be clear: These comprehensive reforms are only possible under a Labor government. The previous Liberal-Nationals Government failed to act on this issue, and renters have been living with instability as a result. The Liberals and Nationals had an election commitment to end no-grounds evictions for periodic leases only. That would have created two classes of renters, one protected from the threat of no-grounds evictions and one without that protection. It would have also led to perverse outcomes such a renters being pushed onto rolling short-term leases. We have seen that happen in other States. Only a Labor government has the resolve to make such historic changes to the rental system by ending no-grounds evictions across all lease types.
The impact of no-grounds evictions is only heightened in the current difficult rental market. We know this rental market is the toughest that renters have seen for decades, with demand for housing far exceeding supply. Vacancy rates across New South Wales are between 1.5 per cent and 1.7 per cent, which is much lower than the 3 per cent vacancy rate considered to provide a healthy, balanced rental market. The reforms in this bill were developed following extensive public consultation, which saw over 16,000 survey responses and more than 400 written submissions from renters, landlords, real estate agents, tenant advocates and industry representatives.
The NSW Rental Commissioner, Ms Trina Jones, also met with renters, landlords, agents, advocates, academics and others to understand the issues and further develop the reforms. We have consulted widely and thoroughly to make sure the bill gets the balance right for the people of New South Wales. The changes in this bill will benefit renters and landlords. Unfortunately, it is all too common for renters and landlords to be pitted against one another. But it does not have to be that way. A better and fairer rental market benefits everyone. Clarity and certainty in the laws that apply to renting, and the ability for everyone to have a stable home, will only strengthen our communities. It may not be possible to please everyone, but we have listened to what people have told us. We have delivered a bill that gets the balance right.
I will now turn to an outline of the key elements of the bill. The Act already sets out a range of reasons for which a landlord can end a lease: for example, if the renter has breached the lease, or if the landlord has sold the home with vacant possession. However, currently a landlord can also end a periodic or fixed-term lease once that fixed term ends, without giving any reason. This is known as a no-grounds eviction. This bill will significantly improve the lives of many renters in New South Wales by making sure there is a valid and justifiable reason for ending any lease. It will ensure that if a property continues to be offered on the rental market, a renter who is doing the right thing will be able to stay. It will provide stability to renters while ensuring that landlords who need to regain possession of their property are able to do so. Importantly, the bill will end no-grounds evictions for both fixed-term and periodic leases.
The bill replaces sections 84 and 85 of the Residential Tenancies Act with new grounds for termination. The new termination grounds in sections 87E to 87M of the bill are as follows: The property will be offered for sale with vacant possession, the property will no longer be used as rented residential premises for at least 12 months, the landlord or a member of their family will live in the property for at least six months, the property will undergo significant renovation or repair that requires the property to be vacant and the works are planned to commence within two months, the property will be demolished and the works are planned to commence within two months, the tenancy is part of an employee or caretaker agreement that has ended, the property is purpose‑built student accommodation and the renter is no longer a student, the renter is no longer eligible for a subsidised affordable accommodation program or for transitional housing, and the property is part of a key worker housing program and is needed to house a key worker.
These grounds were developed in response to feedback received through extensive consultation and will ensure landlords who genuinely need to end leases and regain possession of their properties are able to do so. It should be noted that this bill does not remove a landlord's ability to evict a renter who has breached their tenancy agreement. Landlords will still be able to end a tenancy if a renter does not pay their rent, seriously damages the property, uses the premises for an illegal activity, or seriously or persistently threatens or abuses the landlord, their agent or contractors.
The new grounds recognise that landlords may wish to use a property for a different purpose for a period of time, prepare it for sale, renovate the property or house a family member. The Government recognises that these are all legitimate reasons for a landlord to end a tenancy. Some of the grounds have specific requirements built into them to ensure that tenants are not being evicted unnecessarily. For example, if a landlord is terminating on the basis that the property will undergo renovation or repair works, the works must be planned to commence within two months of the termination. This will prevent tenants being evicted for a renovation that may be planned to commence in 12 months time. Further, this ground cannot be used when the landlord is subject to an order from Fair Trading or the tribunal to fix damage or disrepair caused by a breach of the landlord's obligation to maintain the premises in a reasonable state of repair. This will prevent a landlord from deliberately allowing a property to fall into disrepair and then evicting the renter.
For the vast majority of landlords, the new grounds in the bill will be seen as reasonable and sensible. The Government maintains that the new grounds could only be viewed as problematic by the minority of landlords and agents who do not want to do the right thing. We have always strived to balance the needs of landlords with the right of renters to have a secure home. The bill before the House achieves that balance. Along with the new termination grounds, the bill also introduces a range of supporting measures that will guard against the misuse of the termination provisions and give the community confidence that the laws are being adhered to.
Exclusion periods will apply for each termination ground. This is a period after the termination within which the property cannot be re-let on the tenancy market. Penalties will apply for a breach. The aim of the exclusion period is to deter misuse of the termination grounds. For example, the exclusion period will prevent a landlord from simply terminating a tenancy under the guise of moving into the property themselves only to put it back on the rental market soon after. The exclusion periods are different for each ground and reflect the period for which the property would not be expected to be back on the tenancy market if the termination for that ground was genuine. For example, if the termination is on the basis that the property is being prepared for sale, it will not be able to be re-let for six months.
To protect agents from unknowingly breaching the exclusion period, new section 87 also requires landlords to tell agents about a tenancy exclusion period applying to a premises. It also specifies that an agent will not be in breach of an exclusion period requirement if they were not aware, and could not reasonably have found out, that an exclusion period was in place. The Government recognises the landlord's circumstances may change. For example, they may not be able to sell the property, or planned renovations works may not be able to proceed, under circumstances beyond the landlord's control. In these situations the landlord can apply to the secretary for an exemption from the re-letting exclusion period. The secretary will assess whether the landlord is genuinely unable to proceed with the plans that led to the termination and can grant an exemption that will enable the property to be re-let.
Evidence will be required to guard against the misuse of termination grounds. New section 85 allows the regulations to require supporting documentation or information that must accompany a termination notice. The requirement to provide evidence will deter landlords or agents from using a termination ground that is not genuine, and will provide renters with confidence that the termination provisions are being used appropriately. Offence provisions will also guard against misuse of termination grounds. New section 85 makes it an offence to provide false or misleading documents or information when giving a termination notice. New section 86 also makes it an offence to give a termination notice on a ground that is not genuine. It will be a defence if the landlord or agent could not have known that a ground for giving a termination notice was not genuine or that the supporting information was false or misleading. Significant penalties apply for these offences: 100 penalty units, or $11,000, for an individual and 650 penalty units, or $71,500, for businesses.
Along with the new grounds for termination, the bill provides for an extension of the existing notice periods for termination of fixed‑term leases while retaining the 90‑day notice period that currently applies to periodic leases. For all of the new termination grounds, the notice period for terminating a fixed‑term lease is 60 days if the lease is for six months or less, and 90 days if it is for longer than six months. These longer notice periods will provide renters with much‑needed additional time to find a new home. However, we have listened to feedback highlighting that longer notice periods for renters are only useful if the renter does not have to pay double rent for an extended period.
Currently, if a renter under a fixed‑term lease finds a new home, this does not change their liability to pay rent until the end of the fixed term. If they make use of the longer notice period and secure a tenancy in a new home early in the notice period, this could leave them paying double rent for a longer period. They could break their lease, but this risks paying a break fee and possibly receiving a bad reference. For this reason, the bill proposes at new section 110 that a renter under a fixed‑term agreement who has received a termination notice may give the landlord an "early exit notice" that allows them to leave the tenancy with 14 days notice. The renter who leaves after the 14‑day period has elapsed is not liable to pay rent after that time.
The changes to end no‑grounds terminations will apply to all rental agreements, including those that commenced before the changes come into effect. This will ensure that all renters are able to benefit from these new protections. The reforms to end no‑grounds terminations are sensible and they are balanced. Limiting the reasons for evictions to these grounds will improve certainty for renters and provide them with the confidence to raise problems with their landlord without fear of a no‑grounds eviction. At the same time, the changes acknowledge that the property is a financial investment for the landlord and that changing financial or life circumstances may mean that the landlord needs to change how the property is used.
I now turn to the changes in the bill to make it easier for renters to keep a pet. Currently in New South Wales landlords can refuse permission for any pet in a rental property, unless it is an assistance animal such as a guide dog. The landlord does not have to justify or give any reason for their refusal and a renter who keeps a pet at a property without the landlord's approval may be in breach of their lease. The Government recognises that pets provide profound emotional and psychological benefits, with studies consistently showing that pet ownership can reduce stress, combat loneliness and promote overall mental health.
We know pets form part of the modern family. A recent analysis byThe Sydney Morning Herald found that of Greater Sydney's 34 local council areas, 16 have more dogs than children aged under 15 years. The same analysis showed cats outnumbered children in the City of Sydney and the Inner West Council local government areas, while Woollahra has 1.1 cats per child. In a world where many face isolation, including in rental settings, changes that support the keeping of pets in rental homes will foster a greater sense of belonging and wellbeing for renters. We went to the election promising to make it easier for renters to keep pets in a rental home. Consistent with our broad reform agenda, the reforms in this bill relating to pets are sensible and balanced. Our approach values the right of renters to make their property into a home while also recognising a landlord's right to manage their investment.
Schedule 1[9] to the bill inserts a new division 8, which relates to the keeping of pets. New section 73B provides that renters who have entered into a residential tenancy agreement are still required to seek a landlord's consent to keep a pet in their home, other than for an assistance animal. A consistent process for applying for this consent from the landlord is set out in new sections 73C and 73D. The application for consent must be made in the form approved by the Secretary of the Department of Customer Service. This is to provide a simple process for renters and to ensure they are not sharing more information than necessary. The application must also be made jointly by all co-tenants, as keeping an animal will likely impact everyone living at the premises. The landlord's response to the request must also be in a form approved by the secretary. This means less guesswork for landlords and agents, and digestible information for renters.
New section 73D outlines the landlord's obligation to respond to an application within 21 days. They must either grant consent, with or without conditions attached, or refuse consent on one or more of the prescribed grounds for refusal. The 21‑day time frame provides adequate time for the landlord's consideration and response. If a landlord doesn't respond within the 21‑day time frame, consent is automatically assumed. This is necessary to prevent renters from being left in limbo or waiting too long for a response. If consent is refused, the landlord must provide the reasons for refusal and outline why the landlord considers that the ground for refusal applies. This will provide transparency for the renter and support an application for dispute resolution between the parties, if required. If the consent is granted subject to reasonable conditions, the landlord is required to include those conditions in their response, which would then form part of the terms of the residential tenancy agreement, if accepted by the renter.
The Government understands that some landlords may have genuine reasons to refuse a pet. New section 73F lists the reasons for which the landlord may refuse a renter's request to keep a pet. These reasons are: keeping the animal at the residential premises would result in an unreasonable number of animals being kept at the premises; the premises is unsuitable for keeping the animal because the fencing is not appropriate, there is insufficient open space or the nature of the premises means the animal could not be kept at the premises humanely; keeping the animal at the residential premises is likely to cause damage that would cost more to reasonably repair than the amount of the rental bond for the premises; the landlord resides at the premises and does not want to live with a pet; keeping the pet would break another law, local council order, strata scheme by-law or community rule; or the tenant has not agreed to a reasonable condition proposed by the landlord.
The bill allows further detail on the grounds for refusal to be provided in the regulations, including by clarifying or defining terms used in the grounds. To provide flexibility for different situations, new section 73E also allows a landlord to consent to a pet, subject to reasonable conditions. Section 73E specifies some conditions that are considered reasonable: for example, requiring an animal to stay outside if it is the kind of animal not normally kept inside, such as a chicken. Other conditions that would be reasonable to include are conditions that require the renter at the end of the tenancy to undertake professional carpet cleaning if it is reasonable for the type of animal and the premises and to have the property fumigated if the animal is a mammal.
New section 73G provides an avenue for a renter to appeal to the tribunal against a landlord's refusal to give permission to keep a pet. The renter can appeal if they believe the landlord's reason for refusing consent is not applicable to their case or the conditions the landlord has proposed are unreasonable. The tribunal must dismiss a renter's appeal if satisfied that the grounds for refusal are applicable or the conditions are reasonable. Alternatively, if the tribunal is not satisfied that the grounds for refusal are applicable, the tribunal must make an order allowing the renter to keep the animal and may make the order subject to conditions. If the tribunal considers a condition proposed by the landlord is unreasonable, the tribunal can remove, vary or substitute a condition.
As with the changes to end no-grounds evictions, the changes to the rules about keeping pets will apply to all tenancy agreements, including those entered into before the changes commence. Any consent to keep a pet that is already in place will not need to be applied for again but will become a consent under the new laws. The changes I have outlined will make it easier for renters to keep pets in their homes. They are balanced reforms which recognise the interests of both landlords and renters and provide simple commonsense reasons for refusing a pet. By making it easier for renters to keep pets, we recognise the many benefits that pets bring and that pets can help renters to turn their house into a home.
I now turn to the remaining provisions in the bill which will make renting in New South Wales fairer, simpler and more affordable. Currently, under sections 41 and 42 of the Act, a landlord is prohibited from increasing rent more than once in 12 months if a renter has a periodic lease or a fixed-term lease of two years or more. However, this protection does not apply to fixed term leases of less than two years or when there is a change in the type of lease. That means that in some scenarios, a landlord could increase the rent several times in 12 months. We think it is unfair for renters to be subjected to frequent rental increases. Predictability and certainty is important so that households and families can plan ahead and know what their costs will be.
To address this, the bill will broaden the protection against rent increasing more than once in a 12-month period to all types of leases, including fixed-term leases of less than two years. Successive leases between the same parties will be treated as a single agreement so that as long as one renter remains the same in successive leases, the rent will not be able to be increased more than once in 12 months. The changes will align New South Wales laws with the National Cabinet Better Deal for Renters agreement. The changes will apply to all leases except those fixed-term leases of less than two years that are already in effect. Those leases will be allowed to run until their term is expired, but all new fixed-term leases will be subject to the rent increase protection.
In another reform that will save renters money, the bill will ensure that renters can pay their rent conveniently and without additional cost. The Act currently requires landlords to offer renters a payment method that is free and reasonably available. While that requirement should be uncontroversial, we have heard time and again that renters are offered inconvenient payment methods as the only free way to pay their rent. It is not practical or fair to ask renters to find time each rent cycle to visit their post office or an agent's office during work hours when other free alternatives are available. Complaints to Fair Trading indicate that offering those inconvenient methods means renters are forced into paying their rent using more convenient options that incur a fee, such as through a rental app. Those methods often streamline administration for agents but at a cost to the renter, such as an administration fee.
When paying rent via an app, a renter may also be required to provide more of their personal information than they would otherwise agree to give. It also undermines the prohibition on landlords and real estate agents requiring renters to use a particular service or business. Schedule 1 [3] to the bill moves that prohibition from clause 5 of the regulation into the Act to provide clarity about the requirement. The bill requires a landlord to offer renters the choice of using electronic bank transfer and Centrepay to pay their rent. The landlord is also required to ensure they enable the payment by whatever method is chosen by the renter. The section also prohibits a landlord from charging any fees or passing on costs incurred by the landlord or the landlord's agent to the tenant.
Consistent with the current Act, the bill does not prevent landlords from accepting other forms of payment for rent such as cash, cheque or payment through an app so long as the renter and landlord both agree for rent to be paid that way. The method of payment may not be changed without agreement from both parties. The bill increases the penalty for breach of the requirement to offer a free method of payment. The penalty has been increased as NSW Fair Trading has found that the existing penalty is not significant enough to prevent agents from restricting renters' ability to choose a genuinely free and convenient rent payment method.
The final reform will clarify that tenants cannot be asked to pay for background checks. The Act currently prohibits a landlord, agent or other person from requiring or accepting payments from a renter other than a holding fee, rent, a rental bond and an amount to cover any fee payable for registration of a tenancy agreement. Despite that provision, Fair Trading has heard several complaints about renters being asked or encouraged to pay for background checks. We know that renting and moving are already costly endeavours, and renters should not be burdened with additional, unnecessary expenses. The bill will clarify that the prohibition on being asked to pay for background checks applies to all prospective renters regardless of whether they eventually enter into a residential tenancy agreement. A breach of that provision will be an offence.
Finally, the bill will appoint the Rental Commissioner as a permanent member of the Rental Bond Board. That aligns with the commissioner's role in advising the Government on rental issues and working with both government and community to protect renters and to rebalance the rental market. The bill is a significant step forward in implementing the Minns Labor Government's commitment to creating a modern, fair rental system in New South Wales. Over the past 18 months, the Government has taken significant steps to provide greater balance in the rental market. We appointed the State's first Rental Commissioner, Ms Trina Jones, who is a tireless advocate for renters. We passed legislation to close a loophole to put a stop to solicited rent bidding, as well as to lay the groundwork for the nation's first Portable Rental Bonds Scheme. The scheme will be a game changer for renters, who will be able to save thousands of dollars by transferring their bond between rental properties.
We invested $8.4 million in the new Rental Taskforce as part of this year's budget, with inspectors and support teams to help renters and to act on serious breaches of rental laws. We launched a new free Rent Check website to make it easier for renters to check whether the rent they are being asked for is fair. The reforms in the bill are the most important building blocks for improving the lives of the more than 2.2 million people across the State who rent. They will also provide clarity and certainty for everyone, and help renters create stable homes. I thank all members of the community who participated in the consultation process on the reforms, and all stakeholders representing renters, landlords, agents and others who provided input and advice to help the Government develop the reforms. Their insights, contributions and collaboration give me confidence that together we can improve the rental system for both renters and landlords.
In the months to come, I look forward to bringing further bills to this Parliament to implement the remainder of our commitments and continue the important work on the rental market. I recognise some of the stakeholders in the public gallery today, including those from the Tenants' Union and Shelter NSW, who played an instrumental part in delivering the reform package in the bill. I also acknowledge advocates from the property sector who have been collaborative and productive in providing us with the feedback to deliver this balanced rental law that modernises the rental system for the people of New South Wales. I commend the bill to the House.
Debate adjourned.
