Debate resumed from 8 February 2024.
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) (12:20): I speak on behalf of the Government in debate on the Residential Tenancies Amendment (Prohibiting No Grounds Eviction) Bill 2024. The Government will oppose the bill because it has its own commitment to introduce reasonable grounds to end a tenancy. The Government understands the impact that no grounds terminations have on renters. The ability for an owner to end a lease without a reason creates uncertainty, instability and stress for renters, who can be asked to leave their home without ever knowing the reason.
The Government made the commitment to amend rental laws to end no grounds terminations in New South Wales and that commitment still stands. However, it is important that the Government gets that critical change right. It supports increasing transparency and fairness in the owner‑renter property relationship but any amendments to do so must be grounded in an understanding of the impacts that they could have on all parties involved. Owners and renters should not be pitted against each other. We need to find common ground. Given the tightness of the rental market, the increase in the number of people who are renting and how long they are renting for, the Government must do its due diligence to ensure that there are no unintended consequences for, or detriment caused to, renters—the very people the Government is trying to help—owners or the rental market when we remove no grounds evictions.
The latest statistics on vacancy rates clearly show how tight the rental market is. The vacancy rate equilibrium is about 3 per cent, the point at which the pressure on the rental market is in a good space. However, the latest statistics show that the vacancy rate is about 1 per cent and even less than 1 per cent in higher demand areas. That is why, given the tightness of the rental market, we need to be careful that the removal of no grounds eviction does not have unintended consequences for all stakeholders involved in the property market, whether renters or property owners, and for the way the market functions in general.
Some people have the impression that the change will be easy because it has been made elsewhere in Australia and overseas. However, the reality is that there is no one agreed model on how best to end no grounds evictions. There is no nationally uniform or consistent approach regarding what constitutes a valid reason to end a lease. Given that there is no one agreed model, it means that a model cannot just be imported from another jurisdiction because that jurisdiction may not have the same characteristics as the New South Wales market. The Government will take its time, in a considered way, to ensure that the reforms suit this market. New South Wales is different to other jurisdictions such as the Australian Capital Territory and Tasmania. A careful, considered and methodical approach will be this Government's way of ensuring that no grounds evictions are well‑suited to the people of this State and does not have unintended consequences that hurt the very people we are trying to help.
In Queensland and Tasmania, coming to the natural end of a fixed-term agreement such as a one-year lease is a valid ground to end that lease. No further action is required. In Victoria, the end of a fixed-term is a valid ground to end a lease but only for the renter's first term. A landlord needs a more specific reason at the end of any subsequent fixed-term lease. In the Australian Capital Territory and South Australia, any type of lease needs a specific reason to end it. Just stating that the full term of the agreement has passed is not sufficient. I note that the changes in South Australia are yet to commence so it is not yet known what the repercussions might be for a market that is much larger and more spread out than that of the Australian Capital Territory. The fact that there are so many different models reiterates to the Government that a solution that meets the characteristics of the New South Wales market, the biggest market in the country, is needed.
The Government has been observing what is happening in those jurisdictions that I have just mentioned and it will apply its own learnings and analysis to ensure that the reforms work for the New South Wales market. This State has its own unique market characteristics and its own specific challenges. It undoubtedly has the largest rental market and economy in the country. The Government's reforms therefore will be some of the biggest changes the rental market has seen in recent memory. It would be remiss of the Government to simply copy and paste another State's approach to New South Wales. It cannot be a lift-and-shift process. The Government needs to take into account the nuances of the market and be sensitive to any adverse or distortionary effects that the reforms may have.
The Government will not rush through a policy approach that is not suitable for the community or one that will be met with agitation for change as soon as it is introduced. If there is agitation for change the moment a reform is tabled then that reform does not meet the much broader goal of ensuring greater certainty, clarity and consistency for the market—for renters and property owners and the way the market functions as a whole. Therefore, bringing a policy reform that has broad acceptance from all stakeholders is the approach that the Government is taking.
The Government will take its time, in a careful and considered way, to compile a suite of rental reforms that it hopes will be accepted by owners and renters because that is what will give it the long-term certainty and consistency that everyone needs and wants. The Government's consultation process last year showed that there are very different views about ending no grounds evictions. The difference between the views of tenancy advocates and property owners is significant. The statistics show that, as was found out from the consultation period. Make no mistake: ending no grounds terminations will be the most significant New South Wales rental policy change in decades.
It is an absolute change in the paradigm of how owners and renters interact in the property market. We are going to take the time needed to ensure we deliver a package that has longevity, provides broad certainty and balances the challenges of both renters and owners. The Government is working to engage with the people most impacted by the reforms—renters, owners and the industry at large—to understand their concerns about the impact of the changes and the form they should take. Last year we carried out an extensive consultation process, with record levels of interest and feedback, which reinforced the importance of making sure we get this right. We are considering that feedback and other feedback from engagements led by the NSW Rental Commissioner.
The Rental Commissioner has conducted 50 sessions of in-depth consultations, including round tables and one-on-one engagements, with more than 65 organisations, which further reinforced the existence of widespread interest in the reforms we want to make. We need to ensure that every organisation and advocate is heard. Everybody has an interest in making sure the reforms work for the whole market and for the New South Wales market in particular. Legislation should be not only well intentioned but also well informed and well thought out. We must understand its impact in real-world scenarios. Theory and ideals, whilst nice, must be implementable, practical, and must not have adverse consequences on how the market operates.
The Government continues to engage with the sector to refine its approach and, therefore, stands against this bill, not out of disregard for the concerns of renters but in pursuit of a more balanced and workable solution that is underpinned by extensive consultation. A reform package must stand the test of time and have broad acceptance from all stakeholders. I appreciate the intention of the Member for Newtown and the bill, but I must point out some problems with the provisions contained in the proposed legislation. Firstly, the bill has a limited list of permissible reasons for ending a lease. The Government has been clear about its intention to draft fair, balanced legislation. The bill before the House does not meet that standard.
Unfortunately, the bill includes only a short list of additional reasons for termination to replace the existing no‑grounds provisions. It does not include measures to support the operation of the changes, such as evidence requirements for terminations or offences for landlords or agents who give false or misleading information. As part of its consultation on rental reforms, the Government proposed a comprehensive list of reasons to end a lease for renters, owners and the industry to consider. Those reasons included the proposed sale of a property into which the owner or a member of the owner's immediate family is moving. They do not form part of the bill before the House, suggesting the balance between renters and owners has not been met.
Further, the bill allows additional reasons to be prescribed by regulation. Additional reasons prescribed by the regulations would not be subjected to the level of parliamentary scrutiny and oversight that such significant reforms warrant. Members represent different communities across the State of New South Wales in metropolitan areas, suburban areas and regional New South Wales, so it is important to ensure we get it right when we make significant reforms to a central part of the New South Wales economy. We need to provide the opportunity for organisations across our respective communities to have a voice through their local members. Members can then state their opinions and advocate on their behalf in Parliament.
The bill requires a 90-day termination notice period for leases of six months or less. Unfortunately, that 90‑day period is impractical as it is over half the length of a six-month lease. The bill is also missing some key protections. Consultation on proposed changes to end-of-tenancy laws highlighted that reforms should include a number of protective measures to prevent misuse of the new provisions and empower renters so that they benefit from the changes. One of those measures is the requirement to attach evidence to a termination notice to show that the termination is genuine. This benefits the tenant because it increases the accountability of an owner and benefits the owner by ensuring appropriate records are kept. That makes it less likely for a termination to be challenged, creating greater transparency, fairness and certainty for all involved.
The bill does not require any evidence to be provided to the renter as part of the termination process. It does not make it an offence to provide misleading or false information as part of the termination process. That is an offence in other jurisdictions that have made changes to no-grounds terminations, such as Queensland and Victoria. Instead, the bill requires the renter to challenge a termination in the Civil and Administrative Tribunal. I acknowledge that the bill's proposed re-letting restrictions are designed to protect tenants. However, it is possible that an owner's circumstances could change so that they can no longer proceed with the plans that led to the termination. In that case, an owner may wish to re-let the property before the restriction period ends. A mechanism to give an owner a defence in certain circumstances or to enable a landlord to seek exemption from the restriction is not included in the bill.
It does not appear that there has been broad consultation to inform the provisions in the bill, which has led to the issues with the proposed legislation I have just described. The Government has undertaken a comprehensive public consultation process as it looks to improve rental laws in New South Wales. It stands by its commitment to make our rental laws fairer and more transparent. This is a significant paradigm shift for how stakeholders, including tenants and property owners, interact in the property market. As I mentioned earlier, the Government had record‑breaking engagement from renters, tenant advocates, owners and industry stakeholders. I thank them for their ongoing engagement and contributions to ensure that any proposed reform the Government brings to the Parliament is informed by all views and reflects a balanced and fair approach that engages all stakeholders and has broad acceptance across the sector. That approach will ensure that proposed reforms do not result in agitation for change the moment they are introduced to the House. Consultation and ongoing discussions with all stakeholders from all spectrums within the industry will inform the Government's rental legislation.
The Government is striving for a fair and practical approach that upholds the principles of transparency, fairness and responsibility, and expects to see this work progress further in the coming months. It has been clear on its intention to create a fairer, more modern rental market. It is committed to taking sensible, pragmatic action to implement its reforms. Those reforms will stand the test of time. The Government will ensure that all voices in the market—every single one of those stakeholders—have a legitimate voice in the reforms that it makes. Therefore, the Government opposes the bill.
