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) (14:54): I move: That this bill be now read a second time.

I am pleased to introduce the Residential Tenancies Amendment (Rental Fairness) Bill 2023. The bill marks the beginning of the implementation of the Government's commitments to improve residential tenancy laws and make renting fairer for all in New South Wales. The New South Wales Government went into the last election with a set of firm commitments to improve the situation for renters in New South Wales and is taking the steps needed to deliver them. With over one-third of the New South Wales population renting, the Government is committed to ensuring that renters are not second-class citizens; that they have access to secure, safe and affordable housing; and that the rules around renting are fair for all parties.

Renters are facing one of the toughest markets we have seen for decades. Across the State, families are feeling the pressure. Low housing supply and escalating interest rates are impacting affordability for all renters and making things especially tough for owners, many of whom are just ordinary mum-and-dad investors. The latest PropTrack Rental Report, released in April, showed that rents have increased by 11.1 per cent over the past 12 months. Reports by the Property Council and the Reserve Bank of Australia have confirmed that the proportion of income that tenants are paying towards rent has increased, with more tenants in financial stress. A recent report by Long View and PEXA highlighted that tenants are often competing for properties that are lower in quality and that all tenants face poor security of tenure.

It is in that context that the Government will make a number of changes to make renting fairer in New South Wales, some of which are reflected in the bill. The first is the appointment of a dedicated Rental Commissioner to be a voice for tenants and to work with tenants, owners and the community to progress the Government's reform agenda. The Rental Commissioner will also identify barriers to increasing the housing supply for renters, identify gaps and practices that erode renters' rights and gather data on renting that will help to inform future reforms. The process of recruiting the Rental Commissioner is already underway, with the position being advertised as we speak.

The second change is to amend the rules around ending a tenancy so that tenants can no longer be evicted without any reason. The Government will work with the Rental Commissioner, all stakeholders and the community to identify additional reasonable grounds for ending a tenancy. The Government has also committed to making it easier for tenants to enjoy the same rights to keep pets as others in the community by preventing owners from unreasonably refusing permission for a pet.

The Government will also address the issue of over-collection of information from tenants and the protection and use of tenants' personal information. Work on all of those commitments is happening now, and the Government will be seeking input from all stakeholders and the public as the changes take shape. The Government will also work with stakeholders, particularly the housing industry, to identify opportunities to increase the supply of compliant, safe and resilient homes. Rental affordability relies on working to achieve rental availability. The Minns Labor Government cannot progress this solution overnight, but it has committed to finding responsible ways to incentivise the delivery of more housing to relieve the stress on those seeking affordable housing.

The bill will enact another two of the Government's election commitments: to eliminate the practice of secret rent bidding and to establish a portable bond scheme. Those two important changes will help level the playing field for tenants and assist with the costs of renting. The changes to rent bidding will fix loopholes in New South Wales' current rent-bidding laws and boost transparency for everyone in the system. The bill does this by extending the existing ban on solicited rent bidding so that it also covers owners and third parties, not just real estate agents. Those changes will also fulfil the Government's promise to remove secret rent bidding, where one applicant for a tenancy offers a higher price and secures the property without the other applicants knowing about the higher offer or being given an opportunity to match it. The bill enacts that change through a new requirement for owners and their agents to notify applicants of other offers from applicants who are in the running for the property that are higher than the advertised price.

The changes also include an important regulation-making power that will enable the secretary to collect information from owners and agents, meaning the Government will finally be able to gather accurate data on the operation of this change and on the rental market more broadly. The Government's election commitment to introduce a portable bond scheme for renters will ease the cost pressures renters face when they move into a new property. Currently, they are required to pay a new bond before they receive their old bond back, which increases financial stress on tenants. The changes in the bill ensure that the Act contains appropriate powers to design and establish an effective portable bond system.

With this bill, we are doing exactly as we said we would. We are setting up a fairer system where balanced reform allows all parties to work together and build trust. Owners need renters and renters need more owners in the market to reduce prices. We do not want a rental system that pits owners and renters against each other, and we recognise the important role owners play in providing properties to rent. It is critical rental housing supply is not further constrained, particularly in the very tight market renters are experiencing right now. But we also recognise the rental laws in New South Wales have favoured owners too heavily at the expense of renters. The rental laws need to be more equally balanced. I am confident these reforms will help to improve outcomes for both owners and renters in the current rental market.

I now turn in detail to the provisions of the Residential Tenancies Amendment (Rental Fairness) Bill 2023. Currently, the Property and Stock Agents Regulation 2022 requires real estate agents to advertise a rental property at a fixed price and bans them from asking renters to offer more rent than the property is advertised for. However, this rule currently only applies to real estate agents. It does not include landlords, or any of the property technology platforms, including online rental application tools. The bill moves the current requirements relating to fixed price advertising and the ban on soliciting of higher bids from the Property and Stock Agents Regulation to the Residential Tenancies Act 2010. In doing so, the bill closes the existing loophole and ensures that owners are covered by the rent bidding ban, bringing New South Wales into line with rent bidding bans in Victoria, Queensland, Tasmania, the Australian Capital Territory and New Zealand.

Unlike other States and Territories, for the first time in Australia the bill also explicitly extends the ban to any third parties who may encourage renters to offer more for a rental property. This is particularly relevant for online rental application tools that have now become a staple of the application process for renters. They not only collect the information for the application—including the amount of rent offered—they also evaluate and assign ratings to applicants to help agents and landlords with their decision on who they will choose as the tenant. The bill will also prohibit those application tools from soliciting higher offers from prospective tenants. Section 22A (3) of the bill provides that third parties cannot, either directly or indirectly, solicit offers of rent that are higher than the advertised price.

Secret bidding will be eliminated through transparency requirements. While the bill bans agents and landlords from asking tenancy applicants to offer more than the advertised price, agents and landlords can accept higher rent offers made voluntarily by an applicant. In the current environment, these operate as secret offers, given and accepted without other applicants ever knowing an offer was made or what the final agreed price was. The bill will change those practices and make them open and transparent. Section 22B introduces a requirement for an owner or their agent to notify all those who have applied for a property about higher rent offers that other applicants who are being considered as prospective tenants have made. This will create an even playing field for all applicants, giving them knowledge about rent negotiations that are occurring and providing them with a chance to match that offer or make a higher offer themselves if they wish to.

Importantly, the bill does not require all higher offers to be communicated with other applicants, but only those which are made by someone who would be an acceptable applicant. An acceptable applicant is defined as someone with whom the landlord would be prepared to enter into a tenancy agreement. This limitation avoids wasting everyone's time, as it does not require communication of offers made by an applicant with whom the landlord would not be prepared to enter into a tenancy agreement.

Landlords and agents are required to advise tenancy applicants in writing of a higher offer from an acceptable applicant within one business day of receiving the offer. Verbal advice may also be given. Importantly, the advice to applicants must advise the amount that was offered and must be given before the applicant who made that higher offer is either advised that they are the successful applicant or a holding deposit is taken from them, whichever happens first. The requirement for a landlord or agent to notify applicants of higher offers ceases to apply once a holding deposit has been accepted for the property or if a tenancy agreement has been entered into.

If a landlord or agent is considering an offer of higher rent from an acceptable applicant and intends to conduct an open house for prospective tenants, the landlord or agent must take all reasonable steps to update any advertisements for the property with the higher rent amount that is now being considered. This will avoid misleading prospective tenants into attending an inspection when the rent negotiations are sitting at a price higher than the previously advertised price. In recognition that a higher offer from an acceptable applicant may have been received by the time an inspection by prospective tenants occurs, the bill also requires owners and agents to advise any prospective tenants attending an inspection or inquiring about a property of the higher offer received from an acceptable applicant at that point in time. The bill provides for a maximum penalty for breaching the notification requirements of $11,000 for a corporation and $5,500 for individuals, with on-the-spot fines of up to $1,100 for every breach of those new requirements.

The Government recognises that changes to regulation might potentially impact a volatile rental market in different ways. That is why the Government will ask the Rental Commissioner to keep those changes under review and to recommend amendments to them if needed. To enable monitoring and evaluation, the bill includes a regulation-making power which will enable the secretary to collect information from relevant persons on the operation of the new requirements if necessary. I look forward to working with the new Rental Commissioner and representatives of renters, owners and agents to set appropriate evaluation measures to inform future rental reforms.

The second commitment being progressed by the bill is the Government's commitment to setting up a portable rental bond scheme which will allow tenants to directly transfer bonds from one property to another, while ensuring property owners have access to funds they may need. Tenants face significant costs when moving from one property to another, including the usual costs of boxes and packing materials, movers or vans, cleaning, utilities, and arranging time off work to prepare for and manage the move itself. The Tenants' Union of NSW estimates moving costs to be between $2,500 to $4,000 on average.

Tenants are also required to pay a rental bond up front at the time of entering into a tenancy agreement, despite the fact that most tenants have already paid a bond on their previous rental. For the 2021‑22 financial year 63 per cent of bonds were repaid in full, meaning there is a period when they must find money for a new bond to secure a new home while still waiting for the bond from their previous home to be released. A tenant in New South Wales is facing an extra rental bond cost of $2,200 for a property that costs the median rent of $550 per week. That means less money in the bank for new furniture, appliances, school uniforms and other incidental costs that can occur with moving house.

The sum of $2,200 is equivalent to the cost of buying groceries for 11 weeks, based on an average Australian spend of $185 a week. If the condition of the previous rental home is disputed, there may be a delay before the disagreement is resolved and any previous bond paid out. The Government's portable rental bond scheme will lessen the financial burden of moving house for renters. The scheme will prevent tenants being out of pocket for two rental bonds at the same time by allowing tenants to use the rental bond from their old rental property for a new rental property, before the first bond is released.

The bill facilitates the implementation of the portable bonds scheme by adding to the regulation‑making powers that already exist in section 186A of the Act, which allows a portable bond scheme to be established through the regulations. The bill will add further powers to the existing regulation-making provisions. They relate to administering the scheme, guaranteeing bond payments, ensuring flexible systems are used to administer the scheme, and ending rental agreements if there is non-compliance with the scheme's terms and conditions. The bill amends the Act so that all the necessary powers needed to progress an effective and customer-focused portable bonds scheme are in place. However, that is only the first step in implementing the portable bonds scheme. The detailed application of the scheme will be enacted through regulation, allowing further design work and consultation to occur on the details of how the scheme should work.

Rental bonds are held on trust for renters and landlords. The final amendment in the bill also relates to rental bonds. The bill clarifies that rental bonds held by the New South Wales Rental Bond Board are held on trust on behalf of New South Wales landlords and renters. That is a legal clarification because, in practice, those bonds are already held on trust and are ready to be paid out at the end of a tenancy agreement. The Act already allows interest from bonds to be used for a number of purposes, including funding for tenant advice and advocacy services for New South Wales renters. The amendment will not change that.

As I have indicated, the bill is just the first step in implementing the Government's changes to New South Wales renting laws. This Government has a comprehensive reform agenda that recognises the realities of the current New South Wales rental market, while also establishing sustainable rules that will continue to strengthen that market. The Government recognises these measures will not be successful without the united commitment across government, industry and the community to take meaningful action to help those who need it most. In this environment it is easy to point the finger at owners, but we also recognise the need to support good owners who are providing an important service.

I acknowledge that the past few years have been incredibly challenging for those seeking to find a home for their family, which has created untold pressures on those families. This Government is committed to ensuring that renters are protected and that there is a more even balance between their rights and those of landlords. The bill will provide much‑needed relief to those who need it most. As we consider the comprehensive reform agenda this Government will roll out, I recognise the support that the Tenants' Union, the Real Estate Institute of NSW, Proptech Association Australia, CHOICE, Shelter NSW and the Property Services Expert Panel provided in finalising the bill. From working so closely with those peak bodies, I can see a mutual commitment to tackling the rental crisis. The candour and meaningful contributions from those stakeholders has given me confidence that together we can support good landlords while also ensuring fair and transparent rental laws to protect tenants.

The Government recognises that the biggest impact on rental prices will be lack of rental housing supply. This will remain the case and that is why we will continue to work with industry to unlock supply. The Government has a plan for delivering more compliant, safe and resilient housing, but that will take time. We also recognise that current rental laws do not provide renters with the protections necessary to have a secure and stable home. The people of New South Wales deserve a more balanced and equal rental system that allows landlords and renters to mutually benefit. The bill shows that the Government is acting quickly and will continue to improve the lives of renters, without constraining rental housing supply.

We will continue to progress our election commitments to the people of New South Wales, including amending no‑grounds terminations, making it easier for renters to have pets, better protecting renters' personal information and appointing a New South Wales rental commissioner so that renters can have a voice. In the weeks and months to come, I look forward to bringing further bills to this Parliament to continue this important work. I commend the bill to the House.

Debate adjourned.