On the 23rd March 2020, the new residential tenancy laws will begin.

The aim of many of these changes is to reduce disputes over repairs and maintenance, increase protection and certainty for tenants, and clarify the rights and obligations of both tenants and landlords.

Many of these changes apply only for all new tenancies and lease renewals signed on or after 23rd March 2020. However some do apply to existing tenancies (such as additional water efficiency measures) and landlords will need to ensure they comply to this new legislation.

In our two-part series of articles, we take a look at what has changed and highlight some key areas of interest within the sections. If you want to see all the changes, visit the NSW Fair Trading website* which has in depth details of all the changes.

Rental monies

Currently the owners of property we manage receive their funds on or before the 25th day of each month. However, from the 23rd March 2020 this must be moved to the last business day of the month, ie for March, it will be on Tuesday the 31st.

To compensate for this, we will do a disbursement as of the 24th and then another on the 31st and then going forward each month it will be the last business day. (For those owners who receive mid-month payments, as of April, this will move from the 10th of each month to the 14-16 of each month.)

Minimum standards to clarify ‘fit for habitation’

Landlords are currently required to provide the rented property in a reasonable state of cleanliness and ‘fit for habitation’. The changes introduce 7 minimum standards which clarify what ‘fit for habitation’ means and will apply to all rented properties. To be fit to live in, the property must (as a minimum) be:

1. be structurally sound
2. have adequate natural or artificial lighting in each room, except storage rooms or garages
3. have adequate ventilation
4. be supplied with electricity or gas, and have enough electricity or gas sockets for lighting, heating and other appliances
5. have adequate plumbing and drainage
6. have a water connection that can supply hot and cold water for drinking, washing and cleaning
7. have bathroom facilities, including toilet and washing facilities that allow users’ privacy.

The property could have other issues that may make it unfit for a tenant to live in, even if it meets the above 7 minimum standards. Before the property is rented out, the landlord or agent should take steps (such as make repairs) to make sure the property is fit to live in.

These standards must be maintained throughout the tenancy (by making repairs).

New smoke alarm obligations for landlords

There are several changes under smoke alarm obligations. A major one is now you must indicate whether smoke alarms on the premises are hardwired or battery operated. In addition, the landlord must ensure smoke alarms have been installed in the residential premises in accordance with the Environmental Planning and Assessment Act 1979.

To ensure smoke alarms installed in the rented property are in working order, a landlord must:

• carry out annual checks to ensure all smoke alarms installed at the property are in working order
• replace a removable battery in all smoke alarms in the period specified by the smoke alarm manufacturer (for a removable lithium battery), or otherwise annually
• repair or replace a smoke alarm that is not working within 2 days of becoming aware that it is not working
• replace a smoke alarm with a new smoke alarm within 10 years from the manufactured date, or earlier if specified by the smoke alarm manufacturer.

There are also new criteria of entry notice to tenant to inspect or asses the need for repairs or replace a smoke alarm (not less than 2 business days), and to actually carry out the repairs or replace the smoke alarm, (not less than 1 hours’ notice).

If a landlord becomes aware that a smoke alarm is not working, they must engage an authorised electrician repair or replace it within 2 businesses days.

For hardwired alarms, if a tenant has notified a landlord that a hardwired smoke alarm is not working and the landlord fails to repair or replace the alarm in a specified time (and the property is not in a lot in a strata scheme), the tenant is entitled to engage an authorised electrician to carry out the work. The tenant is entitled for reimbursement of the cost to replace or repair within 7 working days after the landlord has been given written notice.

Further changes to legislation relating to smoke alarms can be found at: https://www.fairtrading.nsw.gov.au/housing-and-property/renting/new-residential-tenancy-laws/key-changes-to-smoke-alarm-requirements-for-rented-homes

Changes of a ‘minor nature’

Tenants can install fixtures or make alterations, additions or renovations if they have the landlord’s written consent, or if the tenancy agreement permits it. If the tenant’s request for a fixture or alteration, addition or renovation is of a ‘minor nature’ then the landlord must not unreasonably withhold consent. The tenant must pay for the fixture they install or for any alteration, renovation or addition to the property that they make, unless the landlord agrees otherwise.

The new Regulation lists the kinds of fixtures or alterations, additions or renovations that are minor where it would be unreasonable for the landlord to say no. These are:

1. securing furniture to a non-tiled wall for safety reasons

1. fitting a childproof latch to an outdoor gate of a single dwelling
2. inserting fly screens on windows
3. installing or replacing an internal window covering e.g. curtains and removeable blinds
4. installing cleats or cord guides to secure blind or curtain cords
5. installing child safety gates inside the property
6. installing window safety devices for child safety
7. installing hand-held shower heads or lever-style taps to assist elderly or disabled occupants
8. installing or replacing hooks, nails or screws for hanging paintings, picture frames and other similar items
9. installing phone line or internet connection
10. planting vegetables, flowers, herbs or shrubs (shrubs that don’t grow more than 2 metres) in the garden if existing vegetation or plants do not need to be removed
11. installing a wireless removable outdoor security camera
12. applying shatter-resistant film to window or glass doors
13. making modifications that don’t penetrate a surface, or permanently modify a surface, fixture or structure of the property.

The new Regulation also specifies a landlord may require a qualified person to carry out the following changes:

• installing hand-held shower heads or lever-style taps to assist elderly or disabled occupants
• installing a phone line or internet connection

The changes do not apply if a property is listed on the loose-fill asbestos insulation register (https://www.fairtrading.nsw.gov.au/housing-and-property/loose-fill-asbestos-insulation/public-register-of-affected-properties), or if the property is a heritage item. Some restrictions and exclusions also apply to property in a strata scheme, residential land lease community, or to social housing properties.

Damage and removing modifications

Tenants are still responsible for any damage they cause to the property. The existing requirements on liability for damage and removing any alterations, additions, renovations or fixtures still apply.

At the end of the tenancy, a tenant is responsible for leaving the property in the same condition as at the start of the tenancy, except fair wear and tear. This includes making sure any alterations, additions or renovations are removed and also fixing any damage caused to the property. For ‘fixtures’, a tenant can choose whether to remove any ‘fixtures’ they have installed, provided they repair or compensate the landlord for any damage caused by removing the fixture. A tenant cannot remove any fixtures if the landlord paid for them.

Landlords may apply to the NSW Civil and Administrative Tribunal (the Tribunal) to seek compensation from the tenant for the costs involved if the work is not done to a satisfactory standard, or if the work is likely to adversely affect the landlord’s ability to let the premises to other tenants if it isn’t corrected.

New mandatory set break fees for fixed term agreements

Mandatory set fees when a tenant breaks a fixed-term agreement early will apply to all new fixed-term agreements that are 3 years or less. This applies to agreements that are entered into from 23 March 2020 onwards.

The break fees are:

• 4 weeks rent if less than 25% of the lease had expired
• 3 weeks rent if 25% or more but less than 50% of the lease had expired
• 2 weeks rent if 50% or more but less than 75% of the lease had expired
• 1 week’s rent if 75% or more of the lease had expired.

For example:

• if 7 months of a 12-month tenancy agreement (or 58%) has expired, a tenant would need to pay a fee equal to 2 weeks’ rent to the landlord to end the agreement early
• if 2 months of a 6-month tenancy agreement (or 33%) has expired, the tenant would need to pay a fee equal to 3 weeks’ rent to the landlord to end their agreement early.

Strengthened information disclosure requirements

A landlord or agent must not make false or misleading statements or knowingly conceal certain material facts from a prospective tenant before they sign an agreement. The list of material facts is available in the Tenant Information Statement that a landlord or agent must give a tenant before entering into a tenancy agreement.

Before signing an agreement, a landlord or agent must also tell a tenant of any proposal to sell the property if the landlord has prepared a contract for sale, or if a mortgagee (i.e. bank or other lender) is taking court action for possession of the property.

The list of material facts and information that prospective tenants must be told before entering into an agreement has been expanded. The changes also provide a remedy for tenants when material facts and information are not disclosed. The changes recognise the potential hardship tenants face if they are not provided with important information about a tenancy.

Changes to the landlord information statement include:

• flooding from a natural weather event or bushfire damage within the last 5 years
• significant health or safety risks
• serious crime (eg manslaughter or murder, but not suicide)
• used for manufacturing or cultivation of prohibited drug in last 2 years.

The new landlord information statement guidance can be found here: https://www.fairtrading.nsw.gov.au/__data/assets/pdf_file/0010/608383/Residential-Tenancy-Information-Statement-for-Landlords.pdf

New material facts

New material facts that a landlord or agent needs to disclose if the property:

• has been used to manufacture or grow a prohibited drug or prohibited plant in the last 2 years
• is in a strata scheme where scheduled rectification work or major repairs will be done to common property during the fixed term of the agreement
• is part of a building to where a:
  • fire safety or building product rectification order (or a notice of intention to issue one of these orders) has been issued for external combustible cladding
  • development or complying development certificate application for rectification has been lodged for external combustible cladding

In the next article, we will cover in more detail the following changes:

• New information to be disclosed to prospective strata tenants
• Remedies for tenants for breaches to information disclosure requirements
• Additional water efficiency measures
• New rectification order process
• New standard form of agreement
• New condition report
• New Landlord information standard
• Other changes

If you want to know more about the changes in legislation, or are concerned about how or when it affects you, please call us on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office. We are keen to ensure you know all the changes and fully understand the implications and costs, if any, to you.

We also regularly put tips and ideas for landlords on our Facebook page: www.facebook.com/NewcastlePropertyManagement

*To see the full list of changes to the legislation and what they entail visit: https://www.fairtrading.nsw.gov.au/about-fair-trading/legislation-and-publications/changes-to-legislation/new-residential-tenancy-laws