Residential Tenancy Law in NSW

Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion.

Briefing Paper No. 13/2007 by Gareth Griffith and Lenny Roth

This paper updates a 1999 briefing paper entitled Tenants Rights in NSW. It does so against
the background of the recent publication by the NSW Office of Fair Trading of a
consultation paper entitled, Residential Tenancy Law Reform: A New Direction. These
latest proposals follow the release in July 2005 by the NSW Office of Fair Trading of an
options paper titled Residential Tenancy Law Reform.

Statistical profile of residential tenancies in NSW: According to the 2006 Census, there
were 700,654 rented dwellings in NSW, which represented 28.4% of total occupied
dwellings in the State. Of the rented dwellings, 396,247 (56.6%) were rented from a real
estate agent, 109,494 (15.6%) were rented from the NSW Department of Housing, and
175,026 (25.0%) were rented from other landlord types. [2.1]
In 2005/06, average housing costs for private renters in NSW were $258 per week ($223
pw nationally). These housing costs represented 21% of average gross income for private
renters in NSW (19% nationally). In September 2007, rental vacancy rates in Sydney were
1.2%, compared to 1.6% in the Hunter region, 2.2% in the Illawarra region and 2.4% on the
Central Coast. In 2005/06, average housing costs for public renters in NSW were $105 per
week ($100pw nationally). These housing costs represented 18% of average gross income
for public renters in NSW (17% nationally). As at 30 June 2006, there were over 53,000
approved applicants on the public housing register (waiting list). [2.2]-[2.3]

Recent developments in residential tenancy law in NSW: Since 1999 there have been very
few substantive reforms to the Residential Tenancies Act 1987. In relation to the private
rental market, provision has been made for the repayment of overpaid rent in certain
circumstances (s 45A) and for the installation of smoke alarms (s 29A) [3.1]-[3.2]. In
relation to public housing, acceptable behaviour agreements were introduced in 2004 and
other tenure and eligibility reforms were introduced in 2005. Social housing tenants must
pay a water usage charge under these reforms, a requirement that is to be reviewed after
two years (s 19A) [3.4]-[3.5].

Overview of Residential Tenancy Act: The rights, obligations and powers of landlords and
tenants under the Residential Tenancies Act, which are incorporated into any residential
tenancy agreement are defined in Part III of the Act. Generally, the Act applies whenever a
person grants to another person the right to occupy residential premises, in whole or part,
either in writing or on an oral basis, in exchange for rent. [4.3]-[4.7] Certain types of
premises and certain types of agreement are excluded, including boarders and lodgers,
nursing homes, and tenancies covered by the Residential Parks Act 1998, the Holiday
Parks (Long-term Casual Occupation) Act 2002 and the Retirement Villages Act 1999.
Rental bonds are provided for under separate legislation – the Landlord and Tenant (Rental
Bonds) Act 1977. [4.3]

Proposed reforms outlined in consultation paper: The NSW Government’s September
2007 consultation paper contains 102 proposals for reforming residential tenancy laws in
NSW. Some key proposals include:
• Tenants who have been issued with a notice to vacate for being in rent arrears
would have the onus of applying to the Tribunal if they wish to contest the matter;
• Landlords could not unreasonably refuse consent for a tenant to make cosmetic
improvements to the property or add fixtures at their own expense;
• Where a property is to be sold during the fixed term period of a tenancy, the tenant
would be entitled to a rent reduction during the inspection period, and selling
agents would be required to respond to problems raised by the tenant;
• Tenants would be entitled to be given at least 30 days notice if a mortgagee decides
to obtain vacant possession after foreclosing on a mortgage;
• Tenants would be entitled to end a fixed term agreement by giving 21 days notice
on certain grounds (eg if they accept an offer of public housing);
• The notice period for ‘no grounds’ evictions by a landlord after the expiry of the
fixed term would be extended from 60 to 90 days although a landlord would be able
to give 60 days notice on certain grounds (eg a need to move into the property);
• Co-tenants would be able to apply to the Tribunal for an order to terminate a fixed
term or continual tenancy, or to remove one or more co-tenants from the premises;
• The regulation of tenancy databases would be strengthened.
• Landlords could request a bond ‘top-up’ payment with rent increases. [5.1]-[5.2]
At this stage the publicly available responses to these proposals are few in number. If the
preliminary response of the Tenants’ Union of NSW is any guide, the proposals are likely
to receive a mixed response from tenants’ organisations. While the Real Estate Institute of
NSW is yet to make a concerted response to the consultation paper, at this stage it appears
to be supportive of the main thrust of the proposals. [5.4]-[5.6] With respect to bond ‘topup’
payments, the Real Estate Institute of NSW appears to support the proposal to clarify
the law, while the Tenants’ Union of NSW is opposed to it. [5.6]-[5.7]

Recent tenancy reforms in other States/Territories: Since 2000 the changes include:
• Coverage of boarders and lodgers (Qld, Vic, Tas, ACT);
• Coverage of renters in residential parks and caravan parks (WA, SA);
• Regulation of tenancy databases (Qld, ACT);
• Addressing anti-social behaviour by tenants (NT and proposed in SA);
• Requiring mortgagees to give tenants 28 days notice before eviction (Tas);
• Requiring owners/agents to obtain tenant’s consent to hold ‘open homes’ (Tas);
• Increasing notice period to 120 days for ending a tenancy without grounds (Vic);
• Limiting rent increases to two per year (Vic).
Following a review of tenancy laws in Queensland, the Government has recently
announced that it will introduce significant reforms including preventing rental auctions,
increasing the notice period to 60 days for ending a tenancy without grounds and providing
for a minimum period of 6 months between rent increases. In Western Australia, a review
of tenancy laws has also recently been completed but reforms have not yet been announced.
[6.1]-[6.8]

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