On October 24, 2024, the NSW Parliament passed the Residential Tenancies Amendment Act 2024, introducing significant changes to rental laws. While these updates aim to balance the needs of renters and landlords, they also place new responsibilities on you as a property owner.
Understanding these changes is essential to protect your investment, comply with the law, and manage your financial outcomes effectively. Here’s what you need to know:
Key Rental Law Changes You Need to Know
1. Background Checks
You can no longer charge renters for background checks when they apply for a rental property.
2. Rent Increases Limited to Once Per Year
You can now only increase rent once per year for all leases. Previously, this rule applied only to periodic leases and fixed-term leases of two years or more. It now also applies to fixed-term leases under two years.
3. Stricter Rules for Ending Tenancies
Landlords will now need a valid reason to end a tenancy for both periodic and fixed-term leases. Acceptable reasons include:
- The renter is at fault due to a breach of lease, property damage, or non-payment of rent.
- The property is being sold or offered for sale with vacant possession.
- Major repairs, renovations, or demolition are needed on the property.
- The property will no longer be used as a rental home (e.g., being repurposed for business).
- The landlord or their family intends to move into the property.
- The renter’s employment has ended, or they no longer qualify for affordable housing programs.
- The property is student accommodation, and the renter is no longer a student.
- The property is part of a key worker housing program, and it needs to be used by essential workers like teachers, health workers, or police.
If the landlord wants to end a lease, they must provide evidence with a termination notice. Penalties would apply if the reason given is not valid.
4. Notice periods have also increased
The notice period for renters on a fixed-term lease will be extended. If the lease is six months or less, renters will now need to be given 60 days’ notice before the lease ends. For leases longer than six months, the notice period will increase to 90 days. There will be no changes to notice periods for renters on periodic agreements. These longer notice periods will provide renters with much-needed additional time to find a new home. The changes are set to take effect in the first half of 2025.
5. Pet-Friendly Rentals
The new laws will make it easier for renters to keep pets in rental properties. As a landlord, you will be required to respond to a renter’s pet request within 21 days, and if you don’t respond, the pet will be automatically approved. You can only refuse a pet for specific reasons, such as:
- There being too many animals on the property.
- The property being unsuitable for the pet due to poor fencing, lack of open space, or conditions that could harm the animal’s welfare.
- The pet potentially causing damage beyond the bond amount.
- You are living at the property.
- The animal breaking laws, local council rules, strata or community scheme by-laws, or residential community rules.
- The renter does not agree to reasonable conditions for keeping the pet.
You’ll also be limited in the conditions you can set. For example, you cannot ask for an increased bond or higher rent as a condition for allowing the pet. Strata by-laws that ban all pets will no longer be valid, and you cannot use them to refuse a pet. If a renter disagrees with your decision, they have the right to apply to the NSW Civil and Administrative Tribunal.
6. Fee-Free Rent Payment Options
Property owners and agents will be required to offer a way to pay rent that is electronic and without additional fees. Renters will be able to choose a bank transfer method or payment via the Commonwealth Government’s Centrepay.
If both the renter and landlord agree, the renter can choose to pay rent using other options.
Renters cannot be required to use a particular service provider, such as an app, to pay their rent.
When Do the Changes Start?
The changes will take effect at different times. Some began on 31 October 2024, including the introduction of a limit to one rent increase per year and the removal of fees for background checks. Other reforms, such as requiring a valid reason to end a lease (ending no-grounds terminations) and making it easier for renters to keep pets, are expected to commence in the first half of 2025. This phased approach gives renters, landlords, and the sector time to prepare for the updates.
Steps You Can Take Now
1. Update Your Lease Agreements
Ensure your tenancy agreements comply with the new regulations. This will help you avoid legal issues down the line.
2. Reassess Your Property Portfolio
Evaluate whether your current portfolio aligns with the increased compliance and maintenance demands. It might be time to adjust your holdings.
3. Work with Professional Advisors
Accountants and legal professionals can help you understand your obligations and optimise your financial strategies. Their guidance can save you time and money.
How We Can Help You
At Chan & Naylor, we understand the challenges you face as a landlord in NSW’s evolving rental market. Our services include:
- Financial Planning: Helping you manage costs effectively.
- Property Tax Optimisation: Ensuring you claim all eligible deductions.
- Compliance Support: Keeping you up to date with the latest regulations.
Don’t let these changes catch you off guard. Schedule a consultation with us today for tailored advice that keeps you compliant and confident.
About Chan & Naylor
Established in 1990, Chan & Naylor has been a trusted partner for thousands of businesses and investors across Australia. Choosing Chan & Naylor Pymble means you’re not just selecting a service provider; you’re gaining a partner aligned with your business goals. You’ll have access to a dedicated client manager supported by a team of accountants that specialises in business tax and investments. Contact us today so we can discuss how we can help you.
Disclaimer
This article serves as general information only and may not account for the unique circumstances of individual readers. For personalised and strategic solutions tailored to your specific situation, we invite you to seek professional advice from Chan & Naylor. Our highly experienced team is dedicated to helping you navigate the complexities of Australian taxation, ensuring that your financial strategies align with the latest regulations. Contact us today to embark on a path of informed and customised tax planning for your property investments
