Recent Home Living Property Culture The Team North Shore Living
Recent Home Living Property Culture The Team North Shore Living

5 residential tenancy changes landlords should know

Written by Matthew Bourn
With the world’s focus on the COVID-19 pandemic for the last five months, it is easy to miss the news about residential tenancy law changes. The modifications in residential tenancy laws became effective on 23 March 2020.

Clarifications to the minimum rental standards and urgent repairs, new smoke alarm obligations, and guidelines for separate trust accounts are part of the amendments. Key areas of interest to landlords follow.

1. Break fees for fixed-term agreements

Before landlords can end the tenancy, they are required to provide 30 days’ notice for a fixed tenancy and 90 days’ notice for a periodic tenancy. The previous six-week break fee was substituted with a four-week (or shorter) break fee subject to the following:

Four weeks rent if less than 25 per cent of the rental agreement has expired.
Three weeks rent if 25 per cent or more but less than 50 per cent of the rental agreement has expired.
Two weeks rent if 50 per cent or more but less than 75 per cent of the rental agreement has expired.
One week’s rent if 75 per cent or more of the rental agreement has expired.

These notice periods are designed to provide tenants with enough time to find another rental property and landlords enough time to find a new tenant. At McConnell Bourn, we recommend keeping an open and positive line of communication with your tenants. The sooner landlords are aware of a change in circumstances with their tenants, the easier it is for us to plan to get your property swiftly re-leased.

2. Rental increases

Rental increases are now limited to once annually. The provision does not apply to fixed-term leases of less than two years if a landlord provides advanced notice specifying when rent will be increased and by how much.

3. Smoke alarm rules and penalties

Landlords are now required to ensure smoke alarms are in working order and be aware of the fact that steep penalties can result if they do not comply. Smoke alarms have life-saving benefits, and it is your duty of care as a landlord to your tenants.

4. Modifications to the property

There is a list of 14 modifications tenants can make to a rental property that a landlord cannot deny. Without permission, tenants can make alterations that do not penetrate a surface or permanently modify a surface, fixture, or structure. Upon ending their tenancy, occupants are required to leave the property in the same condition as it was at the start of the tenancy. Normal wear and tear is excluded. A complete list of permissible modifications is available on the NSW Department of Fair Trading website under the Changes of a ‘minor nature’ section.

5. Information disclosure requirements

Information disclosure requirements were strengthened. Landlords now must advise the tenant in writing within 14 days of becoming aware of the following:

The property is subject to a significant health or safety risk. The notice must explain the risk in detail.
The rental unit is in a building where a development application or complying development certificate application for rectification has been lodged in reference to external combustible cladding.
The rental property is in a building where a fire safety order or building product rectification order was issued regarding external combustible cladding.

Need help navigating the changes?

As a leading independent real estate agency for Sydney’s North Shore, McConnell Bourn specialises in meaningful real estate journeys. Our dedicated team of real estate professionals has kept abreast of the residential tenancy law changes and is committed to ensuring our investor clients understand how those adjustments affect them.

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