NSW tenancy reforms – what tenants need to know about key changes to protect and enhance renters' rights

With the passing of the Residential Tenancies Amendment Bill 2024, under the Residential Tenancies Act 2010 ("the Act ") tenants in New South Wales can now expect significant improvements in rental security and rights. The reforms, part of the NSW Government's effort to support renters amid rising housing pressures, cover critical issues like "no grounds" evictions, pet ownership, rent increases, and tenant fees. Here's what residential tenants need to know:

Ending 'no grounds' evictions

Currently, landlords in NSW can end a residential tenancy without providing a reason, provided they give the appropriate notice period. This provision, commonly referred to as "no grounds" eviction, has been a contentious issue, often leaving tenants with little stability and security.

The new Act now abolishes the option of "no grounds" evictions, requiring landlords to provide a valid, legally defined reason for terminating a tenancy, regardless of whether the lease is fixed-term or ongoing (periodic). Under the amended Act, landlords must cite one of several "reasonable grounds" to justify the eviction.

The new defined grounds for eviction include situations such as:

• Renovations or demolition that necessitate the tenant vacating the property.
• Change in use of the property (e.g., the property will no longer be used as a rental).
• Landlord or family move-in, where the owner or a close family member intends to reside in the property.
• Property sale with vacant possession required.
• End of eligibility for certain housing programs (e.g., affordable, transitional, or student housing).

Existing grounds for eviction such as tenant breach (e.g., rent non-payment) and landlord hardship in addition to the new grounds will remain applicable.

The Act now includes significant penalties for landlords or agents who misuse the new termination grounds. Regulations will also set requirements for the evidence landlords must provide when issuing termination notices, helping to ensure transparency and integrity in the eviction process.

Notice period adjustments

For fixed-term tenancies, the reforms extend the notice period for terminating agreements under certain circumstances:

• 60 days for leases shorter than six months.
• 90 days for agreements longer than six months.

For ongoing periodic (week to week) tenancy agreements, the notice period generally remains at 90 days. These adjustments are designed to balance tenants' need for sufficient relocation time with landlords' operational flexibility.

More certainty around pet ownership

Under previous NSW residential tenancy laws, landlords could deny pet requests without providing reasons. The Act now grants tenants the right to request permission to keep a pet, and landlords must respond within 21 days, either granting consent or providing a legally specified reason for refusal. If a landlord fails to respond within the timeframe, consent is automatically granted.

For tenants who disagree with a refusal, there is an option to appeal the decision at the NSW Civil and Administrative Tribunal (NCAT). This amendment provides a framework for pet ownership in rental properties, aiming to protect both tenants' desires for companionship and landlords' property rights.

Rent increases capped at once a year

In response to the rising cost of living, the Act limits rent increases to once per year for ongoing tenancies, helping renters better predict their housing expenses. This rule applies to periodic leases, while rent for fixed-term leases is set for the duration of the lease.

Additional financial protections for tenants

Several provisions aim to protect tenants from unexpected fees:

• Ban on background check fees – rental platforms will no longer be permitted to charge prospective renters fees for background checks.
• Fee-free rent payment options – landlords must now offer tenants at least one fee-free payment method, such as bank transfers, to provide tenants with accessible and affordable payment choices.

These changes address emerging trends in the rental market, where costs associated with securing and maintaining housing have disproportionately impacted tenants' finances.

Upcoming regulatory framework and implementation

The enactment of the Bill does not represent the totality of the legislative change in this area The NSW Government will soon begin drafting regulations, which add detailed operational guidelines necessary to enforce the amended Act . These regulations will:

• Set out evidence requirements for landlords to support claims for "reasonable grounds" eviction.
• Define updates to the standard form agreement to reflect the reformed laws.

The completion of this regulatory process, expected by early 2025, will complete the framework of the new legislation.

Long-term changes: portable bonds and data privacy

Among the anticipated developments is the introduction of a Portable Bonds Scheme by late 2025. This scheme will allow tenants to transfer their existing rental bonds to a new tenancy, reducing the financial burden of moving.

Additionally, future amendments are expected to address tenants' data privacy, especially regarding information collected during rental applications. With a focus on tenant protection, these amendments will align NSW with best practices in data management.