Residential Tenancy Lease New South Wales - NSW Residential Tenancy Agreement

Renting laws are changing

The Residential Tenancies Act 2010 was passed by Parliament in June 2010. The Act and its associated Regulation will commence on 31 January 2011. Until then, the existing laws continue to apply.

Main objectives

The Act aims to:

fairly balance the rights and obligations of tenants and landlords
modernise and update the law in line with current practices
reduce the level of disputes, by providing greater clarity and certainty in the legislation.

NSW Fair Trading has examined the tenancy laws in place in other States and Territories to identify best practice approaches that have been successful elsewhere, and these have been adopted in the Act in a range of different areas.

Key changes

The new laws will deliver important protection for tenants and landlords when they commence on 31 January 2011. Some of the key improvements are as follows;

Tenants get more time to move out

If a tenant is no longer under a fixed term agreement and the landlord wants the tenant to move out ‘without grounds’, the notice period increases from 60 to 90 days. If notice is given by a landlord just before the end of the lease, the notice period increases from 14 to 30 days.

Certainty for landlords

If a tenant no longer on a lease does not move out after being given a ‘no grounds’ notice to vacate, the Consumer, Trader and Tenancy Tribunal must terminate the agreement and return possession of the property to the landlord. The only exception to this is if the tenant can show that the notice was retaliatory.

Mechanism to save tenancies

If a tenant catches up on overdue rent, or follows a repayment plan agreed with the landlord, termination action will be cancelled. This will not apply if the tenant is shown to have frequently failed to pay their rent on time.

Faster rent arrears eviction process

Landlords will be able to cut 2 weeks from the eviction process by applying to the Tribunal for orders at the same time as giving a termination notice to the tenant.

Alterations

A tenant will still need their landlord’s written approval if they want to make a minor change to the premises, such as installing child safety locks on windows. Landlords will need to be reasonable, but will be able to say no if the tenant wants to paint the premises, make structural changes or do something that would be difficult to remove.

Rental bonds

The maximum amount of rental bond that can be charged will be 4 weeks rent, regardless of whether or not the place is furnished. Landlords will not be allowed to request or receive any bond ‘top–ups’ during the course of a tenancy. The time period for landlords and agents to lodge bonds has been extended.

New process for goods left behind

Procedures for landlords and agents dealing with goods left behind when a tenant vacates have been streamlined. Rubbish and perishable items will be able to be disposed of immediately.

Fee–free rent payments

Under the new law, every tenant must be given at least one fee–free way to pay their rent. At the same time, tenants will be required to pay the landlord’s costs if a cheque for rent bounces or if a direct debit payment is dishonoured.

Water efficiency

Rented premises must be water efficient if tenants of separately metered premises are to pay for water usage.

Letterbox service of notices

There will be an additional option for serving notices – by hand delivery to a person’s letterbox.

Holding fees

Holding fees will only be able to be charged once a tenancy application has been approved. If the tenant pulls out after paying a holding fee they will lose the whole fee rather than a pro–rata amount.

Improved disclosure

Before a lease is signed, prospective tenants will be required to be told certain things, such as if the landlord has drawn up a contract to sell the property or if a bank or other lender has started court action to recover possession of the premises.

Optional lease ‘break fee’

Landlords will have the option of including a fixed penalty in the lease (a break fee), in the event that a tenant breaks a lease before the end of the fixed term period. Where there is no such penalty in the lease, the tenant will still be liable to compensate the landlord for any loss.

Additional grounds for eviction

Landlords will be able to apply to the Tribunal to end a tenancy if the tenant uses the premises for an illegal purpose or if they threaten, abuse, intimidate or harass the landlord or agent.

Breaking a lease early

Tenants will be able to end a fixed–term lease in certain situations, such as when they accept an offer of public housing or need to move to a nursing home.

Sale of rented premises

Selling agents must make reasonable efforts to agree with tenants on the days and times the premises will be available for inspection. Two inspection periods each week will be allowed, and the parties can negotiate if more access is required.

Sub–letting

If a tenant wants to sub–let part of the premises or bring in an extra co–tenant, they will still need the landlord’s written approval first and landlords will need to be reasonable when considering such requests. It will be reasonable to refuse if the person is listed on a tenancy database or if an extra person would result in overcrowding.

Rights of co–tenants

Some disputes between co–tenants in shared households will be able to be taken to the Tribunal. Once a fixed–term lease ends, a co–tenant can give 21 days notice to end their contract with the landlord. This will bring an end to their liability for future rent, damage etc.

Domestic violence

Victims of domestic violence living in a rented property will have the right to change the locks and seek to take over the tenancy if their name is not already on the lease.

Current Act

In NSW a Residential Tenancy is subject to and governed by the Residential Tenancies Act 2010.
The act applies to both verbal and written agreements and covers most residential tenancies including some caravan parks. However some tenants are not covered under the Act. These include tenants whose principle place of residence is a residential park, those living in hotels and motels, holiday homes and aged care facilities including hospitals and nursing homes. For a list of other exclusions one should consult the Residential Tenancies Act 2010

Before the tenant moves into the rented premises or enters into a Residential Tenancy Lease Agreement there are several documents that they must receive from the Landlord or the landlords agent. These include a written copy of the lease, a list of costs that they will need to pay when they sign the lease and a NSW Renting Checklist It is available free from the NSW Office of Fair Trading.

The Residential Tenancy Agreement
The lease or residential tenancy lease agreement is a binding contract between the landlord and the tenant. The residential tenancy agreement is made up in two parts .

The first part defines the rights and obligations of the parties as prescribed under the act.
The second part is the property condition report. The tenant must be given time to read and understand the terms of the tenancy agreement before being asked to sign it.

Condition Report
At the beginning of the tenancy the landlord fills out and signs 3 copies of the condition report and gives two copies to the tenant. The tenant indicates agreement or disagreement with the condition suggested by the landlord or landlord’s agent by placing a tick or a comment in the correct space. If they believe the report does not represent the true condition of the premises, this is the time to say so. The tenant must return one signed copy of the completed condition report to the landlord or landlord’s agent within (5) business days and keeps the second copy.

Bond
For unfurnished premises the maximum bond is 4 weeks rent, 6 weeks rent for fully furnished premises with a rent of $250 or less per week. Unlimited for fully furnished premises for rent more than $250 per week.

Rent in Advance
The tenant will usually be required to pay 2 weeks rent in advance from the first day of the tenancy if the weekly rent is $300 or less. If the weekly rent is more than $300 upto one calendar month in advance is acceptable.

Terminating a Residential Tenancy Lease
In the last 14 days of a fixed term agreement, either party can give 14 days notice to end the tenancy. Once the fixed term tenancy has ended Tenants are required to give at least 21 days notice and the Landlord must give at least 60 Days notice.
If the tenant breaks the tenancy lease agreement early the Landlord may claim compensation for any loss suffered, including costs incurred to find a new tenant.

Infomation Courtesy of NSW Dept of Fairtrading