NSW Landlords are under threat from new changes that were brought to their attention in late 2009. At this stage these changes to the Residential Tenancy Act are just proposed and are yet to be introduced into the NSW Parliment. This is scheduled to occur in 2010 so if NSW landlords don’t like what they are about to read, then it is important that they make this know to their local members as well as the Real Estate Institute of NSW.

Some of the most significant changes that have been raised in the Residential Tenancies Bill 2009 include:

Fixed term tenancies – end of certainty of tenure for landlords and tenants. Section 98 of the Bill will enable tenants to break a lease, during the fixed term, without any special grounds, by giving 14 days notice to the landlord. This break clause will be subject only to the payment of a ‘break fee’, which will not exceed 6 weeks rent. Details of the maximum amount of ‘break fees’ for long-term leases (over 3 years) have not been released. What is the point of a landlord entering into a fixed term tenancy that will be unable to be enforced?

Periodic tenancies – ‘no grounds’ termination notices. Section 85 of the Bill increases the notice period required to be given by landlords to tenants (who are out of fixed term) from 60 to 90 days. While the section provides that the CTTT must now make a termination order if the notice has been validly drawn and served, the Bill still gives the CTTT jurisdiction to determine when vacant possession is to occur, if a tenant challenges the landlord’s termination notice. The Bill does not set a maximum time limit between the date the CTTT makes a termination order and the date it nominates that vacant possession is to be given up by the tenant. Once served with a 90-day termination notice by the landlord, a tenant can give vacant possession at any time. Section 110(2) of the Bill provides that a tenant will only be liable to pay rent until the date they give vacant possession.

Frustration of repossessions by tenants. Section 89(2) of the Bill provides a mechanism whereby tenants who are already (or habitually) in arrears, can further frustrate a landlord’s attempt to regain possession of their property. The effect of the section is that orders for possession and warrants for possession issued by the CTTT, will cease to have effect if the tenant pays their arrears at any time prior to vacant possession being given, or the warrant enforced. The tenant will not have to apply to the CTTT seeking the suspension of an order for possession or warrant. The section also makes no provision for the recoupment by the landlord of the costs incurred in obtaining the order for possession or warrant.

Cosmetic changes. Section 66 of the Bill provides that landlords must not unreasonably withhold consent “to a fixture, or to an alteration, addition or renovation that is of a minor or cosmetic nature”. While the section provides that the costs of installation are to be met by the tenant, no definition of what “a minor or cosmetic nature” is contained in the Bill. This section is backed by another provision (section 68), that a tenant may apply to the CTTT for an order that the tenant may install a fixture or make a renovation, alteration or addition to the residential premises without the consent of the landlord. While the Bill contains provisions concerning the removal, rectification and cost of repairs for such matters at the end of a tenancy, the potential for default or significant disputes concerning this area alone is enormous. Disputes will occur both at the beginning and the end of tenancies and landlords risk being considerably out of pocket as a result of these changes.

Partial transfers of tenancies or sub-letting. A landlord’s right to decide who inhabits a property will be able to be challenged. Section 75(5) of the Bill will enable a tenant to apply to the CTTT to review a landlord’s refusal of consent to a partial transfer or sub-letting to an additional tenant, or tenants, that the landlord would not otherwise accept as a tenant. The CTTT will be able to permit the partial transfer or sub-letting if the landlord’s failure to consent was unreasonable (the word unreasonable, is not defined). The scope for dispute here is obvious.

Rent control. Section 44 of the Bill does not, unfortunately, clarify some of the past uncertainty (and case law) relating to what matters the CTTT must, or may, take into account when hearing an application by a tenant that rent, or a rent increase, is excessive. For example, there is no compulsion in the Bill for the CTTT to take the market rent of the premises into consideration when making a determination.

I for one am against giving tenants this much control of your property. Make the fight today to ensure that these changes and others don’t impact on your investment properties in NSW.