NSW Legislative changes and what they mean for Property Managers, Landlords & Tenants.

The NSW government has announced that the remaining reforms will come into effect on 19 May 2025.

The NSW rental market is evolving with the Residential Tenancies Amendment Act 2024, bringing significant changes that impact Property Managers, Landlords & tenants alike. This legislation aims to improve rental security, affordability and transparency, heavily favouring renters.

Some changes are already in effect, such as restrictions on upfront fees and a cap on rent increases, while others, including the end of ‘no grounds’ terminations and easier pet approvals, will roll out in early 2025. So, what do these changes mean for Property Managers and Landlords? Let’s break it all down, with insights and solutions to help you navigate the shift smoothly & efficiently.

What legislation is changing and when does it start?

On 24 October 2024, as part of the Minns Labor Government delivering on its election promise to ‘make renting fairer’, NSW Parliament passed the Residential Tenancies Amendment Bill 2024. The legislation is now the Residential Tenancies Amendment Act 2024 (the Act).

The changes already in effect include:

• Preventing extra fees at the start of a tenancy, including fees for background checks and for preparing a tenancy agreement

• Limiting rent increases to once per year

The changes due to take effect on the 19 May 2025:

• Requiring landlords to provide reasons to end a lease — ending ‘no grounds’ terminations for renters

• Making it easier for renters to keep pets

• Ensuring renters can pay rent by bank transfer or Centrepay

  
  

We’ll take a closer look at each of these changes and how they impact property management practices to better help you understand the effects on your investment.

The changes already in effect, as of October 2024

Prohibiting costs at the start of tenancies (for renters)

Landlords and property managers are no longer permitted to charge fees to renters at the start of a tenancy. Prohibited fees include:

• Background checks

• Showing a property

• Initial copies of keys or other opening devices

• Preparing / filling in the tenancy agreement

• A pet bond to allow tenants to keep a pet on the property.

  
  

Permitted fees include those relating to the ongoing tenancy costs, including:

• A holding fee or deposit of no more than one weeks of rent, after being approved for a property. This goes towards the first week of rent upon signing an agreement

• A rental bond of no more than 4 weeks of rent, held with rental bonds for the duration of the tenancy

• Rent in advance of no more than 2 weeks - The landlord or agent must offer at least one method for paying rent that can be used without incurring additional costs (other than the usual bank or account fees).

• Fee for registering the lease with NSW Land Registry Services if it is a fixed term agreement of 3 or more years.

  
  

Rent increases

The number of rent increases a Property Manager or Landlord may issue has been reduced from two increases to one increase per year. Previously, only periodic leases and fixed-term leases of two years or more had this rule. It now applies to all leases.

What does this mean for Property Managers?

With a longer wait between increase periods, landlords and Property Managers will need to be diligent in raising rents to the market rate during the window allowed to keep in line with market rates.

Changes coming soon

Ending ‘no grounds’ terminations for renters - What are ‘no grounds’ terminations?

In NSW, Property Managers & Landlords currently have multiple legal grounds to terminate a residential tenancy agreement. One of these is a ‘no grounds’ termination, which requires 90 days’ notice and does not require a reason for ending the lease.

The move to ban ‘no grounds’ terminations is a growing trend across Australia. They are already prohibited in:

• Victoria (from October 2024)

• Australian Capital Territory (from April 2023)

• South Australia (from July 2024)

  
  

Additional terms

In addition to this, the changes introduce offences and penalties for both Property Managers and landlords, in relation to:

• Giving termination notices on grounds that are not genuine, and

• Providing false or misleading supporting documents or information when giving a termination notice.

  
  

Except in instances where Property Managers could ‘easily find out’ if landlords’ instructions were in breach of the above terms.

Why the change?

NSW Rental Commissioner, spoke on this topic at the 2024 PropTech Forum, explaining the concept behind the introduction is security for renters and reducing the disruption of multiple moves. If a property is available to be general public to be rented, then it should be available to the current tenants, if they have not breached any lease conditions.

What does this mean for Property Managers?

Landlords and Property Managers are now required to provide reasons and evidence to the tenant for termination of a tenancy.

The permitted reasons include:

• The existing rules where the renter is at fault, because of a breach of lease, damage to the property or non-payment of rent

• The property is being sold or offered for sale with vacant possession

• The property needs to be empty for significant repairs or renovations or the property will be demolished

• The property will no longer be used as a rental home, for example, it will instead be used for a business

• The landlord or their family intend to move into the property

• The renter lives in the property as part of their employment and their employment has ended

• The renter is no longer eligible for an affordable or transitional housing program or the property is purpose-built student accommodation and the renter is no longer a student

• The property is part of a key worker housing program and needs to be used by a key worker, like a teacher, health worker or police

  
  

We are yet to see what evidence will be required, as the drafted regulations have not been released.

Likely changes to a day-to-day practice & procedures

Changes to the day-to-day practices of Property Managers will likely include a more rigorous tenant selection process, rather than offering tenants the “benefit of the doubt”, as terminating leases for problematic tenants will become more challenging.

Additionally, a stronger focus on documenting and addressing breaches as they occur, rather than waiting until the end of a fixed term to assess whether the situation improves.

Exclusion periods and amended notice periods

The following periods for re-leasing and amended notice periods apply to terminations for the following reasons:

Standard Residential Tenancy Agreements

Reason for termination	Requirement	Exclusion period
87C Breach of tenancy agreement	– The tenant has breached the residential tenancy agreement, and – The breach is, in the circumstances of the case, sufficient to justify the termination of the agreement	Nil
87D Actual sale of premises	– A contract for the sale of the premises has been entered into, and– The contract requires vacant possession of the premises	Nil
87E Proposed sale of premises	– The premises will be offered for sale, and– The contract for sale will give vacant possession of the premises	6 months
87F Significant renovations or repairs to premises	– The premises will be subject to works for significant renovations or repairs, and– The premises need to be vacant for the works to be carried out properly, and– The works are planned to commence within 2 months after the termination dateUnless:– An order of the Tribunal under section 65(2) is in force in relation to the premises– A landlord rectification order under section 65C applies to the premises	4 weeks
87G Demolition of premises	– The residential premises will be demolished, and– The demolition is planned to commence within 2 months after the termination date	6 months
87L Premises no longer to be used as rented residential premises	– The premises will cease to be used as rented residential premises under this Act, and– Will not be used as rented residential premises under this Act for at least 12 months	12 months
87M Landlord or family will reside at the premises	A relevant person will reside at the residential premises for at least 6 months.Relevant persons include:– A landlord,– A spouse or de facto partner of a landlord,– A dependent of a landlord who ordinarily resides with the landlord– A parent, grandparent, child, grandchild, sibling, child of a sibling, sibling of a parent or first cousin of a landlord, ora spouse or de facto partner of a landlord	6 months

Early exit notices for tenants

If a tenant under a fixed-term agreement has been given a termination notice, they may give the landlord an ‘early exit’ notice, providing 14 days’ notice that they will be giving vacant possession before the termination date.

The tenant is then not liable to pay rent for the period after:

• the tenancy end date specified in the early exit notice, and

• vacant possession being given

  
  

Making it easier for renters to keep pets

Renters will be allowed to keep pets at rental properties, unless Landlords or Property Managers decline the pet application within 21 days, for one of the following reasons:

• There would be too many animals at the property

• The property is unsuitable for the animal because of the fencing, or lack of open space, or because it would harm the animal’s welfare

• The animal is likely to cause more damage than the bond could repair

• The landlord lives at the property

• The animal would break other laws, local council rules, strata or community scheme by-laws or a residential community rule

• The renter did not agree to a reasonable condition for keeping the animal

  
  

Note: The regulations, which have not yet been released, may make further provision in relation to grounds including by clarifying or defining terms used in the grounds.

Conditions for keeping pets

Reasonable conditions for keeping animals include:

• For a type of animal that is not normally kept inside residential premises — a condition preventing the animal from being inside the premises

• For an animal that will be kept inside the residential premises — a condition requiring the tenant, at the end of the tenancy

  - to have carpets professionally cleaned (if reasonable for the type of animal and the premises)

  - for a mammal — to have the premises professionally fumigated

• A condition that

  - relates only to keeping the animal at the premises, and

  - is reasonable in relation to the type of animal and the premises

  
  

Unreasonable conditions for keeping animals include:

• A condition increasing rent

• A condition increasing the rental bond

• A condition requiring a form of security

• A condition that is not permitted to be included as a term of a residential tenancy agreement

Additional terms

Landlords and Property Managers must not advertise, in relation to residential premises for lease, that a tenant’s animal will not be permitted to be kept at the residential premises.

What does this mean for Property Managers?

Until more information is released regarding the reasons for declining an application, it’s hard to know how much impact this will have on Landlords and Property Managers.

Making it easier for Tenants to pay via bank transfer or Centrepay

Property Managers and Landlords will be required to offer a way to pay rent that is electronic and without additional fees to renters. Renters will be able to choose a bank transfer method or payment via Centrepay. If both the renter and landlord agree, the renter can choose to pay rent using other options.

Whats next for the rental world?

As we await further clarity on the legislative framework and effective dates, Property Managers and Landlords alike, should stay informed and prepare for compliance. Keeping up with industry updates, leveraging the right tools and adapting processes proactively will be key to navigating this evolving rental market with confidence.

Watch this space for more updates & useful insights to the ever changing investment world.