Landlords beware - changes to the Residential Tenancies Act significantly affect your rights with your tenants

Significant changes have and will be made to the Residential Tenancies Act 2010 which will restrict the way in which landlords can deal with residential tenancy agreements.

In October 2024, the Residential Tenancies Amendment Act 2024 (the Amendment Act) was passed. The Amendment Act tightens some of the existing tenant rights under the Residential Tenancies Act 2010 while also introducing significant changes in other areas.

The key changes can be broken down into 3 categories:

1. Rent payments and increases

2. Terminations

3. Keeping of pets

Some of these changes have already come into effect, whereas others are set to be enforced in the next couple of months or even later this year.

Regardless, landlords need to quickly familiarise themselves with the changes introduced in the Amendment Act, otherwise they may find themselves on the receiving end of disciplinary action from NSW Fair Trading’s new Rental Taskforce.

Rent – payment methods and increases

Rent payment

In addition to existing prohibitions against requiring rent to be paid by cheque or post-dated negotiable instruments, from 19 May 2025 onwards landlords will be required to offer tenants ways to pay rent that are free and convenient including by electronic bank transfer and by the Commonwealth Government’s Centrepay (both of which are recognised as “prescribed ways” to pay rent).

Tenants can choose to pay rent using other options if agreed to by their landlords, however tenants cannot be required to use a particular service provider to pay rent.

If tenants elect to pay rent using a prescribed way, landlords cannot charge a fee or pass on costs incurred from this decision.

While the manner of paying rent can still be varied by mutual agreement from both parties, landlords cannot refuse to agree to a tenant changing payment methods to a prescribed way.

Rent increase

As of 31 October 2024, there is a 12-month cap on rent increases for new and existing leases. This means that landlords cannot increase rent within the first 12 months of a tenancy or more than once in any 12-month period.

Previously, this limitation applied only to periodic leases (i.e., an expired fixed term lease and/or a month-to-month lease) and fixed-term leases of 2 years or more. Under the Amendment Act, the rule now extends to fixed-term leases under 2 years.

If a lease is renewed with a tenant it will still be considered the same rental agreement for the purpose of the provisions relating to rental increases in the Amendment Act. This means that if a landlord renews a lease with a tenant, they will not automatically be able to increase rent upon entering the renewed lease. The landlord will still need to wait at least 12 months from the last increase under the previous lease before increasing rent again and 60 days’ notice of a rental increase is still required.

However, leases entered into before 31 October 2024 for a fixed term of less than 2 years can have more than 1 rental increase in a 12 month period if the increase is written into the lease and clearly states the method of calculating the increase. If the agreement includes a date for the increase to start, then written notice of the rental increase is not required.

Termination – genuine grounds required

Landlords will need to have a genuine reason to end a tenancy for both fixed term and periodic leases from 19 May 2025 onwards.

Previously landlords could terminate fixed term leases with 30 days’ notice so long as the termination date falls on or after the end of the fixed term. They could also terminate a periodic lease at any time with 90 days’ notice, or with 30 days’ notice if they are selling the property as vacant possession.

Under the Amendment Act, landlords are now required to provide genuine grounds for termination. Acceptable grounds for termination include:

• the tenant has breached the lease

• the property will be offered for sale as vacant possession or the landlord has entered a contract to sell the property as vacant possession

• the property needs to be empty as it will be subject to significant renovations or repairs or demolished within 2 months of the termination date

• the property will be rented as part of an affordable housing scheme, transitional housing program, a NSW Government key worker housing scheme or as a purpose-building student accommodation, and the tenant is not a part of the relevant scheme or program and is therefore not eligible to rent the property

• the property will not be used as a rented residential property for at least 12 months

• the landlord or their family member will be living in the property for at least 6 months

• the lease is an employee or caretaker residential tenancy agreement and the employment or caretaker arrangement has ended.

With the exception of terminating for breach (requiring 14 days’ notice), termination of an employee/caretaker agreement (requiring 30 days’ notice), and termination due to a contract of sale (requiring 30 days’ notice), landlords must give 90 days’ notice to terminate periodic leases and fixed term leases of longer than 6 months, and 30 days’ notice for fixed term leases shorter than 6 months. In the case of fixed term leases, the termination date must fall on or after the end of the fixed term.

For long term tenancies of 20 years or more, landlords are still required to obtain a Tribunal Order to terminate.

When giving a termination notice, landlords may be required to provide further information to support their chosen ground for termination. The supporting documents or information provided must not be false or misleading.

Keeping pets

From 19 May 2025 onwards, landlords must respond to tenants’ pet applications within 21 days, otherwise landlords are taken to have given consent without any conditions and the pet will automatically be approved.

When responding to pet applications, landlords may either give unconditional consent, give consent with reasonable conditions, or refuse consent.

If consent is given subject to reasonable conditions, these conditions must be specified in the landlords’ responses. Conditions that are reasonable would relate only to keeping the animal at the property and would be determined in relation to the type of animal and the property. Reasonable conditions will also depend on whether the animal is normally kept indoors and, if so, will include requiring carpets to be professionally cleaned at the end of the lease, or in some cases professionally fumigated.

Unreasonable conditions include increasing rent or the rental bond, requiring a form of security (e.g., a personal guarantee), and conditions recognised as prohibited terms under the Residential Tenancies Act 2010.

Landlords may only refuse consent if:

• there would be too many animals at the property

• the property is not suitable for the animal due to fencing, lack of open space or because it would be detrimental to the animal’s welfare

• the animal would likely cause damage that would cost more to repair than the amount held as a bond

• the landlord lives at the property

• keeping the animal would breach legislation, council orders, by-laws (noting that strata by-laws banning pets are no longer valid), or a community rule

• the tenant has not agreed to a reasonable condition imposed by the landlord.

If you would like advice on how these changes affect you, please reach out to our Property team at Bartier Perry.

Authors: Melissa Potter, Stella Sun & Pree Silva Das