NSW landlords could face fines if they evict tenants for 'non-genuine' reasons under new tenancy reforms

NSW premier Chris Minns told the NSW Labor conference on Sunday that his government will make good on its election commitment to improve rental laws by introducing new legislation to end the practice of no-grounds evictions in the September sittings of Parliament.

Under the proposed changes, landlords will now need a "commonsense and reasonable" reason to end a tenancy for both periodic and fixed term leases.

These include reasons such as:

• The existing rules where the renter is at fault, because of a breach of lease, damage to the property, or non-payment of rent.
• Where the property is being sold or offered for sale with vacant possession.
• Where significant repairs or renovations make inhabiting the property too difficult or it will be demolished.  If a homeowner seeks to renovate or repair a home, it cannot be relisted for a period of at least 4 weeks.
• If the property will no longer be used as a rental home, i.e a change of use.
• Where the owner or their family intend to move into the property.
• If the renter is no longer eligible for an affordable housing program or if the property is purpose-built student accommodation and the renter is no longer a student.

If a landlord wishes to end a lease, evidence must be provided with a termination notice. Landlords could face fines if they provide non-genuine reasons. 

For tenants on fixed term agreements of less than six months, the termination notice period to tenants will be increased from 30 days to 60 days. 

For fixed term agreements of more than six months, the termination notice period will be increased from 60 days to 90 days.

There will be no change to notice periods for tenants on periodic agreements.

The changes would bring NSW into line with other states including the ACT, South Australia, and Victoria. 

Under the current law, landlords can choose to end a residential periodic lease at any time, for any reason - or no reason at all. 

With around 33% of the NSW population renting, Mr Minns said the reforms will bring more certainty to renters.

"Anyone who rents in NSW knows just how anxious and challenging renting can be at the moment. We've all seen the lines on a Saturday morning with hundreds of people waiting to inspect new properties," he said.

"We believe this reform gets the balance right, but importantly, this will give both homeowners and renters more certainty, more peace of mind, so they can build a home and a life on surer ground."

Tenants' Union of NSW CEO Leo Patterson Ross welcomed the news, saying it's the change renters and housing policy experts have been seeking for decades.

"no-grounds evictions result in housing insecurity, financial strain, and emotional distress. Ending no-grounds evictions is a critical step in ensuring that renters can feel secure in their homes without the constant fear of eviction," he said.

"The proposed reforms are reasonable, and they are fair."

According to NSW Fair Trading's quarterly End of Tenancy Survey, more than half of evictions initiated by landlords in the state are no-grounds evictions - where there is no reason given for a landlord terminating a periodic or fixed term lease.

"Cruel irony" in no-grounds reforms

The real estate industry has pushed back against the reforms, saying they will only disincentivise investors from investing in the state.

The Real Estate Institute of NSW (REINSW) has slammed the proposed tenancy reforms, saying it will drive investors away and make the situation for renters worse.

"The government has dressed this reform up as tenant-friendly to divert tenants' frustrations away from its consistent failure to provide more housing for people and to encourage more investors to make their properties available for rent," said REINSW CEO Tim McKibbin.

"The cruel irony for tenants is that every time you make residential property a less attractive investment, the more you drive investors away, and the less homes there are to rent.

"The result is less choice for renters. This is not a forecast outcome. It's happening now."

According to the NSW Bonds Board, the number of rental bonds held decreased by 1,251 in June. 

"Each bond held effectively equates to one property rented. For this number to be decreasing is hugely concerning, especially at a time when the severe shortage of rental accommodation is creating hardship for so many people," Mr McKibbins said. 

"The number of investors selling properties is outstripping the number of investors buying properties, a trend reflected in near-zero vacancy rates and lengthening queues of hopeful tenants at inspections."

Property Investors Council of Australia (PICA) Chair Ben Kingsley said tenancy reforms like this one risk making things worse - not better - for tenants.

"You only need to look at the recent experience in Victoria where significant tenancy reforms, along with higher property taxes have resulted in 15,600 fewer rental properties in Victoria in the past 12 months alone, based on reported bond registration data," he said.

"Fewer rental properties and higher operating costs equates to higher rents - that's a fact.

"Public servants of the day shouldn't underestimate how much their market interventions can inform these investment decisions."

Related reading: Is Melbourne losing its shine?

Image: Daria Nipot via Canva