The PROPERTY DOCTORS, Sydney Australia Novak Properties

NOVAK NEWS - CHANGING TENANCY LAWS: WHAT EVERY INVESTOR, LANDLORD & TENANT NEEDS TO KNOW BY MAY 19

• Jonathan Vescio & Thomas Sims • Season 30

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NSW tenancy laws are getting their biggest overhaul in years, and every landlord, investor, and tenant needs to be prepared. Recorded live from NOVAC HQ, property experts Thomas Sims and Jonathan Vescio break down the crucial changes taking effect from May 19th that will fundamentally reshape rental relationships across the state.

The days of "no grounds" terminations are over. Landlords must now provide valid reasons with supporting documentation when ending tenancies, with serious penalties for non-genuine terminations. For property investors, this means carefully documenting renovation plans or sales intentions before giving notice. Even more surprising—if you terminate a tenancy to sell but can't find a buyer, you'll need Fair Trading approval before relisting the property for rent.

Notice periods are extending significantly, with 90 days required for leases longer than six months. Meanwhile, the pet ownership landscape is transforming completely. Landlords can no longer advertise "no pets" properties and must respond to pet applications within 21 days or face automatic approval. For investors, this necessitates careful consideration of flooring types and potential wear factors when purchasing new properties.

These changes reflect a deliberate shift toward tenant protection after decades of legislation that primarily safeguarded landlord interests. As Thomas and Jonathan explain, understanding these new requirements is essential whether you're managing properties yourself or working with an agent. Property managers will shoulder additional responsibilities, especially with new documentation requirements for bond releases starting July 1st.

Drawing from their experience in property management under Northern Beaches expert Tina Stacy, Thomas and Jonathan provide practical insights into navigating these changes successfully. Whether you're concerned about your rights as a tenant or protecting your investment property, this episode delivers the essential information you need before these laws take effect.

Have questions about how these changes affect your specific situation? Reach out to Thomas or Jonathan directly—they're always happy to help navigate the evolving rental landscape.

Speaker 1:

Hi everyone. It's Thomas Sims and Jonathan Vescio live from NOVAC HQ and tonight we are discussing changing tenancy laws what every investor, landlord and tenant needs to know by May 19th. All right, hi everyone. I hope you're doing well on this Monday evening. We're joined here today by myself, thomas sims and jonathan vescio. Good evening, I hope everyone's doing okay. How are you doing? How are you well? Um, yeah, I'm good. It's been a long day. Um, new listings today, um, and then doing lots of calls, yeah, busy all day.

Speaker 2:

Busy all day in the office. It's good to be back. I like doing these podcasts. Yeah, they're fun. Actually my partner in crime.

Speaker 1:

Yes, yeah, um. So tonight we are discussing the changing tenancy laws which come into place next monday, may 19th, um, in new south wales, and there's a few points to discuss. Tonight we'll outline what the changing laws are and then we'll also dive a little bit deeper down into each one and how they're going to affect you as an investor, as a landlord and as a tenant, and even as a property manager. Now, we're both coming from we are currently in the sales department, but we've both come from the rental department under the same property manager yeah, one of the best in the northern beaches tina stacy, who's taught us so much as we started in real estate. Um, so big shout out to tina stacy.

Speaker 1:

Um, but we're going to start off with the first changing law, and the first one is regarding ending a tenancy. So, johnny, do you want me to read out what the change in law is? Uh, yeah, you can do. Yeah, okay. So landlords must provide a valid reason to end the tenancy. This ends the no grounds terminations for renters on both fixed term and periodic leases. So supporting documents will now be required in some cases and penalties will apply for terminations that are not genuine. Landlords will need to provide tenants with a termination information statement that will be made available prior to the changes starting and what that kind of means.

Speaker 2:

You know that's the actual legislation around it.

Speaker 2:

What that kind of means is, a lot of the time, a landlord could actually provide notice to a tenant to terminate their lease without really having a reason to do so, and a tenant would find themselves having to find another property and not really knowing the reason why.

Speaker 2:

So Fair Trading have really just taken a deep dive into that and what that means and how to really make it more comfortable for tenants, because a lot of the legislation before was more to do with landlords, so now they've kind of made it a little bit more comfortable for tenants and what that really means. Now landlords are having to provide documents in regards to why they're ending the lease. So, for example, a good reason is, if you wanted to do renovations to the property ie flooring, kitchen, bathrooms or any type of renovations you can do so, but you do need to provide the tenants with details as to what you're going to be doing to the property quotes and you've got to go into that extent prior to giving the termination. You just have to provide that to the tenants. You don't have to do anything through fair trading all the time being, but that's all coming into play on the May the 19th and that's going to have a big, big effect on landlords not being able to terminate the leases.

Speaker 1:

Right. And so in another example, if I'm a landlord and I wish to sell my property, what do I have?

Speaker 2:

to do so. If you're a landlord wanting to sell your property, you can still terminate the lease. However, you do need to provide documents as to why, which is obviously a reason being is putting the property on the market for sale. And an actually interesting fact that I found out is you can put your property on the market for sale. And an actually interesting fact that I found out is you can put your property on the market for sale and if the property doesn't sell, you actually need to go through fair trading in order to get approval to put your property back on the market for rent.

Speaker 2:

So to relet it yeah. If it doesn't sell, yeah. So to relet your property, because your effective cause of termination of tenancy was to put the property on the market for sale and to sell the property. To put the property on the market for sale and to sell the property If the property actually doesn't sell, so you do need to go through Fair Trading and Tribunal in order to get the tick of approval to put the property back on the market for relet, yeah.

Speaker 1:

And that brings us to the next point, which is releting restrictions, which is what he's started to discuss here. So new leases cannot be entered into for a period of time after ending a tenancy for certain reasons, ie, in Jono's example, the sale. This applies where the landlord has said they need the property back for something else, for example sale or renovations. So Jono's dived into that there, which means that fair trading is knuckling down on that no grounds determination where, um, you know, right now a landlord could terminate a tenant under no grounds and take all the time he needs, or be as fast as possible, to do renovations like a like a property, paint or re-carpeting, and then put the property back on the market to rent, yeah. So then after that we actually have notice periods for fixed term leases. So renters on a fixed term lease must be given more notice when a tenancy is ending.

Speaker 1:

So at least 60 days for leases of six months or less, and that's then 90 days for leases longer than six months. So your standard 12-month one-year lease as a landlord. If you're wishing to end the agreement, you must provide 90 days notice.

Speaker 2:

Yep, exactly, and just touching on that and kind of looping back into that, the previous topic there as well, for example, a lot of the reasons being at the moment aren't applicable in order to terminate a tenant's lease. So, for example, if you wanted to ask a friend to do the quotes and do all the work for you in regards to the contracting to get those renovations done in order to just get the tenant out and then not go ahead with the works and put the property back on the market two weeks later without doing those renovations that you previously said you would be doing, you'll be up for a pretty hefty fine, and so will the agent. So it's definitely something to watch out for and in order to be doing everything correctly, because they are definitely cracking down on that sort of thing yeah, and that makes things a little tougher for self-managing landlords as well.

Speaker 1:

Um, you really have to be up to date with these changes, um, otherwise you could accidentally put yourself in a really bad situation there. Um, I'll go to the next one, but we'll come back to how it does affect you as a self-managing landlord, an investor and a tenant as well, as well as a property manager. But the next one is in relation to keeping a pet and advertising. Okay with pets, so keeping a pet. Renters can request to keep a pet. Landlords can only refuse for specific reasons and must respond within 21 days or the pet is automatically approved. A new pet application form and guidance will be available from Monday, the 19th May. And then, just touching on the advertising, landlords and agents are not advertising rental listings that no pets are allowed in the property yeah, which is a big change.

Speaker 2:

Um I think a lot of landlords didn't want pets in the property. Um, ever since we've been in property management which was a little bit of time ago now um I think it was a big thing. Every, pretty much every every advertisement had no pets.

Speaker 1:

Um, so it was just more so for upkeep for the owner.

Speaker 2:

You know wear and tear. Obviously the tenant does have to clean the property professionally, have it fumigated after the tenancy ends, as per usual, if their pet was to be approved. Now it's just a little bit more smooth sailing for the tenant. In order to get that pet approved, you still obviously do have to do an application process for the pet. However, the landlord can't unreasonably deny the keeping of a pet, which really was. It was kind of the case before it slowly come into play over the last six months or so, but now they're really cracking down on that from the 19th of May. Yeah.

Speaker 1:

And, as you said, owners want to keep wear and tear to a minimum. So if you are an investor and you're going to open homes, looking to buy your next investment, you need to then start looking at the properties with a closer eye and identifying things that could affect this. So the biggest example is floorboards and carpet. If you are looking to invest and you have a floorboard property, it may be up for scratches and things like that cats and dogs. If you have carpet as well, you could get a lot of hair in there. But with professional cleaning they do get tend to get that out of carpet. But floorboards would be something that you really have to look out for and even consider um changing. If you really want to purchase that investment property, you may have to go away from floorboards. Yep, um, now in a case of how a landlord can refuse a pet, are there any reasons?

Speaker 2:

I mean there are, but it's very hard in order for them to die. I mean, if you're in a two-bedroom apartment you can't really go and approve a horse, but you know there's some guidelines there. You can't go and obviously you know, have a zoo animal or something like that in your property. There are going to be some guidelines in place and obviously with strata buildings there will be some guidelines from strata as well and the bylaws. But in saying that, majority of pets, and just house kept pets, will be allowed and they can't really deny them anymore. So I mean it's good for the tenant side, I think.

Speaker 2:

In saying that, I mean everybody loves having a pet. Nowadays it's a man's best friend, woman's best friend. So, um, I mean it's a good step. But yeah, there's definitely things to watch out for and if you are a tenant, this is obviously really good for you. But in saying that, make sure to professionally clean your property and fumigate the property once you vacate. If you don't, you can't be mad at the agent for holding some of your bond to do those works and to get the property fumigated and cleaned. Yeah, that's absolutely right.

Speaker 1:

And now, touching on the last change of laws, it is relating to the fee free ways to pay rent, so this is more targeted at self-managing landlords and property managers. So agents as well. If you have a property manager, it's more on them to enforce this and buy this to the tenants. So I'll dive into it here. Landlords and agents must offer renters a fee-free electronic method to pay rent, including bank transfer or BPAY. Tenants cannot be required to use a particular service provider to pay rent. Now we've already, I believe, started incorporating this.

Speaker 1:

The rent payment system has been discussed even when I was in property management so that's over a year and a half ago and it's always been a big issue for tenants in particular, landlords that are with us tend to not get into it because it's our responsibility and we are servicing them and their investment property. So we've already started to see that come into place. But definitely for self-managing landlords, you're going to need to wrap your head around that, and I suggest BPAY is quite good for things like that, but that's sort of something that's already yeah, it's something that's already been implemented.

Speaker 2:

We do a direct debit out of the account with no surcharge. When I was first in property management, that wasn't the case. There was a bit of no surcharge. When I was first in property management, that wasn't the case. There was a bit of a surcharge on it. Obviously, if you're paying by a credit card, you're getting a surcharge from the bank which is about 80 cents. But 80 cents every week obviously adds up over time, especially if you're in there for a period of longer than you know five, ten years. You're paying a hefty fund on that 80 cents every single week. So I think it's a really good, a good way to cut down costs for tenants. Um, cost of living obviously is going through the roof. Even though 80 cents doesn't sound like a lot, if you're doing it over a 10-year period, every week it definitely adds up yeah, yeah, and that is a very good point.

Speaker 1:

Um, which brings us to the next sub topic we have, which is why so many changes now, and, as jonah just mentioned, there's a lot of rising political pressure due to the rental affordability crisis. Um, so, directly relating to a fee-free way to pay rent, um, it's saving tenants their money, um and with with not a lot of rental stock on the market in the northern beaches, uh, I have a lot of friends and family and um tenants that I've dealt with in the past who are struggling to find a property and reaching out to me um to help them find a rental property. And you can even see as well, rental prices have risen due to the low stock, which again making it harder for tenants. So that's why they've kind of put this in place to balance out the just to balance out the landlord and tenant rights there and help tenants kind of equal out.

Speaker 2:

Yeah, exactly, I think a lot of the legislation before the 19th of May was predominantly landlords.

Speaker 2:

It was a lot of protecting the landlord, protect the landlord, and there was nothing really to kind of support the tenant Like. There was obviously some stuff in place but a lot of this termination with no grounds and that was upsetting a lot of tenants because you know they'd been in there for five years' time and they'd been told to get out for no reason kind of thing. So now the landlord having to provide reasoning even though it's a little bit more work for the agent and the landlord, the tenant definitely gets that. You know that clarification around why this is happening, because most of the time it's not actually the landlord just wanting to kick them out, it's them needing to do renovations, putting the market on the property, on the market for sale, um, and I think you know, getting a bit of an idea of why this is happening, um might be a bit more peace of mind for the tenant, um, and then obviously a little bit more comfortable for the tenants as well.

Speaker 1:

Yeah, yeah, and as, as we are sales agents, we do need to jump into how it actually might affect um investors um and their property selection when they're looking to buy an investment. So, jono, if you want to jump straight into that, I'd suggest what you said earlier, with wear and tear and having to look out and have a closer eye on those specific things. What else do you see?

Speaker 2:

So I think if you're looking to directly invest straight from your purchase so straight from settlement you go straight into an investment you definitely, on your pre-settlement inspection, want to be looking for those little scuff marks, stuff like that, especially if the pets are going to be allowed into the property, because you don't want to be liable at the end of the day If they're there before the tenant moves in. The tenant technically isn't liable for them. So you definitely want to be cross-checking. If you've got an agent employed, definitely make sure that they're cross-checking everything because at the end of the day you don't want to be liable for stuff that you shouldn't really be liable for. You could have fixed in the first place. That's a big one. The second thing is obviously just understanding the laws and legislations. If you don't understand, speak to an agent. Come, speak to us, we'll be happy to help you out.

Speaker 2:

Not everybody understands. We're on the ground. We see this every day. Not everybody does. Most people just trust an agent and say here you go, take my property and go and look after it. So understand those things before you invest. Understand the termination laws and legislations. Understand everything around the rent payments and everything and how everything works before you go and invest, um, and get a good agent by your side. Somebody's going to look after your property properly, um, and look after you as well yeah, that's right.

Speaker 1:

And even current landlords of investment properties, you're going to feel a bit of reduced flexibility, um, as these laws come into place. But it's nothing to fear or be scared of. If you have a property manager, you can ask them a million questions. That's what they're there to do. They're there to service you, answer the questions you have. If there's anything you're unclear of, just reach out, call them, text them, email them and they'll be happy to step you through how this does affect you.

Speaker 1:

But then onto the last thing before we log off, how will this, or what does it mean for property managers as well? And I can already see there'll be an increased workload there on property managers, a bit more weight on their shoulders just to make sure all of these laws are implemented and followed, because, at the end of the day, that's what they're there to do for you um, so they're going to have a little bit more work there to provide you and, at the same time, that is where, as a landlord, you can obtain that application form, that tenant, the termination application form as well yeah, and the first from the first of july.

Speaker 2:

Um, the rental bond board and fair trading will be asking for why the bond is being released, as in, why is the tenant vacating, what's happening? Um, and they'll be asking for supporting documents. So that will have a bit of a toll on the agent. So, all the agents out there, make sure you have um ticked all the boxes, um cross-checked everything, got all your supporting documents, because you will need to be providing those to fair trading, um, once a tenant is vacated and the bomb is being released.

Speaker 1:

Yeah, that's right so that will conclude our monday night. No back news session. I hope this helps you as a landlord, as a tenant, um as a investor or just as an agent as well.

Speaker 2:

Thanks guys for tuning in. It's been a pleasure and obviously any questions, feel free to reach out anytime. We're always happy to help. Yeah, that's right, all right, good night everybody. Thanks, guys.