Owners Tips

New NSW Tenancy Legislation 31 January 2011



Key changes
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New Tenancy laws for NSW tenants & landlords commenced on 31 January 2011. Some of the key changes are as follows: 


Tenants get more time to move out
If a tenant is no longer in a fixed term & the landlord wants the tenant to move out ‘with no grounds’, the notice period increases from 60 to 90 days. If notice is given by a landlord just before the end of the lease, the notice period increases from 14 to 30 days.
Certainty for landlords If a tenant does not move out after being given a ‘no grounds’ notice to vacate, the Tenancy Tribunal must terminate the agreement & return possession to the landlord. The only exception to this is if the tenant can show that the notice was retaliatory.
Mechanism to save tenancies If a tenant catches up rental arrears, or follows an agreed payment plan, termination action will be cancelled. This will not apply if the tenant is shown to have frequently failed to pay their rent on time.
Alterations
A tenant will still need the landlord’s written approval if they want to make minor changes to the premises, such as installing child safety locks on windows. Landlords are required to be reasonable, but will be able to say no if the tenant wants to paint the premises, make structural changes or do something that would be difficult to remove.
Rental bonds
The maximum rental bond that can be charged is now 4 weeks rent, regardless of whether or not the place is furnished. Landlords will not be allowed to request or receive any bond ‘top–ups’ during the tenancy.
Water Efficency
All rented premises must be water efficient if tenants of separately metered premises are required to pay for water usage. All internal cold taps, including mixers (other than bathtubs) and all showerheads must have a maximum flow rate of 9 litres per minute (3 star water efficiency). There cannot be any leaking taps at the start of the tenancy and all leaks must be attended to promptly.
Letterbox service of notices
There will be an additional option for serving notices – by hand delivery to a person’s letterbox.
Holding fees
Holding fees will only be able to be charged once a tenancy application has been approved. If the tenant pulls out after paying a holding fee they will lose the whole fee rather than a pro–rata amount. Improved disclosure Before a lease is signed, prospective tenants must be told certain things, such as if the landlord is going to sell the property or if a bank or other lender has started court action to recover possession of the premises.
Optional lease ‘break fee’
Landlords have the option of a ‘Break Fee’, when a tenant breaks a lease before the end of the fixed term. Where there is no such penalty, the tenant will be liable to continue paying rent until a replacement
tenant is found plus reimburse (pro-rata) the letting costs, providing the landlord has mitigated their loss.
Additional grounds for eviction
Landlords will be able to apply to the Tribunal to end a tenancy if the tenant uses the premises for an illegal purpose or if they threaten, abuse, intimidate or harass the landlord or agent.
Breaking a lease early
Tenants will be able to end a fixed–term lease in certain situations, such as when they accept an offer of public housing or need to move to a nursing home.
Sale of rented premises
Selling agents must make reasonable efforts to agree with tenants on the days and times the premises will be available for inspection. Two (2) inspections each week will be allowed, & parties can negotiate if more access is required.  Regardless of when an owner decides to list their property for sale, if the tenant is not advised of the sale prior to the start of their lease, the tenant can give 14 days notice to vacate without penalty.
Sub–letting
Tenants will require the landlord’s approval to sub-let but landlord’s will be required to be reasonable when considering such requests. It will be reasonable to refuse if the person is listed on a tenancy database or if an extra person would result in overcrowding.

Here are some valuable presentation tips:

1.Tend the gardens, mow the lawns & clean the windows, paths, gutters & outside paintwork. These are all things seen from the street, & you don’t want prospective tenant to dismiss the property before getting to the front door.

2. Repair or replace leaking taps, sticking doors, broken light fittings, loose door handles, rotten floor boards, leaky gutters & torn flyscreens.

3. If you are thinking about painting, only paint those areas that really need it unless you plan on doing the lot. New paint may only make those areas left unpainted look even shabbier. Use light, neutral colours as strong colours may not be to the tenant’s taste. Use good quality paint that is washable and easy to clean.

4. Get rid of any odours that prospective tenants may notice, such as cigarette or pet smells. It is a good idea to have curtains & carpets professionally cleaned.

5. Ensure that all electrical wiring & power points are safe. This includes any appliances to be included with the property.

6. Take our comprehensive insurance cover on the property (including public liability). You don’t want to be sued by a prospective tenant who accidentally injures themselves while inspecting the property.

First impressions are critical when a prospective tenant inspects your property

First, decide what sort of tenant you are targeting.

There are tenants who want to save money & are happy to live in a property that is not in first class condition. There are others who are happy to pay top rent, but expect the property to present at its absolute best. There is not doubt that well presented properties achieve top rents & usually attract the best quality tenants. That adds up to a higher investment return, together with fewer & shorter vacancy periods.

Conservatively landlords should allow about 20-30% of rental income for repairs & maintenance to successfully manage their asset. Quality properties attract quality tenants & well maintained investment properties enjoy maximum investment returns.


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