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Being a Landlord

When you rent out a home in NSW and become a 'landlord', knowing your rights and responsibilities will help you avoid or resolve differences you may have with your tenant.

In this section, you will find information to help you understand what the tenancy laws in NSW mean for you, at the beginning, middle or end of a tenancy.

Starting a tenancy

Discrimination in the rental market.
Information for landlords of rental properties

Everybody should be given a ‘Fair Go’ when renting or trying to rent a property. The view that "it’s my property so I can choose who I like” only goes so far. You have the right to choose the most suitable tenant provided no unfair discrimination occurs.

Anti-discrimination laws
The law states that you, or as your agent, must not discriminate against anyone, or harass them, because of their-

  • Race (colour, nationality or descent)
  • Sex (male or female)
  • Pregnancy
  • Marital status (e.g. singles or unmarried mothers)
  • Disability (physical, intellectual or psychiatric disability)
  • Homosexuality (gay men and lesbians)
  • Age (both young or old)
  • Transgender (transsexual)

It is also against the law to discriminate against a person because of the race, sex, pregnancy, marital status, disability, homosexuality, age or transgender of their relatives, friends or associates.

As long as you are not discriminating on one of the above listed grounds you may rent to whoever you like. If you do not want smokers in your premises or tenants with pets, or if you reject an application because of a poor tenancy history or do not think the tenant can pay the rent there is no law to stop you from declining an application for that.

Completing a tenancy agreement
A residential tenancy agreement (also called a lease) is an agreement between you and the tenant to live in your premises in return for payment of an agreed rent. The agreement is a legal contract which sets out the terms and conditions of the arrangement. We complete and sign a written tenancy agreement on your behalf at the start of each tenancy. Before the tenant signs the agreement they must be given a copy.

Types of agreement
There are two types of tenancy agreement-

Fixed term agreement
This is where the agreement is for a fixed period of time (such as for 6 or 12 months or other agreed period) and specifies an end date. A fixed term agreement is used at either the start of a tenancy or when the parties are renewing the agreement once the original fixed term period has ended.

Periodic (continuing) agreement
This is a tenancy for an indefinite period. You automatically move to a periodic agreement when a fixed term agreement ends, if the tenant remains and no new agreement is signed. You can have a periodic agreement from the beginning but this is uncommon. In a periodic agreement, you and the tenant must follow the rules set out in the original agreement (or in the prescribed standard agreement if there wasn’t a signed agreement).

The rights and obligations under both types of agreements are generally the same. However, there are differences in relation to terminating the tenancy and rent increases.
If you fail to have a written agreement in the proper form at the start of a tenancy, penalties can be imposed. In addition, you are unable to evict the tenant without a reason or put the rent up during the first 6 months.

Additional terms
There are 40 mandatory terms in the standard form of tenancy agreement. There are also two optional additional terms about ‘break fees’ and ‘pets’. You need to decide if you want these two terms to stay in the agreement. If not, they will need to be deleted before anyone signs.
Other additional terms may be added to the agreement so long as they-

  • Do not conflict with the tenancy laws or any other laws and
  • Do not conflict with the standard terms of the agreement
  • However, there are a number of terms which are prohibited from being added to a tenancy agreement

These are terms which would-

  • Require the tenant to have the carpet professionally cleaned, or pay the cost of such cleaning, at the end of the tenancy (except as part of a separate arrangement to allow the tenant to keep a pet on the premises)
  • Require the tenant to take out any form of insurance, such as home contents or public liability insurance
  • Exempt the landlord, agent or any other person from legal liability for any negligent act or omission
  • Require the tenant to pay a higher rent, a penalty or some other form of damages if they breach the agreement
  • Give the tenant a reduced rent or rebate for not breaching the agreement or
  • Require the tenant to use the services of a particular person or business to carry out their obligations under the agreement, such as a nominated lawn mowing or pool cleaning company

Any additional terms which are prohibited or conflict with the law or the standard terms are void and unenforceable. Penalties can be imposed for including prohibited terms in a tenancy agreement.

Giving the tenant a copy
As your agent, we must give a copy of the tenancy agreement to the tenant at the time they sign it. If that copy has not been signed by us on your behalf, a fully signed copy must be given to the tenant as soon as possible. If the agreement is for a period of more than 3 years and needs to be registered with the Land and Property Management Authority, and we should provide the tenant with a copy of the agreement as soon as possible after it has been registered.

Filling out a condition report
At the start of every tenancy we need to fill out a condition report on your behalf. This is a record of the general condition of the property, on a room by room basis, including fittings and fixtures. We need to fill it out with as much detail and accuracy as possible. The condition report will be a key piece of evidence at the end of the tenancy if there is a dispute about who should pay for cleaning, damage or the replacement of missing items.

Completing the report
The condition report needs to be filled out before the tenant moves in. We need to give two copies of the report to the tenant either before or at the time they sign the tenancy agreement. It is often minor damage which causes disputes rather than obvious damage so make sure any damage, however minor, is noted and is suitably described.

You may wish us to take photos or videos, which have the date on them, to back up the written condition report.We will complete the report by doing a physical inspection and not by memory. The report should reflect the age and state of the premises. For example, if the property is not new, and has not been recently renovated, any existing damage or wear and tear needs to be noted on the report.

The condition report form may be adapted to suit individual premises, e.g. by adding extra rooms if the property is larger. If there is not enough room on the report, we will attach extra pages and make sure they are signed and dated as well as noting the number of extra pages on the original condition report. A condition report needs to be filled out whether or not a rental bond is taken. However, a condition report is not needed when the same parties are renewing a tenancy agreement or when a new co-tenant or occupant moves in.

Returning the report
The tenant is required to complete their part of the condition report and return a copy to you within 7 days of receiving it. We will check to see if they have added anything which we disagree with. You can apply to the Consumer, Trader and Tenancy Tribunal for an order to amend comments made on the report by the tenant.

If the tenant fails to return a copy, we may wish to send them a reminder letter or we can apply to the Consumer Tribunal for an order directing the tenant to complete and return the report. If they still do not return it, in the event of a bond dispute, the Tribunal will most likely accept your report unless the tenant comes up with some other evidence to the contrary. We will keep the condition report for the duration of the tenancy as you will need to complete it when the tenancy ends.

From tenants of rented properties
A rental bond is money we can request the tenant to pay as a form of security in case they breach the tenancy agreement. A bond will not be treated as a substitute for careful selection of prospective tenants. All bonds must be lodged with Fair Trading and you can make a claim against the bond for certain reasons after the tenancy ends.
Most tenants do the right thing and get their bond back at the end of the tenancy. However, sometimes a bond is not enough to cover the damage and rent owed by a tenant.

Amount of rental bond
Rental bonds are not compulsory, but it is highly recommended that a bond be taken unless there is a good reason not to.
No more than four weeks' rent can be charged as a rental bond. This applies to all rental properties in NSW, whether furnished or unfurnished. Higher bonds cannot be charged for tenants with pets, children or for any other reason.

A rental bond must be in money, and cannot be in any other form, such as personal goods or a written guarantee from the tenant's friends or relatives. The only exception is for Tenancy Guarantees issued by Housing NSW. These guarantees (of up to $1000 over and above any bond paid) help those with a limited or poor rental history to rent a place in the private rental market.

A rental bond can only be accepted when the tenant signs the tenancy agreement. Bonds cannot be taken before the agreement is being entered into, such as from applicants for the tenancy or from those who have paid a holding fee. We can only take one bond for a tenancy. That is, if there is more than one tenant, you cannot take a separate bond from each of them.

Rent in advance
At the beginning of the tenancy, the tenant can be required to pay the first two weeks' rent. This is not another form of bond. The tenant is simply paying their rent in advance, meaning that no rent is due until two weeks have passed. Besides a rental bond and two weeks' rent in advance, you cannot ask the tenant for any other money at the start of a tenancy.

Bond lodgement
When we take a bond from a tenant you must give a receipt or record the payment details on the tenancy agreement. The bond must be lodged with NSW Fair Trading. We cannot keep the money or put it into an account in the tenant’s name.

We need to fill out and get the tenant to sign a Rental Bond Lodgement form. Bonds can be lodged by posting the Lodgement Form along with a cheque/money order for the amount of the bond to the address on the form or in person at any Fair Trading Centre.

If you are letting and managing the property yourself you have 10 working days in which to lodge the bond with Fair Trading. If you have employed us as agent we will lodge the bond and handle the paperwork. Agents have 10 working days from the end of each month in which to lodge all bonds received during that month. These are maximum timeframes and you can lodge a bond sooner.

We will receive confirmation (with the bond number) from Fair Trading once the bond is processed. It is advisable to only accept bond payments in the form of cash, bank cheque or bank transfer from the tenant's account.

Fair Trading does not accept liability for a tenant's dishonoured personal bond cheque. If the cheque bounces this means you have no bond or security. We will need to try to collect the money again and re-lodge the bond or issue a termination notice for breach of the tenancy agreement.

Updating bond records
If the name or contact details of the landlord, agent or co-tenants changes during the tenancy, a Change of Shared Tenancy Arrangement or Change of Managing Agent/Owner form will need to be completed and lodged with NSW Fair Trading.

Smoke alarms

In residential premises
To enhance safety and minimise loss-of-life in building fires, the NSW Parliament enacted the Building Legislation Amendment (Smoke Alarms) Act in July 2005. The Act allows regulations to be made to require smoke alarms to be installed in existing buildings in which people sleep. A smoke alarm is an effective early warning device designed to detect smoke and alert building occupants to the presence of a fire. Installed in the correct location, it increases the time available for safe escape.

From 1 May 2006, when the Environmental Planning and Assessment Amendment (Smoke Alarms) Regulation 2006 came into effect, owners of residential property are responsible for ensuring smoke alarms are installed.The Smoke Alarms Regulation specifies which types of buildings need smoke alarms installed, the types of alarms, where they are to be located and other matters. Contact details for more information about the requirements under the Regulation are listed in this fact sheet.

Changes to fair trading laws
Several fair trading laws were amended as a result of the smoke alarm laws and this information summarises these changes for the people that are affected.

Landlords and tenants
Under the Residential Tenancies Act-

  • Landlords are responsible for the installation of smoke alarms in rented premises.
  • Landlords have the right of access to rented premises to fit or maintain smoke alarms after giving the tenant at least 2 days notice.
  • Neither the landlord nor the tenant are, except with reasonable excuse, permitted to remove or interfere with the operation of a smoke alarm fitted in the rented premises.
  • Where a smoke alarm is of the type that has a replaceable battery, it is recommended that the landlord put a new battery in at the commencement of a tenancy.
  • After the tenancy begins, the tenant is responsible for replacing the battery if needed. Fire and Rescue NSW can assist elderly tenants or those physically unable to change a smoke detector battery.
  • The condition report includes a specific reference to smoke alarms so that tenants and landlords are able to note and comment on the presence of smoke alarms at the beginning and end of the tenancy

IMPORTANT – Owners of residential property who rent out their premises as holiday accommodation are responsible for installing smoke alarms and replacing batteries.

Strata scheme lot owners

In a strata scheme-

• Owners of lots can install smoke alarms in their lots without having to obtain approval of the owner’s corporation.
• There is an obligation on lot owners to repair any damage to common property caused by the installation of a smoke alarm.

Lot owners who rent out their strata scheme residential property should note their responsibilities as landlords in relation to smoke alarms under the Residential Tenancies Act 2010.