The End of No-Grounds Evictions in NSW
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If you own an investment property in NSW, you’ve likely heard about the state government’s proposal of significant changes to tenancy laws, particularly regarding no-grounds evictions.
The changes are aimed at improving tenants’ rights and sense of security in an increasingly competitive market. But what kind of impact will they have on landlords?
Keep reading to find out more about no-grounds evictions and how their proposed ban could affect you.
What are no-grounds evictions?
No-grounds or no-fault evictions enable landlords to terminate a tenancy without needing to provide a reason. These evictions can be issued at any time throughout an ongoing lease or at the conclusion of a fixed-term lease, giving landlords the flexibility to regain possession of their properties without justifying the decision.
Whether or not a tenant has adhered to all of the terms of the lease agreement does not currently affect your ability to issue an eviction. But that could soon change.
What are the proposed changes to eviction laws in NSW?
The Minns government is cracking down on no-grounds evictions as a means of delivering on its election commitment to make rental laws fairer. If the new legislation passes in parliament, which it is expected to soon, NSW will join other states and territories that have implemented similar measures, including Victoria, Queensland, South Australia and the ACT.
Under the proposed changes, in order to evict your tenants, you would be obliged to meet specific criteria. You may issue an eviction if:
- you are selling or intending to sell your property with vacant possession
- you or your family members are moving into the property
- lease conditions have been breached, such as non-payment of rent or property damage
- significant repairs, renovations or demolition of the property are required, or
- your property is no longer to be used as a residential rental.
Additionally, you can evict a tenant if they are no longer eligible for an affordable housing program or, in the case of student accommodation, they are no longer a student.
Landlords, take note: if eviction is due to planned repairs or renovations, the property cannot be re-listed for rent for at least four weeks after the termination of the tenancy!
So, what kind of penalties are at stake if landlords do not comply with the new rules?
What are the penalties for non-compliance?
The exact details of the penalties for landlords providing false or misleading reasons for eviction have not yet been ironed out. However, the NSW government has stated that other jurisdictions are a good indicator of what to expect. Premier Chris Minns has expressed confidence that the penalties his government are putting in place and their means of enforcement will be sufficient to deter landlords from abusing the system. So, at the very least, a pretty hefty fine could be on the cards.
How will the new rules be enforced?
There won’t be an official government body actively monitoring your compliance with these new tenancy laws. Instead, enforcement will rely on individual complaints. That means that if a tenant believes they were evicted for illegitimate reasons, they can file a complaint with NSW Fair Trading, and a further investigation will follow. In cases where disputes arise between landlords and tenants, mediation can be sought through the NSW Civil and Administrative Tribunal, or NCAT.
Will there be any changes to termination notice periods?
Yes, the proposed reforms include changes to the notice periods landlords must provide when evicting tenants. The rationale behind this is to give tenants more time to secure alternative accommodation in the event of an eviction.
For fixed-term leases of less than six months, the notice period may increase from 30 to 60 days. If your fixed-term lease is over six months in length, you may see an increase from 60 to 90 days.
What about bonds?
Tying in with the above changes to no-grounds eviction laws, the NSW government has announced plans for a Portable Rental Bonds Scheme. The first of its kind in Australia, this scheme will allow tenants to transfer their bond directly to a new property when moving, avoiding the financial burden of paying two bonds simultaneously while waiting for a refund from their previous tenancy. It’s still in the development phase but is expected to be finalised in 2025. Landlords, keep an eye out for updates over the coming 12 months so that you’re clued into the new bond-handling process for any future tenancy changeovers.
So, how will these changes affect the way my investment properties are managed?
The proposed end of no-grounds evictions represents a major shift in the tenancy laws that we have all operated under for many years now. For landlords, ultimately this change will require careful planning and an acute understanding of what constitutes legitimate grounds for ending a tenancy to avoid potential penalties and disputes. So, it’s natural to feel overwhelmed or concerned by these developments.
At Shead Property, we are here to ensure your investment continues to thrive under the new regulations. Our experienced property managers are committed to keeping you well-informed about key legislative changes as they arise, so if you have any other questions about how these reforms may affect your rental properties, reach out today.
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