NSW Passes Rental Reforms: No-Grounds Evictions Banned, Rent Increases Capped

Construction workers are seen onsite at a combined residential and commercial development in Surry Hills of Sydney, Australia on June 24, 2024. Lisa Maree Williams/Getty Images

The Minns Labor government has passed a series of rental reforms aimed at improving housing conditions for tenants in New South Wales.

The new legislation includes a ban on no-grounds evictions, limits on rent increases to once per year, and new rules making it easier for tenants to keep pets.

It also ensures fee-free methods for paying rent and prohibits tenants from being charged for background checks when applying for properties.

The bill passed the NSW parliament on Oct. 24.

“Renters have been the forgotten people in NSW for too long, and that ends now. Banning no-grounds evictions will ensure housing security for renters, allowing them to make a house a home,” Premier Chris Minns stated.

Below are some of the key changes:

No-Grounds Evictions Banned

Under the new laws, landlords can no longer end a lease without giving a specific reason. This change is aimed at ensuring tenants are more secure over the long term.

Premier Minns said the reform also benefits landlords.

“The reforms will also give landlords more clarity on when they can end a fixed-term or periodic lease,” he said.

Limits on Increasing Rent

From now on, rent can only be increased once per year.

“Previous protections against rent increases did not apply to fixed-term leases of less than two years or when there was a change in the lease type. The new legislation closes these loopholes, ensuring tenants are protected from frequent rent hikes, regardless of their lease term,” read the government statement.

Minister for Fair Trading Anoulack Chanthivong said, “By limiting rent increases to only once a year, we are making renting more affordable and providing tenants with greater financial security.”

In an aerial view, vacant land sectioned off for housing is seen in the western suburbs of Sydney on Jan. 11, 2024. Jenny Evans/Getty Images

More Accessible Pet Ownership

The reforms also make it easier for tenants to keep pets in rental properties. Tenants will now be able to apply to keep a pet, and landlords will only be able to refuse the request on specific grounds. This represents a shift in renters’ rights, many of whom have struggled to find pet-friendly properties.

“We’re making it easier for renters to have pets in their homes, which will help more people feel comfortable and settled in their rentals,” Chanthivong said.

Fee-Free Rent Payments

Property owners and agents must now offer tenants fee-free payment options, such as bank transfers and Commonwealth Centrepay, to eliminate hidden costs.

The changes are part of a broader effort to ensure that unnecessary financial pressures do not burden renters.

“We’re making sure people can pay their rent without hidden fees, making renting more transparent and fairer,” Minister Chanthavong added.

Ban on Paying for Background Checks

Under the new laws, renters will no longer have to pay for background checks, deemed an additional financial burden.

This protection and other reforms will take immediate effect once the Bill receives royal assent.

The Residential Tenancies Amendment Bill 2024 will also introduce a Portable Bond Scheme, which allows eligible renters to transfer their rental bonds digitally when moving homes. This scheme, backed by a $6.6 million investment, is the first in Australia.

Further, the free tool, Rent Check, will be created to allow tenants to confirm that rents are fair.

The NSW government confirmed that these reforms were passed after extensive discussions with renter advocates, and tenancy experts. A public consultation process, which received over 16,000 submissions, helped shape the final legislation.

Minister for Homelessness Rose Jackson highlighted the importance of the reforms, stating, “We inherited a rental crisis and a housing crisis, and since day one, we’ve been committed to making renting fairer and more secure. This is a huge win for renters in our state.”

Real Estate Body Warns NSW Could Repeat Previous Mistakes

The Real Estate Institute of NSW (REINSW) previously warned the NSW government could end up repeating the mistakes of other jurisdictions, such as Victoria and New Zealand, by eroding landlords’ rights, which has led to a decline in rental conditions for tenants.

In Victoria, recent data from the Department of Families, Fairness and Housing reveals a significant drop in rental properties, with nearly 22,000 fewer available this year, as investors flee in response to new taxes on investors.

Similarly, New Zealand’s 2021 ban on “no grounds” evictions drastically reduced rental supply, prompting the introduction of a Bill this year to restore landlords’ rights to reclaim possession of their properties.

“The removal of landlords’ rights under the guise of populist rental reforms has had a clear negative impact on renters,” said REINSW CEO Tim McKibbin in a statement.

He insisted the best solution for the rental crisis was to increase supply.

“This means new development, eradicating planning delays, and making it attractive to investors to invest in residential property.”