The Minns government is planning one of the largest overhauls of the NSW tenancy market in more than a decade, including the potential for new laws which would close a loophole allowing landlords to hike rents multiple times per year.
Other potential changes being considered by the new government as it sets out to tackle the state’s soaring tenant market include making it harder for landlords to charge “excessive” rental increases and changes to housing applications to prevent real estate agents discriminating against would-be residents.
A proposal to overhaul the NSW tenant’s market will seek to crackdown on ‘excessive’ rent increasesCredit: Peter Rae
The mooted changes are contained in a discussion paper on the government’s rental reforms to be released on Friday, which also includes its election promise to ban ‘no-grounds’ evictions, make it easier for tenants to own pets, and the creation of a portable bond scheme.
Fair Trading Minister Anoulack Chanthivong is hoping that removing a series of “unfair and outdated” rules will rebalance the tenancy market in favour of tenants, as new property data shows Sydney’s median apartment rent reached a record $670 per week following an increase of 8.1 per cent in the June quarter alone.
While the government is expecting pushback from the real estate industry on some proposed measures, Chanthivong said the changes, which are more ambitious than what was previously floated by Labor, are a recognition that renters “are under extreme pressure in a tight market”.
Premier Chris Minns has made it clear that he wants to ease the housing affordability crisis by either convincing councils to accept higher density or bypassing them entirely in order to boost supply, but Chanthivong said the government will also “rebalance the equation” between renters and landlords.
“We want to hear from everyone because renters and owners need each other, and they both need a fair set of rules,” he said.
Among them is a proposal to collect and publish data on rental increases based on their location to help tenants fight “excessive” price surges which have seen apartment rents in Sydney’s inner south-west increase by 11.1 per cent in the June quarter and by 36.4 per cent annually. In Parramatta alone unit rents rose by 33.3 per cent in the past year.
Currently renters can dispute an increase if they believe it is unfair, but, the discussion paper states, “there is a lack of information about average rents paid and rent increases”.
The changes would see the government collect rent-increase data or conduct surveys of tenants and landlords which it would then publish to allow renters to “more easily challenge rent increases that are unfair”.
It also suggests requiring landlords to prove that rent increases are not “excessive” in cases where it exceeds the consumer price index.
The paper also raises the prospect of changing laws which allow landlords to charge multiple rent increases in a 12-month period, depending on the type of lease a renter is on.
In NSW landlords can only charge one increase per year if a renter is on a periodic lease or a fixed-term agreement longer than two years.
But when renters switch between agreements – from periodic to fixed term, for example – landlords can hike the rent even if it had already risen in the previous year, a loophole the government is now considering shutting.
The paper, seen by this masthead, states the government is “considering clarifying the existing laws that place limits on how often landlords can increase rent by making it clear that the limit continues into a new type of agreement”.
The Department of Customer Service also raises concern about the potential discrimination against some applicants, saying potential tenants are often asked “to provide far more personal information than is needed”.
“This risks exposing their personal information to cyber-attacks or data breaches. It can also lead to unfair or discriminatory outcomes,” it states.
It cites evidence of real estate agents using social media or court records to vet applicants and raises the possibility of following Victoria in banning the collection of some information, including when a potential tenant has been in a rental dispute with a previous landlord.
The discussion paper reveals the government is considering ending ‘no grounds’ evictions for both fixed and periodic leases, while adding a series of reasons for why landlords can end a lease, which could include plans to sell, demolish, renovate or live in the property themselves.
It could require landlords to provide “evidence” of the reason, including, for example, a contract with a tradesperson or a building permit.
The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.