By Colm O’Brien
Head of Real Estate Solutions
The NSW Government’s comprehensive Real Estate and Property legislation reform is coming into effect on March 23, 2020. In this article, we examine these changes and what they could mean for you.
Spanning amendments to the Residential Tenancies Act 2010, along with structural changes to the Property, Stock and Business Agents Amendment Act 2002, the intention of the State Government’s regulatory reform is to:
- Offer greater clarity for both landlords and tenants
- Streamline agent classification
- Promote ongoing education and training within the sales and property management sector.
Effective March 23, 2020, the changes will impact three key facets of the NSW real estate ecosystem:
- Real estate professionals
- Rental properties
- Properties for sale.
The following offers a summary of key changes across these three areas, and the benefits of such changes.
1. REAL ESTATE PROFESSIONALS
Wholesale changes to the Property, Stock and Business Agents Amendment Act 2002, (The Act) will change how Real Estate professionals are licensed and classified. The changes are designed to promote education and increase the level of qualifications across the industry to ensure the end user is serviced by a suitably trained and experienced Real Estate professional. The requirements can be viewed here.
2. RENTAL PROPERTIES
Amendments to the Residential Tenancies Act 2010 (the Act) and the new Residential Tenancies Regulation 2019 (the new Regulation) will clarify the rights and responsibilities of both the Tenant and Landlord respectively. The updated set of standards define each party’s role across the rental landscape to alleviate confusion and reduce disputes created by a lack of knowledge or misinformation.
For instance ~
Tenant: “Do I need permission to hang a picture?”
Landlord: “Can I charge my tenant directly for water usage?”
The amendments also reflect the changing environment landscape in Australia via water efficiency measures, effective 23 March 2025 (4 years grace period) ALL rental properties toilets must be dual flush with a minimum 3 star rating in accordance with the Commonwealth Water Efficiency Labelling and Standards (WELS) scheme.
Some of the improvements include:
- Minimum standards to clarify ‘fit for habitation’ thus removing the, somewhat subjective, interpretation of what is ‘habitable’
- New smoke alarm obligations for landlords, including penalties for non-compliance by landlords
- Changes of a ‘minor nature’ to clearly define what a tenant can/cannot do without approval
- New mandatory set break fees for fixed-term agreements for leases signed after March 23, 2020:
- 4 weeks rent if less than 25% of the lease had expired
- 3 weeks rent if 25% or more but less than 50% of the lease had expired
- 2 weeks rent if 50% or more but less than 75% of the lease had expired
- 1 week’s rent if 75% or more of the lease had expired.
- New information to be disclosed to prospective strata tenants – including providing strata by-laws prior to any new contract
- New condition report – to be provided electronically among other changes
- Quotes for maintenance and repairs >$2,000.
3. PROPERTIES FOR SALE
Sales Agents will now have additional disclosure requirements regarding ‘material facts’ when dealing with clients. ‘Material facts’ are defined as facts an Agent should know, or would reasonably be expected to know, which may impact a potential purchaser’s decision regarding a property. Whilst existing disclosure requirements will remain, the intent of the regulations defines the minimum standards regarding “material facts” to be conveyed to a potential purchaser during the sales process to enable full transparency.
Material facts include whether the property:
- Has been affected by flooding or another natural weather event such as Bushfire in the last 5 years
- Has been involved in the production or supply of a prohibited drug or plant in the last 2 years or has significant health or safety risks
- Is listed on the loose-fill asbestos insulation register or contains external combustible cladding
- Has been the scene of a crime of murder or manslaughter in the last 5 years
- Is, or is a part of, a building that contains external combustible cladding to which:
- a fire safety order, or a notice of intention to issue a fire safety order, has been issued requiring the building to be rectified regarding the cladding
- a building product rectification order, or a notice of intention to issue a building product rectification order, has been issued requiring the building to be rectified regarding the cladding
- a development application or complying development certificate application has been lodged for rectification regarding the cladding.
The above disclosures are not designed to punish Agents (as they are the norm for reputable agents), rather they are there to ensure protection for consumers entering what is likely to be the largest financial investment of their life coupled with limited experience in the Industry.
These overdue reforms are vital to ensure NSW’s legislation is robust and reflective of the needs of all stakeholders in the real estate value chain, whilst maintaining the integrity of the sector both now, and in the future.
How can we help?
If you’re keen to further explore or understand the comprehensive upcoming changes to real estate in NSW, please don’t hesitate to contact me, or another member of the Honan Real Estate Solutions team, directly.
Further information regarding these changes can also be found on the NSW Fair Trading website:
Head of Real Estate Solutions
+61 499 490 177