NSW Releases Draft Residential Tenancies Regulation With Disclosure, Smoke Alarm Changes

On 5 July 2019, the draft Residential Tenancies Regulation 2019 (NSW) (‘the draft Regulation’) and corresponding regulatory impact statement was released for public consultation. The current Residential Tenancies Regulation 2010 (NSW) (‘the 2010 Regulation’) will automatically be repealed as part of the staged repeal program under the Subordinate Legislation Act 1989 (NSW) on 1 September 2019. The draft Regulation will remake the 2010 Regulation and also include various reforms to enable provisions of the Residential Tenancies Amendment (Review) Act 2018 (NSW) (‘the Amendment Act’) to take effect.

In 2015 and 2016, the Residential Tenancies Act 2010 (NSW) (‘the Act’) underwent a statutory review by NSW Fair Trading. On 23 June 2016, the final report was published, which made 27 recommendations to improve the Act. The Amendment Act was introduced in order to implement a number of the recommendations of the statutory review.  This included reforms aimed to improving the renting experience in NSW.  The Amendment Act received assent on 26 October 2018, however, most of the reforms have not yet commenced as regulations were required in order to support the changes.

Rights and Obligations under the Draft Regulation

The draft Regulation would introduce a number of changes, including:

• Expanding the list of material facts that landlords (and their agents) must not knowingly conceal
• Setting out the manner and period for landlords to carry out repairs to a smoke alarm
• Setting the conditions under which a tenant can replace a battery in a smoke alarm
• Establishing a list of minor alterations where it would be unreasonable for a landlord to withhold consent for a tenant to carry out
• Clarifying the list of alterations that can be carried out by a qualified person
• Updating the standard form of residential tenancy agreement and condition report
• Providing for mandatory terms that cannot be changed or excluded from a fixed term tenancy agreement of 20 years or more
• Providing for an option for a 5 year fixed term in standard forms of agreement
• Simplifying clauses in order to increase clarity and consistency

One of the key changes to be introduced in the draft Regulation is the expansion of the current list of material facts that the landlord or their agent must not knowingly conceal in order to induce an agreement. Under sections 98A and 103A of the Amendment Act, the landlord has a responsibility to disclose material facts to a prospective tenant. A tenant may give a 14 day termination notice or apply for termination by the NSW Civil and Administrative Tribunal (‘the Tribunal’) if the landlord fails to comply with these sections. Furthermore, the Tribunal may also order compensation for a tenant for any costs incurred due to termination.

Under clauses 8(e) and (f) of the draft Regulation, landlords will now have an obligation to tell renters if someone has been convicted of an offence under the Drug Misuse and Trafficking Act 1985 (NSW), where it occurred at the property within the past 2 years. This includes where the NSW Police Force or local council has notified the landlord that the property has been used to manufacture and/or cultivate any prohibited drug or plant within the past 2 years. These proposed amendments implement a recommendation of the statutory review of the Act following a 2016 study, which found that properties that have been the scene of a drug offence may carry health risks for the tenant where drug manufacturing or storage occurred.

Another key change is amendments made to the regulatory requirements relating to the maintenance and repair of smoke alarms. Currently landlords must meet their statutory obligations in relation to a smoke alarm under the Environmental Planning and Assessment Act 1979 (NSW). However, current legislation does not deal with the repair of smoke alarms. Under the draft Regulation, clause 15 clarifies that a landlord must repair a faulty smoke alarm within 72 hours of being notified that the alarm is not working. It additionally prescribes how often a landlord must install or replace the battery in the smoke alarm. Clause 14 specifies that repairs must be carried out by a qualified professional for a hardwired alarm, unless manufacturer’s instructions state otherwise. On the other hand, clause 16 enables tenants to replace batteries themselves, where the alarm is not hardwired, and where it has a removable or replaceable battery. Additionally, tenants who repair alarms themselves will be entitled to be reimbursed by the landlord for costs within 14 days of written notice.

The final key change under the draft Regulation is clause 17, which prescribes types of minor alteration that a landlord would be found unreasonable to withhold consent. Under section 66 of the Act, a landlord must not unreasonably refuse consent to alterations, fixtures, renovations or additions that are minor in nature. In 2017-18, 314 cases were brought before the Tribunal that involved disputes between tenant and landlord over minor alterations. For greater clarity, the Amendment Act provides that the draft Regulation may set out minor alterations that would be unreasonable for a landlord to withhold consent. This consent may be condition on the alteration being carried out by a qualified person. However, tenants are still required to obtain consent prior to altering the premises.

The list of prescribed alterations in clause 17 includes:

• Installation of a childproof lock on an exterior gate of a single dwelling
• Installation of fly screens on windows
• Installation or replacement of hooks, nails or screws for paintings and other hanging items

Some questions posed for consultation from the regulatory impact statement include:

Consultation on the draft Regulation and regulatory impact statement is currently open. Further details can be found on the NSW Fair Trading website.

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Draft Residential Tenancies Regulation 2019 (NSW) and regulatory impact statement available from TimeBase’s LawOne Service

Media Release: Residential Tenancies Regulation (NSW Government, 5 July 2019)

Media Release: Residential Tenancies Regulation (NSW Fair Trading, 5 July 2019)