The PROPERTY DOCTORS, Sydney Australia Novak Properties

EP. 1387 NSW Laws Aim to Aid Tenants—But Are They Really Working?

• Mark Novak, Cleo Whithear • Season 29 • Episode 1387

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A storm is brewing in the New South Wales rental market as the state government prepares to roll out its ban on "no grounds evictions" for landlords. This controversial reform will fundamentally alter the relationship between property owners and tenants, requiring landlords to provide legitimate reasons before asking renters to vacate.

The legislation, slated for full implementation by May 19th, follows earlier reforms capping rent increases to once yearly and prohibiting rental bidding. Under current rules, landlords can give tenants 90 days notice without specifying a reason once agreements become periodic. The new system requires valid grounds such as property sales, owner occupation, or family member housing needs. Landlords providing false pretexts face severe consequences – potential $14,000 fines or mandatory three-month vacancy periods that could cost thousands in lost rental income.

What's particularly striking about these changes is the questionable net benefit for those they're ostensibly designed to help. Despite multiple tenant-focused reforms in recent years, the rental market remains brutally competitive. Property managers report unprecedented inventory shortages – areas that typically maintained 35-55 available rentals now struggle with just 4-8 listings. Rents continue climbing, and finding affordable housing grows increasingly difficult. Meanwhile, property owners face mounting regulatory burdens that make professional management almost essential, as navigating the complex legal landscape becomes too risky for self-management. Are these reforms genuinely addressing housing affordability, or simply winning political points while leaving fundamental supply issues unresolved? We'd love to hear your thoughts on these changes – share your experience as a landlord, tenant or property professional!

Speaker 1:

No grounds evictions for tenants from landlords in New South Wales gonna be introduced. We're gonna talk about the new laws and net effects that we're seeing when laws are introduced. Stay tuned. Top of the morning. Expert property manager Cleo Whitty. How are you?

Speaker 2:

I'm well, thanks. How are you?

Speaker 1:

Good, good. More red tape for landlords, harder life for landlords, better life for tenants. What's the net effect? We're going to talk about all these things this morning and the struggle's real.

Speaker 2:

Yeah, it's been rolled out more official, although we're still yet to see all the official legislation come out yet for every tenant out there.

Speaker 1:

There's a landlord out there and I've seen plenty of legislation introduced for tenants and no legislation easing up for tenants and no legislation for easing up on landlords. It doesn't win votes no, it doesn't.

Speaker 2:

And if anything, it does put the value of your real estate agent into high esteem. We are the voice, we are the advisor, we are the ones that go to battle for our landlords, the pan.

Speaker 1:

Also for our tenants.

Speaker 2:

But yeah, it's one of those things where you know we're constantly learning new reforms, we're constantly needing to fully understand the legislation. I never know the reason why. That's the biggest question why? Why do these reforms hurt the landlords and come in at a crucial time where we feel that it's the wrong time? It's never a good time, but it's the wrong time. It's never a good time, but it's the wrong time. So we know about them, but the reasoning behind it. We somewhat scratch our heads and be like why are we doing this?

Speaker 1:

Well, in the history of the parliament there's been one politician that we used to support landlords. They didn't last very long. It doesn't get votes. Basically, I think when you see something like the budget come out, they want to appeal to voters, that faction of government, and they look at stuff, sensitivities, where they're going to win votes. That seems to be, prima facie, what the motivation is. I could be wrong, I'm not a political person, but it seems like if you're supporting a landlord in politics, you're going to get bashed up, you're going to get beaten up so much so they don't exist, and if you're supporting, um, tenancies, um, that it wins a lot of hearts and it wins a lot of votes. It has been very hard for tenants, um, this climate, but, um, you know. So my heart goes out totally and I completely understand how that works. But you know, is it going to stop quantum or the force or all that effect of of what they're trying to achieve? Or do they simply need to build more investment properties? Um, rather than shroud legislation, which, you know I find the net effect is never what they want it to be.

Speaker 1:

Interesting, I've been asked by a lot of people about a landlord not being able to ask a tenant ie no grounds to leave a property. This is the newest legislation that's going to be introduced, so we used to have a thing called no grounds eviction. So a landlord being their own property, their own investment property, their own property they have a mortgage on, they may have owned it for a short time or a long time, they could ask the tenant just to leave just because, um, so their hands are going to be tied up behind their back. Can you explain exactly what this actually means, and then we'll talk about the net effect. What is government trying to achieve?

Speaker 1:

And I and I get, I feel reprieved for tenants just in this concept, like it's like, oh, like, oh, great, I'm going to. You know, this is good, this is good for me as a tenant, and I feel landlords going. This is weird. Are you serious? I can't actually remove. You know, I want to move into my own house and I can't. You know, go on. You know I can't ask a tenant to leave my own house. What do you know?

Speaker 2:

so far about the legislation. When an agreement is periodic, so the fixed terms ended, you automatically roll over as a tenant onto the periodic arrangement During that time. The maximum notice that a landlord would be required to give a tenant to vacate for whatever reason, no grounds, was 90 days. That's a long time, three months. You've got three months to find a property. We don't have to give you a reason why you're moving out Now. The owner has to give a valid reason. So the tenants are in control of that situation to a part where the landlord can't just say I've got a friend moving in and then advertise it for $300 a week more.

Speaker 2:

What's happening with this low stock situation is sometimes owners have been frustrated because they couldn't bring their property up to market value after COVID, after interest rates still only one increase per year, 90 days the tenant's most likely going to move in a month out of those three and then he could advertise his property again in the current climate for $300 a week more. Whatever that is, I guess they don't want the owner to be able to do that. They don't want the property, the rent prices going up in that big you know, sort of way, as in you could just get them out in 90 days and then everybody's properties are now back up to what they should be, because naturally tenants give notice and the flow of property and real estate. You know you normally have about 35 to 55 properties for rent. At the moment we have four and five and eight, and that's the maximum. So I guess that part of the no grounds notice has been a real um issue. Um, which is how they've implemented this part of it. Also, um, I don't see the parameters of a landlord needing to sell that property changing much. As far as providing evidence, I mean, that's pretty easy that you're putting the property on the market, that's a valid reason. So, yeah, if you're an owner and you're wanting to sell your property, I can't see the no grounds notice changing much for you there.

Speaker 2:

I feel the ones that will be affected the most are the people that are just wanting to move their tenant along for whatever reason, be it a minor reno, major reno it's mainly to do with getting more money. That's what I feel. And then there's also the you know relationships come to an end. You don't want to tell the tenant you're not happy with them as such, because NCAT does provide a lot of litigation. If you went down the empathetic road with a tenant, this is the reason that this relationship's not working anymore then the tenant's given opportunity to remedy and remedy and remedy, whereas a landlord could in the past have just gone.

Speaker 2:

You know what? I can't see this changing. 90 days off, you go. So what they also want us to do in this bureaucracy that we have at NCAT is to be at NCAT more trying to get you know mediation and tenants and people, and you know that whole process is so frustrating. I went there last week and there's so you know, so much paperwork and so much going back and forth and people are wanting to be at work and they're not at work. They're losing money by being there landlords, tenants, I mean agents. That's what we're paid to do.

Speaker 1:

But you can see that whole resolution.

Speaker 2:

Yeah, that whole conflict resolution and this whole 90 days will provide more of that. I feel your reasons, not complaint, will end up at NCAT, will be at NCAT more. I feel when a landlord is not able to get the tenant out for the reasons that they wish NCAT's for disputes, for landlord and tenant disputes, just so everyone knows.

Speaker 1:

So what are the grounds that a tenant can? Now that this law has been introduced, no grounds can't be used. What are the?

Speaker 2:

grounds that can be used to ask a tenant to leave an owner's asset. One that was interesting, of course, was you have a family member moving in, or you have someone, which happens a lot. You know, I've got a friend returning from overseas. They're going to take my two-bedroom unit, move in whatever landlord moving back in.

Speaker 1:

Is that okay?

Speaker 2:

landlord moving back in. Yes, that's okay. But what's not okay is if you say that you're going to do that and then there's evidence. So this will spark tenants as well getting more involved. If they notice that property online for rent, the landlord will pay a penalty fee for listing the property. There is a fine and there is a period I don't know, I thought it was like $14,000. Like it's a lot of money. There's a big, big 50 fine or you have to leave your property vacant for three months vacant for three months. So you're losing out on all that rent for three months just because you are changing your circumstance. And what if that circumstance changes again? Family friend didn't move in, oh, now I need to re-let it. You know how will that work? How will they gauge honesty into the situation?

Speaker 1:

I don't know, um so the full, the full info on the legislation hasn't landed.

Speaker 2:

They've given us the brief of what it's going to look like but we haven't got all the reasoning exactly, you know, enforced yet that date, 19th of May. They'll have till then, I believe, to roll it all out. But you can see on the website. You can go on the Office of Fair Trading website and it will outline the reasons approved and how that will work. I guess we've just been stalling as property managers hoping it's not going to roll out, even though we know it's going to, it's coming.

Speaker 1:

So I feel really bad for tenants because we've had landlords can't put rent up more than once a year. We've had that was one legislation. There can't be any rent bidding as you can't say offers over on a rent, you can't do no grounds. There's often there's there's three pieces of legislation the last year or two that have come in. There's there's obviously a problem that they're trying to fix and they're trying to, and it's often it's not landlords complaining, it's tenants complaining. So they're putting this legislation in place. I guess gets the votes, whatever, but I actually.

Speaker 1:

And then there's lower stocks than we've ever seen on on our part of sydney northern northern beaches of where we operate, there's a you know if this is a really hard landscape for for someone that's renting a property. It's a really, really hard landscape for a tenant and my heart goes out to these guys to say you know, wow, this must be, but it doesn't seem like it's actually getting any easier. Even the net effect from these legislations it doesn't seem like there's reprieve for tenants. Rent's still going up. It's still as hard as ever to rent a property, Like I don't know. But all this legislation that's coming like for what? Because it may win the hearts of the votes, but the net effect. It's still a really hard world out there for the guys that are renting something.

Speaker 1:

It's true but real estate.

Speaker 2:

Yeah, but real estate, the real estate industry always cops it. We always cop it. What about the cost of living? If a majority of tenants are paying rent because rates are so high and everything, why are they still being charged so much? At the supermarkets they had this audit on, you know, woolworths, coles, alzheimer, whatever it was. You know you go to buy a bag of shopping. It costs you 150 and you've got nothing in the fridge. The majority of your money is going to rent, but yet food didn't get any cheaper. They're not doing anything about that. Where's all the legislation surrounding that?

Speaker 1:

I laugh about the energy costs I don't see and the net effect of like how much you're going to save with energy. I'm thinking that's like such a small fraction of property Rent, for instance. Why aren't they doing stuff out there which is actually going to you know the big figure stuff to help. And I think Minns has done a good job bringing in some of this developing, making it easier to develop and get approved. I don't know if he's going to achieve the net effect again. It's really interesting when these legislations coming in to see the true net effect, you know, 18, 36 months later, because more often than not it's a toothless tiger, but it wins the votes. It wins the votes, which is interesting. So, cleo, thank you so much for speaking with us about this. Awesome. It seems like we're all in it together.

Speaker 1:

I think that the landlords are in a hard position. I think that the landlords are in a hard position. I think the tenants are in a hard position. I think the agents are in a hard position. Unfortunately, you do need an agent to manage your property because of all this legislation and fines that you're shrouded in. That's what I'm seeing. More and more People want to talk to us and get us to manage their assets. They're looking after themselves more than ever because of what's happening here. Um interesting landscape it is.

Speaker 2:

We'll see how it rolls out um. If I start going grayer and grayer and grayer in all our shows, you'll know why it.

Speaker 1:

It's true. Have a great day everyone. Thanks, cleo, bye, see you, bye, bye, bye, bye, bye.