Bond and evictions boost for renters

Life looks like it’s going to get a little easier for millions of renters across NSW with two big announcements within a couple of days.

Firstly, New South Wales Premiers Chris Minns announced his government plans to ban no-fault evictions, preventing landlords from ending a lease without a “reasonable” excuse from next year. 

And two days later we heard that renters across the state will soon be able to move homes and transfer their bonds with them, thanks to the Australia’s first portable rental bonds scheme.

With about half the residents of apartment blocks being renters, this is a double dose of big news for tenants and landlords in the strata sector.

Launching the portable bonds schemes, a government spokesperson explained there is a turnover of more than 330,000 tenancies every year across the state, with the average tenancy 1.6 years.

As residents juggle high rents, low vacancy rates and general cost-of-living pressures, they’re also faced with an average moving cost of $4,000 and the prospect of having to pay a new bond before their old one is returned.

That problem is exacerbated further if the landlord or rental agent objects to the full bond being repaid.

Moving stressful

The Portable Rental Bonds Scheme will allow eligible tenants to digitally transfer their existing bond to their new rental home.

“Moving house is one of the most stressful things you can do, not to mention expensive for many renters,” Premier Chris Minns told the media. ““The process can leave renters out of pocket, for up to several weeks.

“The NSW Government’s portable bonds scheme will give cost of living relief to renters moving homes, by making sure they don’t have to set aside extra money while they wait for their bond to be refunded.”

Minister for Better Regulation and Fair Trading, Anoulack Chanthivong said the scheme would be the first of its kind in the nation.

“Once in place, renters won’t have to think twice about how they’ll pay their bond on top of moving costs,” he said in a press release. “This scheme is a win for renters and owners.”

Minister for Housing and Homelessness, Rose Jackson said that the high cost of moving, especially having to pay a new bond before the old one is refunded, can push people to the brink of homelessness.

“The portable bonds scheme is an important and practical way to help ease this pressure renters feel,” she added.

The Rental Commissioner is leading the development of the Scheme which is  expected to be completed in 2025.

No-fault evictions

Meanwhile, the proposed revamp of the rental lease termination process means homeowners will have to meet one of several “commonsense” thresholds for eviction, which include the sale of the property or if the tenant causes damage. 

Under current law, landlords in NSW are able to terminate rolling leases at any time without reason as long as they give the tenant 90 days’ notice.

Both Labor and the Coalition went into the 2023 state election promising to ban this type of eviction.

Premier Minns announced the changes as part of his keynote speech at the NSW Labor State conference in Sydney. The reforms will be among the most significant in the rental market in a decade. 

A third of NSW residents are renting, an increase of more than 17 per cent since 2016. 

Under the proposed changes, landlords would face as-yet undisclosed penalties if they terminate a lease for “non-genuine” reasons. This would bring NSW into line with current practises in Victoria. 

Proposals slammed

However the proposals have been slammed by the Property Investment Council of Australia (PICA) which represents landlords.

“Governments and politicians are naive if they don’t think that some reforms to the current tenancy laws put tens of billions of annual investment dollars at risk in the private rental sector being spent in their state or territory,” PICA chair Ben Kingsley said in a media statement. “[That’s] money that creates initial and ongoing jobs and adds critical supply to the rental pool.

“Put simply, small business private rental accommodation providers have a choice on whether they invest at all in this sector and, if they do, where they invest in Australia.

“You only need to look at the recent experience in Victoria where significant tenancy reforms, along with higher property taxes have resulted in 15,600 fewer rental properties in Victoria in the past 12 months alone, based on reported bond registration data.

“Fewer rental properties and higher operating costs equates to higher rents – that’s a fact.”

According to some reports, rents in Sydney have stabilised while in Victoria they are still rising, but at a slower rate than previously.

According to the Victorian government’s department of Families, Fairness and Housing, in the March quarter 2024 Rental Report, median rents increased over the quarter, both in metropolitan Melbourne (by $30, to $560 per week) and in regional Victoria (by $15, to $445 per week).

The Melbourne Rent Index (MRI) increased by 4.6 per cent over the March quarter, and by 14.6 per cent over the past year. The annual increase is the same as that in the March quarter 2023 and well above the long-term average annual increase over the last 10 years (3.7%). It continues a trend of higher-than-average annual increases since the March quarter of 2022.

The Regional Rent Index (RRI) increased by 2.6 per cent in the March quarter, and by 5.3 per cent over the past year. The annual increase is below that of the twelve months to March 2023 (6.3%), but above the long-term average annual increase over the past ten years (4.6%). It continues a trend of higher-than-average annual increases since the December quarter of 2020.