Proposed tenancy reforms, including ending no-grounds evictions, will harm not help NSW renters, according to the Real Estate Institute of NSW (REINSW).
REINSW Chief Executive Officer, Tim McKibbin, said the number of rental properties in the state was already falling and the proposed reforms would only make the situation worse.
Currently, landlords can end a residential periodic lease at any time, for any reason.
Under the proposed reforms, landlords would need a reason to end a tenancy, irrespective of whether it’s a fixed-term or periodic lease.
Such reasons could include breaching the lease, damaging the property, not paying rent or if the property is being sold or offered for sale with vacant possession.
Other reasons could include if the home will no longer be used as a rental, the owner or their family plan to live in the property and repairs or renovations making the home uninhabitable or if it needs to be demolished.
Landlords must also provide evidence when issuing a termination notice, with penalties for those evicting tenants with “non-genuine” reasons.
For those on a fixed-term agreement the termination notice period will also be extended by 30 days.
Mr McKibbin said the State Government had pitched the reform as being tenant friendly, but what was truly needed was more housing and incentives for investors to make their properties available.
“The cruel irony for tenants is that every time you make residential property a less attractive investment, the more you drive investors away, and the less homes there are to rent,” he said.
“The result is less choice for renters. This is not a forecast outcome. It’s happening now.”
Mr McKibbin said the number of rental bonds held by the NSW Bonds Board decreased by 1251 in June.
Each bond held effectively equates to one property rented.
“Investors can put their money into shares, commercial property, fixed interest and other alternatives,” Mr McKibbin said.
“For them to choose residential property, it has to be the most attractive option, and tenants depend on investors making this choice.
“But in the current climate, investors are net sellers.
“The number of investors selling properties is outstripping the number of investors buying properties, a trend reflected in near-zero vacancy rates and lengthening queues of hopeful tenants at inspections.”
NSW Premier, Chris Minns, said about 33 per cent of the NSW population rented, a rise of 17.6 per cent since 2016.
He said the reforms were about making renting fairer and balancing the needs of both tenants and landlords.
“Bad tenants will still be able to be evicted,” he said.
“We don’t want homeowners to have to put up with bad behaviour.
“But anyone who rents in NSW knows just how anxious and challenging renting can be at the moment.
“We’ve all seen the lines on a Saturday morning with hundreds of people waiting to inspect new properties.
“We believe this reform gets the balance right, but importantly, this will give both homeowners and renters more certainty, more peace of mind, so they can build a home and a life on surer ground.”
Mr McKibbin said in announcing the reforms, the NSW Government wrongly implied landlords evicted tenants without good reason.
“The reality is that landlords greatly value good tenants,” he said.
“No tenant means no rent and landlords are dependent on rent to service debt or, as retirees, to pay for their living expenses.
“In presenting the need for reform, government is once again portraying landlords in an unfair light. They deserve better and tenants do too.
“That’s why it will fail to improve renters’ circumstances.
“Investors will have more reasons to invest elsewhere and tenants will find they have even less choice.”
Property Investment Council of Australia Chairman, Ben Kingsley, said the NSW Government was “naive” if it didn’t think the reforms wouldn’t put investment dollars in the private rental sector at risk.
“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,” he said.
“Public servants of the day shouldn’t underestimate how much their market interventions can inform these investment decisions.
“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.”
Mr Minns said the new legislation would be introduced in the September sittings of Parliament, with the reforms set to start early next year.
NSW renters will also soon be able to move homes and transfer their bond with them, with the State Government investing $6.6 million to develop and deliver the country’s first Portable Rental Bonds Scheme.
The scheme will be a financial relief measure, which makes it easier for renters when moving by allowing eligible tenants to digitally transfer their existing bond to their new rental home.
NSW Rental Commissioner, Trina Jones, will lead the development of the scheme, which is currently out to public tender.
Development will involve an upgrade of the existing rental bonds system and work is expected to be completed in 2025.
