The Residential Tenancies Amendment Act 2024 introduces significant changes to the rental landscape in New South Wales, focusing on enhancing tenant protections and fostering fairness. While these reforms aim to create a more balanced market, they also present challenges and added responsibilities for landlords. Previously, we discuss the impacts of these reforms to the renters. Now, we will explore how these updates impact property owners and their operations.

Recent post: Impacts of changes to Renters

Impacts of the Reforms on Landlords

INCREASED REGULATION AND RESPONSIBILITIES

• Stricter Rules for Lease Terminations

The removal of “no grounds” evictions means landlords must provide valid reasons for terminating a tenancy, such as property sales, renovations, or personal use. Evidence is now required to support these claims, with significant penalties for non-compliance. This limits flexibility for landlords, making property management decisions more complex.

• Extended Notice Periods

Landlords must now adhere to longer notice periods for ending leases:

• 60 days for leases up to six months.
• 90 days for leases over six months.
• 90 days minimum for periodic leases.

While these changes offer tenants more stability, they reduce landlords’ ability to quickly adapt to changing circumstances, such as market conditions or personal needs.

FINANCIAL IMPLICATIONS

• Rent Increase Caps

Rent increases are limited to once every 12 months for all lease types, including fixed-term agreements. While this ensures predictability for tenants, it restricts landlords’ ability to adjust rents in response to market shifts or rising property costs.

• Fee Restrictions

Landlords can no longer charge tenants for background checks, and they must offer fee-free payment options like bank transfers or Centrepay. These restrictions could result in added administrative costs for landlords.

PET POLICIES

• Pet Ownership Approvals

Landlords must respond to tenant requests to keep pets within 21 days, providing specific, reasonable grounds for refusal. If no response is given, approval is automatic. This change may lead to concerns over property damage or increased wear and tear, especially since landlords cannot charge additional bonds for pets.

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Balancing Rights and Market Impact

While these reforms prioritize tenant protections, landlords face tighter regulations and reduced flexibility. Key challenges include:

• Adjusting to the administrative burden of compliance, such as documenting valid grounds for lease terminations or managing pet-related requests.
• Financial constraints from capped rent increases and the inability to pass on certain costs to tenants.
• Potential reluctance to continue renting out properties, which could reduce overall housing supply in the market.

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The Residential Tenancies Amendment Act 2024 demands that landlords adapt to a more regulated and tenant-focused environment. Although these changes promote fairness and stability, they also require landlords to take on greater responsibilities.

To navigate these reforms successfully, landlords must:

• Stay informed about their rights and obligations.
• Ensure compliance with the new rules to avoid penalties.
• Seek professional advice or property management services to mitigate challenges.

While the long-term effects of these reforms on the rental market remain uncertain, finding a balance between tenant protections and landlord needs will be crucial to maintaining a healthy, sustainable housing market.

Last week, we covered the newly passed Residential Tenancies Amendment Act 2024. The approved reforms are designed to enhance the renter’s protections and promote fairness. It aims to reshape the rental landscape in favour of stability, inclusivity and affordability.

For today’s article, we will enumerate the key benefits of the passed reforms and the changes they bring to renters.

Full copy of the Residential Tenancies Amendment Bill 2024

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Impacts of the Reforms on Tenants

AFFORDABILITY AND TRANSPARENCY

• Fee-Free applications

One of the most immediate benefits for renters is the removal of application costs related to background checks. This change eliminates a financial barrier many tenants face when applying for properties, making the rental process more accessible and affordable.

• Capped Rent Increases

Under the new law, rent increases are now capped at one adjustment every 12 months, providing tenants with predictability and relief in managing their finances. This change ensures that renters won’t face unexpected increases during their lease term, making budgeting easier in an increasingly competitive market.

SECURITY AND STABILITY

• No More “No Grounds” Evictions

Landlords are no longer allowed to terminate a lease without a valid reason. Tenants can now feel more secure knowing their tenancy cannot be abruptly ended without cause. Valid grounds for ending a lease—such as property sales, significant renovations, or personal use—must be supported by evidence, with penalties imposed for false claims.

• Extended Notice Periods

Tenants now benefit from longer notice periods when a lease is set to end. For fixed-term leases:

• 60 days for leases up to six months.
• 90 days for leases exceeding six months. For periodic leases, a minimum of 90 days’ notice is required. These changes provide renters with more time to plan their next steps, reducing stress and uncertainty when leases are not renewed.

CONVENIENT AND COST-FREE PAYMENTS

• Fee-Free Rent Payment Options

Renters can now enjoy greater flexibility and fairness in how they pay their rent. Landlords are required to offer fee-free electronic payment options, such as bank transfers or Centrepay, ensuring tenants are not burdened with unnecessary processing fees.

INCLUSIVITY

• Pet Ownership Rights

The amendments address a common renter concern: pet ownership.

Tenants can now apply to keep pets, with landlords required to respond within 21 days. Landlords can only refuse based on reasonable and specific grounds. If no response is given within the timeframe, the application is automatically approved. This promotes inclusivity and recognizes the importance of pets for many renters.

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The changes introduced by the Residential Tenancies Amendment Act 2024 are a welcome step toward creating a more balanced and equitable rental market. By addressing affordability, improving security, and promoting inclusivity, these reforms empower renters with greater control and protection.

However, the long-term success of these measures will rely heavily on consistent enforcement and the ability to strike a fair balance between tenant rights and landlord responsibilities. As these policies take shape, renters can look forward to a future of increased stability and fairness in the housing market.

On 24 October 2024, the NSW Parliament passed the Residential Tenancies Amendment Act 2024. This amendment aims to sweep and reshape the rental landscape. Of these changes, some are effective immediately with the remainder expected to fully roll out by mid-2025, promising greater protections for renters while raising questions about their impact on landlords and the housing market.

What’s Changed?

Deposits and Fees

Limitations have been introduced on what a landlord can accept as a deposit and restricts some fees.

 – Deposits are only for the purposes of the rental bond, holding deposit or rent

 – Renters can no longer be charged for background checks.

These changes aim to address affordability concerns and prevent unnecessary application costs.

Rent Increases Part 1

A uniform cap limiting rent increases to once per 12 months across all lease types, extending a rule previously applicable to only some leases. This does not currently allow for increases during a fixed-term period.

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What’s Changing?

 

Rent Increases Part 2

When part 2 comes into effect it will allow landlords to increase rent during a fixed-term, but only if adhering to the once per 12-month rule.

Ending Tenancies

Landlords can no longer terminate a lease without a valid reason. Legitimate grounds include property sales, renovations, or personal use. Evidence is required, with significant penalties for false claims.

Notice Periods

Fixed-term leases will require extended notice periods:

 – 60 days for leases up to six months.

 – 90 days for leases exceeding six months.

Periodic leases will require a minimum of 90 days.

Pet Ownership

Renters can apply to keep pets, with landlords required to respond within 21 days. Refusals must be based on specific, reasonable grounds. Automatic approval applies if landlords fail to respond.

Rent Payments

Renters must be offered fee-free, electronic payment options like bank transfers or Centrepay, preventing forced use of paid alternatives.

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The Vision: Fairness and Stability for Renters

 

The NSW Government is tackling housing fairness with these changes. By capping rent increases and extending notice periods, renters get more stability, which is a big deal in today’s competitive market. Getting rid of “no grounds” evictions also helps tenants feel more secure in their homes.

The updates on pets and background checks show a move toward making renting more inclusive and affordable, acknowledging the hurdles renters face. At the same time, landlords’ concerns aren’t ignored. They still need valid reasons and evidence for ending leases or refusing pets.

 

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The Challenges: Are Landlords Overburdened?

Landlords still have some protections, but these changes add more responsibilities. Longer notice periods and stricter rules for ending leases might make it harder for them to manage properties flexibly.

Plus, not being able to charge extra bonds for pets or adjust rent as often could make some owners think twice about renting out their properties, which might shrink housing options.

NSW Fair Trading’s new Rental Taskforce will play a big role in making sure the rules are followed. The challenge will be finding a balance that keeps things fair without putting too much pressure on landlords.

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Balancing Rights: A Win-Win or Market Tension?

For renters, these changes are definitely a win. They bring more financial stability and legal protection. But for landlords, it’s a bit of a mixed bag. While the reforms push for more transparency, they also come with extra responsibilities. It’s still unclear how all this will affect housing supply and affordability in the long run.

In the end, these changes are a big move toward a fairer rental market, but their success will depend on how well they’re put into action and how well the needs of both renters and landlords are balanced.

 

 

Investor activity in Australia’s dynamic real estate market is at a turning point. New investor loans are on the rise, according to recent data, but some investors are also retreating. What is actually going on, then?

 

Investor Activity on the Rise

Nationally, the number of new investor loans has increased by 18.8%. A significant jump, especially when compared to the slower pace of new properties hitting the market. Investor demand is strongest in high-growth states like Western Australia (WA), Queensland (QLD), and New South Wales (NSW), while growth is more subdued in states like Victoria and Tasmania due to factors like soft capital growth and rising holding costs.

 

Two Contrasting Narratives

Concerning Australian real estate investment in 2024, there are two contrasting points of view:

• Investors Are Leaving: Some investors are opting to leave the market due to rising interest rates, tenancy reforms, and higher property taxes.
• Investor Activity is Up: Despite these challenges, investor loan commitments are growing. Investor loan approvals have significantly increased, according to data from the Australian Bureau of Statistics (ABS), suggesting that more people are still keen to purchase investment homes.

Which story is true, then? It appears that both are taking place at the same time, with more investors joining the market and others leaving.

 

Regional Differences Matter

While national trends show growth in investor activity, the picture looks different across regions:

• Victoria: As some investors are discouraged from holding onto properties due to high interest rates and slow capital growth, the number of new investor listings has increased above normal.
• Queensland and Western Australia: These jurisdictions continue to have below-average investor listings, indicating that high-growth regions continue to see strong demand.
• Tasmania: Rising interest rates and declining home values have caused a rise in investor listings over the previous five years.

These regional patterns demonstrate the substantial influence that local market conditions can have on investment behavior.

 

Shifting Investor Profiles

The market for investors is likewise changing. Less indebted purchasers are joining the competition, even while highly leveraged investors may be retreating. The Reserve Bank of Australia (RBA) has noted a rise in lower leverage investors, which could signal a shift in the types of investors dominating the market. Although the underlying quantity was still quite low in September 2024 (711 loans), ABS loan data also indicates that the percentage of first-time home buyer loans for investment acquisitions has increased.

It’s interesting to note that first home buyers are increasingly choosing investment homes as a more cost-effective way to enter the real estate market.

 

Looking Ahead: Will Investor Activity Continue to Rise?

Despite the recent spike in investor loan commitments, there are indications that the market may soon cool. As affordable properties with strong capital growth potential become scarcer and interest rates remain high, investor activity could soften. However, it’s uncertain if this will result in a slowdown or an increase in sales given potential interest rate reduction.

 

In Summary:

Investor activity is up across much of Australia, particularly in high-growth regions. But rising costs, taxes, and interest rates are having a notable impact on investors in certain states. As the market continues to shift, it’s important to stay informed about how these dynamics are evolving.

 

For the full article: CoreLogic, What Is Going on with Property Investors? (2024).

As we enter the early weeks of November, 2024 is drawing to a close. While you’re looking forward to the upcoming holiday break, we want to share some crucial housing market trends you should examine closely to avoid missing out on great opportunities.

Housing Market Price

According to CoreLogic’s Home Value Index (HVI), last month’s modest 0.3% increase marks the 21st consecutive month of growth since the market recovery began in February last year.

While larger cities like Sydney and Melbourne have seen price declines, balancing out the overall market value, mid-sized cities such as Perth, Adelaide, and Brisbane have consequently experienced price gains in recent months.

According to CoreLogic’s Hedonic Home Value Index released on November 1, Perth led the way with the largest increase of 1.4%, followed by Adelaide (1.1%), Hobart (0.8%), and Brisbane (0.7%). In contrast, Sydney (-0.1%), Melbourne (-0.2%), Canberra (-0.3%), and Darwin (-1.0%) experienced minor declines.

According to CoreLogic’s research director, Tim Lawless, buyers are gravitating towards affordable markets due to limited borrowing capacity and affordability constraints. Lower-priced market segments have demonstrated stronger or more stable growth compared to their higher-priced counterparts across all capital cities—with Canberra being the sole exception.

Australia Housing Demand

A recent article by Leith van Onselen, Chief Economist at Macro Business Fund and Macro Business Super, highlights a roundtable discussion held by the Business Council of Australia and The Australian Financial Review. The discussion focused on strategies to address Australia’s housing shortage.

During the discussion, Tony Lombardo, CEO of Lend Lease Group, pointed out that there aren’t enough skilled tradespeople to meet the housing demand. According to Lombardo, this shortage is partly due to many young people being encouraged to pursue university education rather than trades.

It’s becoming increasingly evident that Australia’s housing shortage will persist for the foreseeable future, given the challenging conditions facing the construction industry. High interest rates have made borrowing more expensive for both builders and buyers, naturally dampening market activity.

Exacerbating these issues is the fierce competition for resources within the industry. With government projects in full swing, builders face shortages of both labor and materials, driving costs even higher. Private builders struggle to compete when public infrastructure projects absorb a significant portion of available resources.

In this challenging environment, it’s no wonder that many smaller building companies are shutting down. Those still operating grapple with razor-thin profit margins and escalating costs. Without a major policy shift to address these pressures, housing supply is likely to remain inadequate, trapping the market in a cycle of high demand and limited availability. Consequently, for everyday Australians, the dream of affordable housing slips further out of reach.

Australia’s Rental Market

On a separate update by Onselen, he cited the Reserve Bank of Australia’s (RBA) November Statement of Monetary Policy (SoMP) pointing out the increase on the Australian housing value eases the rental crisis in the country.

The RBA SoMP stated “Population growth over the tightening phase has contributed to increased demand for housing, which (combined with a lack of new supply) has led to strong growth in housing prices.”

Strong population growth, driven by high immigration rates, has increased housing demand. This surge has also highlighted the need for more rental properties, prompting some developers and investors to shift their focus from sales to creating rental units.

While limited housing supply remains a barrier to affordability, developers are increasingly recognizing the long-term rental demand and beginning to address it. Some areas are seeing the first signs of new housing projects as the need for rentals reaches a critical level.

This focus on increasing rental supply, combined with strong government support for affordable housing initiatives, could slowly help ease the pressure in the rental market.

The challenge will be sustaining this momentum while addressing construction costs and high interest rates. But if Australia can keep growing its rental stock to match population growth, renters may finally see some relief in a market that has been tight for far too long.

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In conclusion, while Australia’s housing market faces significant challenges, including high construction costs, limited supply, and competition for resources, there are signs that the situation may be gradually improving.

Strong population growth continues to fuel demand, particularly in rental markets, which has prompted increased attention on expanding housing supply. Although rising interest rates and inflation in building costs have made it difficult to see a quick fix, the growing focus on affordable housing development and migration-related demand offers hope for easing the rental crisis.

As the market continues to adapt, a balanced approach—encouraging investment in both housing and rental properties, addressing affordability challenges, and ensuring the supply of skilled labor—will be key to long-term stability. With careful attention to these factors, Australia’s housing and rental markets could start to shift towards a more sustainable future, providing relief for both buyers and renters alike.

As the housing market continues to evolve, staying informed and proactive is key. Whether you’re a buyer, renter, or investor, now is the time to understand the trends shaping the future of housing in Australia. Stay ahead of the curve—explore opportunities, make smart decisions, and secure your place in this changing market today.

If you have questions about your plumbing or insurance coverage, reach out to a professional. Taking these steps can save you time, money, and headaches in the future.

As we approach the final quarter of 2024, Australia finds itself grappling with a profound housing crisis that continues to escalate. The ongoing shortage of housing, compounded by construction delays, is driving significant rent inflation across the country. To fully understand this complex situation, it’s essential to delve deeper into the key factors contributing to this critical crisis in the housing market.

(Originally posted 26/09/2024)

As we exit September, it is critical to stay up to date on the trends impacting the rental market in Sydney’s CBD.

According to recent CoreLogic data, Sydney’s rental market saw a severe downturn in July and August.

Rents, which were previously rising, have now levelled off, owing primarily to diminishing rental demand. This trend is mostly due to a combination of slowing migration and affordability constraints, both of which influence household formation patterns.

Find more insight into this on the following page or you can view the full CoreLogic article here: The end of the rental boom is in sight | CoreLogic Australia

Change in rents to August 2024

Key Factors Impacting the Market

1. Slowing Migration: The lessened migration of new people has lowered demand for rental units.
2. Affordability Constraints: Rising rents are causing changes in household structure, with more people choosing shared living arrangements or relocating to more inexpensive places.

Renter Tips: Navigating the Current Market

1. Evaluate Your Budget: With rental affordability becoming a serious issue, it’s time to rethink your budget. Look for properties that are within your price range and consider altering your expectations based on current market conditions.
2. Explore Alternative places: If your favourite location is becoming too pricey, look into growing suburbs or less desirable places that provide better value for money.
3. Negotiate Rent: Don’t be afraid to bargain with landlords. As demand softens, you may be able to negotiate a better price.
4. Be Prepared for Longer Search Times: As market dynamics change, it may take longer to discover the ideal rental home. Maintain patience and flexibility.

Investor Insights: Adapting to Market Shifts

1. Reassess Investment Strategies: With flattened rent growth, it’s critical to rethink your investment plan. Instead of relying entirely on rental income, invest in properties with potential for capital growth.
2. Consider diversifying your property portfolio by adding different property kinds or regions. This can assist reduce the risks connected with variations in rental demand.
3. Improve Property Appeal: Investing in property upgrades or renovations can make your rental more appealing to potential tenants, especially in a sluggish market.
4. Monitor Market Trends: Stay up to date on current market trends and migration patterns so that you may make effective decisions about future investments.

Wrapping Up

The end of the rental boom signals a period of adjustment for both renters and investors. While the market is experiencing a slowdown, there are still opportunities for those who adapt to the new dynamics. Renters should be strategic in their search and budgeting, while investors need to pivot their strategies to align with the evolving market conditions.

Thank you for staying connected with us. Please contact us if you have any questions or need personalized advice.