In New South Wales there are three main types of leases:- residential leases, retail leases and commercial leases. In this newsletter we shall look at residential leases, which are governed by the Residential Tenancies Act.
The Act covers the leasing of most ordinary residences, whether they are apartments, houses or villas. Not covered are boarding and lodging arrangements.
The Act requires that there is a standard form of Residential Tenancy Agreement, although additional terms can be added. Typical of these might be restrictions on pets, a requirement to pay for water usage or for replacement of light bulbs by the tenant.
A copy of the agreement must be given to the tenant, who must complete a Condition Report. Doing this carefully is vital to protect both the landlord and the tenant against disputes as to damage at the end of the lease.
Leases are normally for a fixed term, and the rent cannot be increased during the term unless specific provision is made for this. Any rent increase requires 60 days notice to the tenant. There are limits on requiring rent in advance, and on the size of a rental bond.
Any bond must be deposited with the Rental Bond Board, where it becomes a cheap loan to the government! A landlord is under an obligation to make reasonable repairs and maintenance, but a tenant can spend up to $100 on urgent repairs, to be repaid by the landlord.
Disputes between landlords and tenants are dealt with by the Consumer, Trading & Tenancy Tribunal. Mostly these are about failure to repair premises, about unreasonable rent increases or about eviction of a tenant. The Tribunal operates in an informal manner compared to a court, and has exclusive jurisdiction over evictions.
For landlords, the system can be a minefield, which is no doubt why most landlords use the services of an agent to manage a property. An agent should carry out periodic inspections to check on the tenant's care of the property, and will arrange for tradesmen to carry out needed repairs and maintenance.
A Residential Tenancy Agreement is a legally binding contract; both the landlord and the tenant are bound by it, and a change in circumstances does not allow one party to opt out. This is often a problem when a group of young people sign up for a lease, and then the composition of the group changes- one wants to move on, and another wants to come in. Unless the landlord agrees to changes, the original tenants will remain liable. A landlord can also look to whichever tenant they want to pay the whole rent, the rent is not payable in shares by each tenant.
Whether you are a landlord or a tenant, never forget that there are formalities that have to be complied with. Not doing the right thing can be costly!