By Chris Martin. Image credit Adobe.

Today the NSW Parliament will begin debating proposed tenancy law reforms to get rid of no-grounds evictions. Proposed by the Minns Government, the reforms would make good on a pre-election promise to the state’s renters. More than that, the reforms are the single most important change to New South Wales tenancy laws in almost 40 years.

The reforms would substantially improve the legal security of renters in New South Wales. Improved security means renters will be better able to assert their other rights too, such as getting repairs done and challenging rent increases. The reforms are a win for renters and housing advocates, such as the Tenants’ Union of NSW, who have pressed for these reforms for years.

But the reforms are not perfect. There are several shortcomings that will produce unjust outcomes for some renters and that detract from the overall improvement.

The main thing that the reforms get right is they would remove the prospect of renters receiving a termination notice without grounds during a periodic tenancy, and towards the end of a fixed term tenancy. It is important that end-of-fixed term terminations were included in the reforms – these are ‘no-grounds’ terminations by another name.

For an example of the problems created by allowing no-grounds terminations at the end of fixed terms, we can look to Queensland, which abolished no-grounds termination for periodic tenancies (only) in 2022. There it is now common for renters to be signed up on a series of fixed terms, so the prospect of a no-grounds notice still hangs over most renters. Worse, some agents even give a no-grounds notice dated for the end of the fixed term when the renter signs up to the fixed term – to ensure the threat of eviction is always present.

By contrast the New South Wales reforms avoid this unfair absurdity and get rid of no-grounds terminations comprehensively.

In place of no-grounds terminations, the New South Wales reforms provide for 10 new grounds for termination, and restate two existing grounds (breach by the tenant, and sale of premises requiring vacant possession). Most of the new grounds are reasonable; five relate to specific types of housing arrangements (affordable housing, transitional housing, key workers, students and employee/caretakers) so will not apply to most renters. The reforms would also create a new offence where landlords and agents give termination notices where the grounds are not genuine, backed by a fine ($11,000 for individuals, $65,000 for corporations), and some of the new grounds are subject to an exclusion that prevents the premises from being relet for certain period. Generally speaking these provisions should prevent abuse of the new grounds.

Three of the new grounds, however, present problems.

One is a new ground where the landlord proposes to sell the dwelling – distinct from the existing ground where they have actually sold the dwelling and the sale contract requires vacant possession for the purchaser. The new ground allows termination for nothing more than ease of marketing. Considering that a significant minority of property sales are to landlords who continue to rent the dwelling out, and the ‘actual sale’ ground is available for purchasers who need vacant possession, this new ground should not have been included in the reforms.

The second problematic new ground is where the landlord will do significant renovations or repairs to the dwelling. Generally speaking this is a reasonable ground, but as drafted it would allow premises to be relet only four weeks after the previous tenancy is terminated. Expect to see this ground used by landlords for ‘retaliatory paint-jobs.’ The exclusion period should be longer.

The third problematic ground is where the premises will not be used as rented residential premises for 12 months. Whereas a ‘change of use’ ground may be reasonable, this ground is too broad, allowing termination where the landlord wants to Airbnb the dwelling, or even leave it vacant.

There is, moreover, a larger problem with the reforms, affecting all the grounds for termination – except one, tenant’s breach. In proceedings on each of the grounds (except tenant’s breach), the tribunal would have no scope to decline termination, provided the notice was valid and the grounds were genuine. There would be no scope to decline termination where this would be necessary to doing justice in the circumstances of the case; no scope to ensure termination is a last resort; no scope to ensure a tenant is not evicted into homelessness.

This omission is especially troubling in relation to the three problematic grounds. But such a provision should be made in relation to all the grounds. There are a number of ways in which this could be done. One option would be to provide that the tribunal must terminate if it is satisfied ‘termination of the tenancy is appropriate considering the circumstances of the case’ – as in the tenant’s breach ground. Another option would be: ‘termination of the tenancy is duly justified, a last resort, and will not result in the tenant becoming homeless’ – this incorporates standards derived from the international jurisprudence on the right to housing and security of tenure. Yet another option would be ‘termination of the tenancy is reasonable and proportionate’ – as in recent amendments to Victoria’s tenancy laws.

The issue of the tribunal’s scope to decline termination has been overshadowed by the issue of reasonable grounds in tenancy law discussions. This will become the new focus of the ongoing effort to improve legal security for renters.