NSW is ending 'no grounds' evictions: what does it mean for renters?

Evictions reform: A fundamental and necessary first step

The recent announcement by the NSW Government that they are moving ahead with promised eviction reforms is welcome news. For renters, and those who campaign for housing justice, this is long awaited reform. The reforms to end ‘no grounds’ evictions will mean renters will be provided with a genuine reason if they are being evicted. Doesn’t seem like such a big ask does it? And still we’ve been fighting 50 years to make it happen.

More than a third of NSW now rents - more of these households are families with kids, and older renters, and more of them are renting for longer. All of NSW is experiencing the cost of living crisis alongside the housing crisis, but renters especially are feeling the pressure with the steep increases to rents we’ve seen over the last 18 - 24 months. 

The NSW Premier Chris Minns has explained the government’s announced rental reforms as a response to the housing crisis. Addressing the issues facing renters is necessary, he continued, as the current state of play presents a clear ‘equity issue’, particularly for young people who are being pushed out of the state because of their housing experiences in the rental market. 

This year the Tenants’ Union of NSW, with the Sydney Alliance, has been hosting a series of Community Renters’ Forums. These provide an opportunity for renters to share their experiences, and their perspectives on solutions. One of the key themes that emerged was the importance of security, with each forum identifying the instability renters face as a widely and deeply felt concern. One that needs to be addressed by effective eviction reform.   

Reforms to end ‘no grounds’ are not the only changes needed to start addressing the problems renters are facing, but they are the fundamental and necessary first step. Landlords’ ability to evict renters for no reason undermines any other rights renters have. Without addressing the problem of ‘no grounds’ eviction all other reforms will have little impact. 

Progress to implement reforms to end ‘no-grounds’ evictions will hopefully now move quickly - with a Government Bill expected to be introduced to Parliament in September and the reforms to take effect in early 2025. Though we’ve always highlighted these reforms should be implemented as a priority, the time taken for further consultation has ultimately meant a stronger model at implementation. The Government proposes to adopt a model of reform applying to renters on both fixed term and periodic tenancy agreements. This means the changes will provide all renters with greater stability and protection, and allow them to do basic things like ask for repairs from their landlord, and negotiate a rent increase without fear of eviction.

Proposed new reasons for eviction

Current renting laws allow landlords to evict renters during a periodic tenancy and at the end of a fixed term tenancy agreement without providing a reason. The proposed reforms announced by the NSW Government will require landlords to have a valid reason to end a tenancy, and this requirement will apply no matter the lease type (periodic or fixed term agreement). By ensuring that evictions are based on clear, reasonable grounds, the reforms will help to reduce the fear of arbitrary eviction experienced by so many renters currently.

The Government is proposing that under the new laws, valid reasons for eviction will include:

• Significant repairs or renovations that necessitate vacant possession, with a restriction on relisting the property for at least four weeks.
• A change in the use of the property, such as converting it from a rental home to another type of accommodation or from residential to commercial use.
• The owner or their family intends to move into the property.
• The renter's ineligibility for affordable housing programs or purpose-built student accommodations.
• The property is being sold or offered for sale with vacant possession.

These reasons are in addition to existing eviction provisions that allow landlords to end an agreement for breach for non payment of rent (s88), other breaches (s88), hardship (s93), death of tenant (s108), and uninhabitability (s109).  

There are a couple of proposed new reasons we don’t love. 

We’re worried that landlords might exploit the reason of ‘significant repairs and renovations’ to evict renters rather than fulfill maintenance obligations, although the proposed ground specifies the repairs or renovation necessitate vacant possession. To avoid landlords mis-using this ground the evidence requirements must be sufficiently strong. This could include as one option for repairs or renovation that don’t require demolition, etc a requirement for landlords to show that the renter has declined to stay at a reduced rent during the repair period.

The proposed reason that will allow eviction where a property is being ‘offered for sale’ also raises concerns. The new grounds would extend the existing provision for sale (section 86 Sale of Premises) which allows landlords to evict if the property has been sold and a contract for sale requiring vacant possession is in place. This allows owner occupiers to move in, although they would also be able to do this via other proposed eviction provisions (family intends to move in) after the new grounds are in place. 

We’ve recommended new grounds for eviction should reflect situations where the rental property is needed for a use other than as a residential property in the private rental market. Eviction on the basis of a property being ‘offered for sale’ could easily result in sale to an investor who didn't need the property empty at all. Landlords may want to sell properties empty to increase the sale price, but if they believe it is worth it they could negotiate with the renter to leave by offering compensation for costs, etc. Just as an investor may make decisions to expend money hiring agents, furniture and so on to maximise the price, it is reasonable to negotiate with the renter rather than have the law impose the burden of costs associated with moving on the renting household. 

We’re also concerned landlords might misuse the new grounds, and evict renters and then quickly ‘change their minds’ and re-let the property. Again strong evidence requirements and other compliance measures such as restrictions on reletting will be doing some heavy lifting here to prevent misuse.

We'll be monitoring the development of both of these grounds through the legislation, and their impacts on implementation of reform generally. These are real concerns but they shouldn’t stop the legislation passing. We will be watching closely and ready to raise the need for further work if, as we fear, they allow poor outcomes to occur.

Implementation Considerations

Notice periods

More broadly the success of these reforms will hinge on good implementation. One critical aspect of this is the notice periods provided for the proposed new reasons. Where notice periods are inadequate and renters aren’t provided enough time to secure new accommodation they face the untenable choice of overstaying their lease—potentially leading to legal proceedings and additional stress—or risking homelessness. 

In renting law currently ‘no grounds’ termination provisions provide 30 days’ notice at the end of a fixed term, and 90 days' notice for periodic tenancies. We know this often leaves renters with insufficient time to find alternative accommodation. 

The proposed reforms extend the notice period for fixed-term agreements: from 30 days to 60 days for leases shorter than six months, and from 60 days to 90 days for agreements longer than six months. We’d have liked to see a minimum of 120 days’ notice provided for no-fault eviction, as a more extended period gives renters a more reasonable timeframe to search for a new home, arrange their finances, and manage the logistics of moving. Additionally renters at the end of a fixed term agreement should be allowed to move out at any time once a termination notice has been served by their landlord, otherwise they will not in practice be able to take advantage of the longer notice being provided. Still, if the currently announced changes to notice periods go through these will be a significant improvement on the status quo.

Evidence requirements

As mentioned earlier, the evidence requirements for landlords seeking to terminate will be critical. Strong evidence requirements help protect against landlords’ misuse of the new provisions. While we don’t have any details yet about what proposed evidence requirements for the new grounds are, the approach adopted suggests responsibility for justifying the eviction will appropriately be on the landlord. We’re hoping requirements are set at a standard that can give renters’ confidence, and that where possible require evidence that is independently verifiable, meaning it should not be something created solely by the landlord but rather issued by a third party. An example: if a landlord claims that a property needs to undergo significant renovations, building permits and a contractor's quote could serve as independent evidence of the extent of the work required and the necessity for eviction.

Compliance and enforcement

There must be robust mechanisms for compliance and enforcement. Penalties for wrongly issuing termination notices need to be substantial enough to deter landlords from attempting to circumvent the new rules. Landlords should be required to compensate a renter where they have been found to have misused the new eviction provisions.  

Tribunal discretion

And finally the Tribunal should be given the power to decide whether eviction is fair and reasonable in each case. The Tribunal can already use discretion in many cases, like when there's a breach of the agreement, to determine if eviction is justified. For any of the new proposed reasons for eviction, the Tribunal should similarly be given the ability to reject eviction if it feels it's not fair given the situation. This would mean they could consider various factors, such as how long the tenant has lived in the property, their age and health, and how hard it might be for them to find another place to live. The Tribunal should weigh the difficulties the landlord might face if they don't get the property back against the hardships the tenant might face if they're evicted, including financial difficulties. The Tribunal could use their discretion to stop an eviction from taking place, but could alternatively provide a longer notice period allowing the renter more time to find a new home. 

Looking ahead

Following the announcement on eviction reforms, the NSW Government committed $6.6 million to develop and deliver the nation’s first Portable Rental Bonds Scheme, anticipating the scheme will kick into gear in 2025. They have also shared plans to introduce stronger protections for renters’ personal information, and to limit soliciting of payments from renters for background checks. We’re anticipating an announcement any day now on reforms to make renting laws more pet friendly.

While there’s still plenty to be done, these reforms are a crucial step toward making renting fairer. These changes, alongside the significant investment into public and community housing announced at the last state budget earlier this year, should give us all hope we're finally moving in the right direction.

See also our legal information resource: Tenancy laws are changing in NSW