RTA in Focus: Landlord Information Statement

RTA in Focus: Landlord Information Statement

7 April 2020

This article is part of the RTA in Focus series. With a raft of reforms to the residential tenancies framework set to start on 23 March 2020, we’re giving you the information you need to ensure you understand your obligations.

You can access all the articles in the RTA in Focus series here.

All landlords are now required to acknowledge that they’ve read and understood the Landlord Information Statement before entering into a residential tenancy agreement.

Being a property manager isn’t easy. Gone are the days when the job was simply about collecting rents and organising repairs. The responsibilities of property managers have increased significantly and now include areas outside the core function of managing the relationship between the landlord and tenant.

Property managers are now expected to have competencies and express opinions as to the integrity and compliance of a broad range of building and safety issues – and this extension of duties and responsibilities has been a growing concern for REINSW.

According to Michelle McLean, Senior Property Manager at Leah Jay and Chair of the REINSW Property Management Chapter Committee, property managers provide a high-quality service within their specific areas of expertise, but landlords need to be more aware of their own responsibilities – and the new Landlord Information Statement will help boost this awareness and compliance.

“Requiring landlords to acknowledge that they’ve read and understood the Landlord Information Statement will be a great benefit,” she said.

“Consider smoke alarms, for example. How often do you hear ‘I’m not going to pay for an annual check’ or ‘why do I need to pay for someone to replace the alarm, can’t I just do it myself?’. The Landlord Information Statement will clearly set out the landlord’s rights and obligations, which will give property managers something to point to when a landlord questions a request.”

On and from 23 March 2020, all property managers need to ensure they understand the law when it comes to the Landlord Information Statement. Importantly, you need to know what’s contained in the statement and have processes in place to ensure all your landlords acknowledge it. Without this acknowledgement, landlords cannot enter into a residential tenancy agreement.

What’s changed?

A new section 31A has been inserted into the Residential Tenancies Act 2010 (NSW).

This section will prohibit a landlord from entering into a residential tenancy agreement without acknowledging that they’ve read and understood the contents of the Landlord Information Statement.

Where the landlord engages the services of a property manager, they must provide a written statement to the property manager that they’ve read and understood the Landlord Information Statement. Only then can the property manager sign the relevant acknowledgement in the residential tenancy agreement on their landlord’s behalf.

A new field to be signed by the landlord (or by the property manager on the landlord’s behalf) is included in the updated standard form of residential tenancy agreement set out at Schedule 1 to the Residential Tenancies Regulation 2019 (NSW). This field is where the landlord (or the property manager on the landlord’s behalf) acknowledges that the landlord has read and understood the Landlord Information Statement.

The Landlord Information Statement includes information about the landlord’s rights and obligations at the start of a tenancy:

  • General responsibilities – That, before renting out the property, the landlord must ensure it is reasonably clean and in a reasonable state of repair (including compliance with health and safety laws).
  • Fit for habitation – That, before renting out the property, the property be fit for people to live in and comply with certain minimum standards.
  • Disclosure requirements – That the landlord must tell the tenant certain things before entering into a residential tenancy agreement (including material facts and various other items). Where the property is in a strata scheme, that certain additional information must be provided to the tenant.
  • Written agreement – That the prescribed standard form of residential tenancy agreement must be used and that the standard terms must not be altered. Also, that there are certain terms that cannot be included in the agreement.
  • Documentation – That the tenant must be given certain documents prior to signing the residential tenancy agreement, including the proposed agreement, Tenant Information Statement and by-laws (if the property is in a strata scheme).
  • Condition report – That a report about the condition of the premises be completed prior to or when the tenant is given the residential tenancy agreement for signing (including the number of copies that must be provided to the tenant).
  • Rental bonds – That there are certain requirements regarding the collection and management of rental bonds.
  • Contact details – That the landlord must provide their name and contact details to the tenant, so the tenant can contact the landlord directly (even if the landlord has engaged the services of a property manager).

The Landlord Information Statement also includes information about the landlord’s ongoing responsibilities during the term of the tenancy, including:

  • Payment records – That the landlord (or their property manager) must keep certain records and receipts regarding rental payments.
  • Rent increases – That rent increases can only be applied in accordance with the terms of the residential tenancy agreement in the case of fixed term agreements with a term of less than two years, or once every 12 months in the case of continuing tenancies or fixed term agreements with a term of two years or more (provided the tenant has been given 60 days written notice).
  • Rates, taxes and utility charges – That the landlord is responsible for the payment of all rates, taxes and other charges payable under the law (other than electricity and gas charges if the property is separately metered).
  • Water efficiency measures and water usage charges – That the landlord may pass water usage charges on to the tenant where certain water efficiency measures have been installed, but only if the property is separately metered.
  • Repairs and maintenance – That the property must always be in a reasonable state of repair and the landlord is responsible for any repairs and maintenance.
  • Smoke alarms – That working smoke alarms must be installed on all levels of the rental property and the landlord’s responsibilities in relation to installation, repairs and maintenance.
  • Access to the premises – That the landlord may only access the property in certain circumstances and the notice periods that are required.
  • Minor changes – That the landlord cannot unreasonably withhold consent where a tenant requests to make certain minor changes to the property.
  • Domestic violence – That a tenant can end their tenancy immediately and without penalty if they or their child are in circumstances of domestic violence (as defined by the Residential Tenancies Act).

Further, the Landlord Information Statement sets out information about ending the tenancy, including:

  • Notice – That any termination notice be in writing and include certain details.
  • Break fee – That there is a break fee payable in the case of a fixed term agreement of three years or less where the tenant terminates the agreement early.
  • Rental bonds – That the bond will be refunded to the tenant in full at the end of the tenancy, unless there is a reason to make a claim against the bond.

Like the Tenant Information Statement (which replaces the New Tenant Checklist), the Landlord Information Statement is an approved form and published by NSW Fair Trading.

The amendments in practice

Michelle said REINSW lobbied for this new Landlord Information Statement for many years.

“The New Tenant Checklist (now the Tenant Information Statement) has always been a useful tool for tenants and, similarly, we’ve long held that there should be a similar tool for landlords,” she said. “It’s essential for landlords to be better informed and educated about their responsibilities under the residential tenancies framework and other legislation, including the condition of the premises and their obligations regarding various statutory matters.

“All too frequently, landlords are not aware of their responsibilities and the Landlord Information Statement will go some way to addressing this issue. It will provide property managers with another important tool when communicating with their landlords.”

The standard form of residential tenancy agreement states that: “The landlord acknowledges that, at or before the time of signing this residential tenancy agreement, the landlord has read and understood the contents of an information statement published by NSW Fair Trading that sets out the landlord’s rights and obligations.” (emphasis added)

So how do the words “at or before” translate into practice?

“As property managers, will we need to obtain a written statement from our landlords that they’ve read and understood the Landlord Information Statement every time a new lease is entered into and for every renewal?” Michelle asked. “Or will it be sufficient to obtain that written statement only once when they engage our services?”

Michelle said that REINSW sought clarification from NSW Fair Trading on this point.

“NSW Fair Trading has advised that we do not need to obtain a written statement from the landlord acknowledging that they have read and understood the Landlord Information Statement every time they enter into a new residential tenancy agreement,” Michelle explained.

“Rather, we only need to confirm that they have read and understood the Landlord Information Statement in order to sign the acknowledgment in line with section 31A(2) of the Residential Tenancies Act.”

Michelle said that NSW Fair Trading also advised that section 31A of the Residential Tenancies Act only applies to new residential tenancy agreements entered into on or from 23 March 2020.

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