Proposed NSW Tenancy Legislation Changes: Why Fixed Term Leases are Key for Landlords

By Cootamundra Property Manager, Jorja Holder.

The NSW Government has recently proposed some changes to residential tenancy legislation, and one of the most significant proposed changes is the abolition of “Termination Without Grounds”. 

Many people have a misconception about termination notices. They mistakenly believe that these notices are solely intended to punish tenants for breaching their lease. In reality, a termination notice serves as a document issued by the landlord or their representative to bring a tenancy agreement to an end. While there are different reasons for issuing a termination notice, one common scenario occurs when a fixed-term tenancy agreement has ended and transitioned into a periodic tenancy arrangement. In such cases, the landlord has the option to terminate the tenancy without providing specific grounds for their decision. They can accomplish this by serving the tenant with a 90-day notice, known as a “no-grounds termination notice.”

Under the proposed changes to the residential lease legislation in NSW, the provision for “no grounds termination” may be abolished. 

What this means.

In the event that a tenant transitions from a fixed-term tenancy to a periodic agreement,  unless the landlord intends to sell the property or move in themselves, it may pose a challenge to compel the tenant to vacate the premises and in order for landlords to maintain control and have flexibility in the decision-making of their property, it is crucial to keep tenants in a fixed-term lease. This allows them to provide notice to vacate at the end of the tenancy agreement and have greater control over the timing of tenant departures.

It should also be noted that a fixed-term tenancy also provides significant benefits to the tenant. A fixed-term tenancy provides the tenant with stability and security and tenants have the assurance of a predetermined rental period. They can enjoy the stability of knowing that they have a secure place to live for the specified duration of the lease. They also typically have a set rental amount that remains consistent throughout the lease period. This predictability allows them to plan their budget more effectively and eliminates concerns about potential rent increases during the tenancy.

At Flemings, we actively monitor expiring leases and strive to keep tenants in lease wherever possible and in doing so, we help our landlords alleviate any challenges or unexpected vacancy periods and puts it in the capable hands of our experienced team.

To discuss these proposed changes further, contact your local Flemings branch. We are here to help landlords navigate changes in legislation and help achieve your property investment goals.