Changes to legislation due to be implemented this week will affect tenants in New South Wales' right to terminate a fixed-term agreement early without compensation to the landlord.
According to the Real Estate Institute of New South Wales (REINSW), the amended legislation will allow the tenant to give a termination notice for a fixed-term agreement if the landlord has notified the tenant of their intention to sell the residential premises, unless the landlord disclosed the proposed sale of the premises before entering into the residential tenancy agreement as required.
The current legislation allows the tenant to give a termination notice for a fixed-term agreement if the landlord has notified the tenant of their intention to sell the residential premises and did not disclose that proposed sale before entering into the residential tenancy agreement.
REINSW believes this change provides clarity to property managers on how the section operates and will hopefully resolve the problems it has caused in the past.
A problem with the interpretation of the current drafting is that a tenant may validly terminate a fixed-term agreement without compensation to the landlord, even if the landlord did not intend to sell before the agreement was entered into but subsequently decided to do so, REINSW said.
The changes to the section make it clear the tenant's right to terminate is linked to the requirement of the landlord (and agent, if aware) to disclose a proposal to sell the premises for which a contract for sale has been prepared.
The amendments will extend to existing residential tenancy agreements entered into before 4 July 2014, but do not affect the validity of any termination notice given before that date pursuant to the legislation.