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Starting a tenancy

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Renting a new property can be daunting, whether you're a first-time tenant or landlord, or simply moving from one rental property to the next.

Understanding the process in starting a new tenancy helps prevent any problems and arms tenants, landlords and agents with the information they need to get the tenancy right from the start.

In this issue of The Letterbox, we explore the importance of inspecting a property before you apply to rent it, the New tenant checklist and condition report, and info on bonds, including the Rental Bonds Online service.

Answers to your questions on starting a tenancy

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Q: I found a place to rent online and the landlord is asking for the bond to be paid before I even inspect the property. Do I need to pay any money to the landlord before I see the property?

A: No. A landlord or agent cannot require you to pay a rental bond before a residential tenancy agreement has been signed.

A landlord can accept a holding fee from a tenant for a rental property. However, a landlord or agent must not require or receive a holding fee from a tenant unless the tenant's application for tenancy of the residential premises has been approved and the fee is not more than one week's rent.

You should make sure you inspect a property before you sign the residential tenancy agreement.

Inspecting the property lets you check things like whether there is enough room for you and your family, how close it is to transport or other services and in some cases, to check if the property even exists.

Sometimes rental properties are advertised as part of a scam. The potential tenant is asked to pay bond money upfront to someone who claims to be a landlord, only to discover on the day they plan to move in that either the property does not exist or is occupied by another person. If this occurs, make sure you report it to Scamwatch on their website:
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Q: My friend told me about a tenancy checklist they were given by their landlord when they moved into their rental property, but my agents did not give me one. Do I need it?

A: A landlord or an agent must give a tenant the New tenant checklist before they enter into a residential tenancy agreement. Fines can be imposed if this has not been done.

The checklist contains important information about the lease, any promises to undertake repairs and upfront costs that should be considered before signing a tenancy agreement. It also outlines which documents the tenant should receive from the landlord and includes tips for problem-free renting.

You should contact your agent and request they provide you a copy of the New tenant checklist.

You can find more information on the New tenant checklist page on our website, or call us on 13 32 20.
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Q: If I make a note of something that needs to be repaired on my copy of the ingoing condition report, does this mean it will be repaired?

A: For the purposes of the condition report, landlords or agents are only promising to undertake repairs they have specified in the Landlord's promise to undertake work section on the last page of the condition report.

It is very important to note any damage or defects in the ingoing condition report as it may be used as evidence if the landlord or agent disputes the return of your bond at the end of the tenancy.

Regardless of what has been promised in the condition report, the Residential Tenancies Act 2010 requires landlords to provide and maintain the rental property in a reasonable state of repair, even if the tenant knew about the state of disrepair before signing the lease. This can be important if you make a Tribunal application to force the landlord to undertake repairs.

You can read more about Getting repairs done on our website.
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Q: I'm in the process of renting out my property and becoming a landlord for the first time. When I take a bond from a tenant, can I keep it in my own bank account? How much bond can I ask they pay upfront? Also, how much rent can I ask the tenant to pay upfront?

A: No, you cannot keep the bond in your bank account.

The maximum bond a landlord can charge is 4 weeks' rent. This applies regardless of whether the property is furnished or unfurnished.

If you are a self-managing landlord, the bond must be lodged with NSW Fair Trading within 10 working days of receiving the bond.

If you have employed an agent, they have 10 working days from the end of each month to lodge all bonds received during that month.

Bonds can be lodged either through a paper-based process or through Rental Bonds Online. Rental Bonds Online is a service for tenants, agents and private landlords to lodge, manage and refund rental bond money more securely and easily.

After taking the bond from a tenant, the landlord or agent must provide them with a receipt or record the payment details on the tenancy agreement.

You can read more about taking a bond on our website.

Remember, you cannot require the tenant to pay more than 2 weeks' rent in advance. Apart from the rental bond and 2 weeks' rent in advance, you cannot ask the tenant for any other money at the start of a tenancy.
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Q: I inspected an apartment a few days ago and decided I'd like to rent it, so paid a holding deposit to the agent. I've just found out the landlord has withdrawn the apartment from the tenancy market and won't enter into an agreement with me. Are they allowed to do this?

A: A landlord or agent must not require or receive a holding fee from a tenant unless the tenant's application for tenancy of the residential premises has been approved. The fee cannot be more than 1 week's rent.

If a tenant has paid a holding fee, the landlord must not rent out the residential premises to any other person within 7 days of receiving payment for the holding fee, unless the tenant notifies the landlord that they no longer wish to enter into the residential tenancy agreement.

Upon signing the tenancy agreement, the holding fee will go towards the rent from the first day of your tenancy agreement.

Even if your application has been approved, neither party can be compelled to proceed with an agreement. If the agreement does not proceed, the landlord or agent must refund your holding deposit in full.

Tenancy Tales from the tenancy complaint service

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A tenant entered into a tenancy agreement without inspecting the property. Instead, they had a friend do the inspection on their behalf.

When the tenant went to move into the property, they noticed noise issues and the property wasn't as clean as they expected.

Because of these issues, they wanted to break the lease.

The tenant did not wish to pay the break lease fee and the landlord refused to waive it, so the tenant contacted Fair Trading's Tenancy complaint service.

Fair Trading advised the tenant that the landlord was within their right to claim a break fee, as they were breaking the lease early. Fair Trading contacted the landlord, who agreed to offer the tenant a refund of half of their bond which was less than the break fee the landlord was entitled to.

The tenant was advised of the landlord's response and accepted that half of their bond would be kept by the landlord as a break lease fee. As a result, the tenant was able to move out and received a refund of half the bond.

Fair Trading explained to the tenant the importance of carrying out a physical inspection of a property before signing a lease agreement.

When moving into a new property, a tenant should also carefully fill out the condition report as it may be used as evidence if the landlord or agent disputes the return of the bond at the end of the tenancy.


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Starting a new tenancy with Rental Bonds Online

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If you're starting a new tenancy, have you considered using Rental Bonds Online (RBO)? Your agent may be one of the 7,000 managing agents who have made the switch to RBO.

RBO makes managing rental bonds easier and quicker for agents, landlords and tenants.

Tenants can lodge their bond online using credit card or BPAY in minutes without having to lodge a paper form. Tenants can only lodge the bond online if the agent or the landlord has an account with RBO. Agents, landlords and tenants receive updates via SMS and email notifications.

If you're a tenant starting a new tenancy, ask your agent or landlord if they're registered for RBO.

You can find out more on the RBO section of our website, or watch our 3-minute introduction to the service:

Watch our video on Rental Bonds Online

Property inspection report law change helps home buyers in NSW

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When a prospective buyer asks for a contract of sale, the agent must let the buyer know about property inspection reports done for that property. This should make it easier and possibly cheaper for the buyer to find out about the property's condition.

By being informed about the reports already commissioned, the buyer can choose to negotiate a cheaper price to repurchase a report, instead of commissioning their own.

How does this work?

Agents are required to record and disclose information about strata reports as well as building and pest inspection reports.

The agent is obliged to:
  • keep records of reports they are aware of
  • include report details that they can obtain such as:
    • the date of the inspection
    • who requested the report
    • if the report is available to be repurchased
    • contact details of the report's author for the buyer
    • if the report author has public indemnity insurance.

Will the buyer receive updates when new reports are commissioned?

The prospective buyer receives the information about the reports that is available at the point in time when they request a contract of sale. They are not informed for every subsequent report that may be commissioned afterwards.

Does this mean sellers and prospective buyers have to tell agents about certain reports?

No, sellers and interested buyers are not obliged to provide this information.

If an agent seeks information from a seller or an inspector but they refuse to provide it, then the agent has still followed their legal requirement to make reasonable efforts to gain the information about available reports.

Want to find out more?

For details, refer to our Property reports and commercial exemption reforms page. From here, you can also access our frequently asked questions about this reform.

Complaints Register now online

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The recently-launched Complaints Register lists businesses that are the subject of 10 or more complaints to NSW Fair Trading in a calendar month. The data on the Register helps consumers to make more informed decisions when shopping for goods or services, and provides businesses with a real incentive to deliver even better customer service.

Only those complaints considered by Fair Trading to have been made by a real person, relating to a real interaction with a business, will be included on the Complaints Register. The information listed will include the name of the business, the number of complaints received by Fair Trading in the last month, and the product groups complained about. For further detail, visit the Complaints Register page on the Fair Trading website.

Fuelling a better deal for NSW motorists

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Have you heard the word about FuelCheck? It's the new website from the NSW Government that helps you get the best deal on fuel, anywhere in the state. Simply visit from any device connected to the internet, search for your preferred fuel type (such as E10), enter the suburb, town or postcode and off you go!

Check out the FuelCheck page on the Fair Trading website for more info, and remember to never use your mobile phone while driving.

Upcoming events

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NSW Fair Trading offers free community education seminars across NSW. Stay informed with Fair Trading's events and seminars on tenancy topics for real estate agents, self-managing landlords and tenants.

Events are coming up in Armidale for self-managing landlords (13 September) and real estate agents (14 September).

For people in strata-titled units or townhouses, there are strata reforms info sessions coming up across the state over the next few months to support residents, landlords and strata professionals. Visit the Strata reforms information sessions page on our website to find out more and register for a session.