Rental property application platforms would be prohibited from asking prospective tenants in New South Wales to pay for their own background checks under proposed new laws.
The Minns Labor government on Tuesday announced it would introduce the legislation after feedback from renters who said they were often told that paying these “optional charges” would increase their chance of securing a home.
Some widely used online rental property application platforms encourage would-be renters to pay a fee ranging from $19 to $30 for a background check they say will strengthen their application.
Landlords would still have the right to check or make reports to third-party tenancy databases under the proposed reforms, but the government has promised to make it clear that this must not come at a prospective tenant’s expense.
Tenant databases, also known as renter “blacklists”, are run by third-party companies and keep information relating to problems that landlords or agents may have had during a tenant’s stay at a property.
Tenants can only be listed on one of these databases for two reasons: if they have left a property and owe money, or if the NSW Civil and Administrative Tribunal has made an order to terminate their lease, the government said.
The premier, Chris Minns, said property owners would still be able to ensure prospective tenants hadn’t “done the wrong thing” at a previous rental.
“But you shouldn’t have to pay for your own background checks just to apply for a place,” he said.
Minns previously said he hoped the government’s rental reform legislation would be passed by parliament and come into effect by the start of 2025.
The package would also fulfil Labor’s election promise to ban no-grounds evictions, meaning landlords would no longer be able to terminate rolling or fixed-term leases without a valid reason.
Under the changes, landlords would only be able to end a lease if there were “reasonable grounds”, including if the home was damaged, needed renovation, the owners wanted to move back in or if a tenant was not paying.
The changes have been welcomed by renters’ and homeless persons’ advocates, but the government faces an uphill battle to win over property investors, who have argued ending no-grounds evictions could affect housing supply.
In its submission to a parliamentary inquiry into the proposal, the Property Investors Council warned that Victoria’s no-grounds evictions laws “caught most property investors off guard” when they were introduced in 2021.
The government has invested $6.6m to make NSW the first state in Australia to allow tenants to digitally transfer an existing bond to their new rental if they move, meaning they wouldn’t have to pay a new bond before having their old one returned.
The government is still looking for a company to develop the technology to facilitate the “portable bonds” scheme through a public tender process.
It expects the changes to come into effect next year.
