Renting out a property in NSW comes with a set of obligations that sit with the landlord, whoever manages it. Most are simple once you know them. This is the checklist we run through before a new tenant moves in, and the insurance questions we suggest every landlord asks.
Getting a property ready for its first tenant? Jordan Thomas walks through it step by step in what landlords should know before renting out their property.
Before the tenant moves in
The property meets the minimum standards
A rental home in NSW has to be fit to live in. At a minimum it must be structurally sound, have adequate lighting in each room and adequate ventilation, be connected to electricity or gas with enough outlets for lighting, heating and appliances, have adequate plumbing and drainage, have hot and cold water for drinking, washing and cleaning, and have a bathroom with a toilet and washing facilities that allow privacy.
Smoke alarms work, and are checked every year
Landlords must make sure smoke alarms are installed and working. That means checking them every 12 months, replacing removable batteries at least once a year (or lithium batteries as the maker says), replacing an alarm before its expiry, and repairing a faulty alarm within two business days of hearing about it.
A pool has its certificate
If the property has a swimming pool or spa, it has to be on the NSW Swimming Pool Register and have a valid certificate of compliance (or a recent occupation certificate) before a lease is signed, and the tenant must be given a copy.
You've told the tenant what you need to
Some facts have to be disclosed before a lease is signed. They include whether the property is listed on the loose-fill asbestos insulation register, whether it has been affected by flood or bushfire in the last five years, any significant health or safety risks, and whether the building has been the subject of an order about external combustible cladding. If you're not sure whether something applies, ask before the lease is signed rather than after.
Water can only be charged if the property qualifies
You can pass on water usage charges only if the property is separately metered and meets the water efficiency standards, such as showerheads and taps with a flow rate of no more than nine litres a minute and no leaking taps at the start of the tenancy.
At the start of the lease
- The condition report is completed and given to the tenant before they move in. It's the record the end of the tenancy will be measured against, so photos matter.
- The bond is no more than four weeks' rent for an unfurnished home, and it's lodged with NSW Fair Trading, through Rental Bonds Online, within 10 working days.
- Rent can be paid a free way, such as a bank transfer, and the tenant has been offered it.
During the tenancy
- Rent increases are limited to one in any 12 months, with at least 60 days' written notice.
- Urgent repairs, such as a burst water service, a gas leak or a broken hot water system, are dealt with straight away.
- Ending a tenancy now needs a valid reason and evidence for it, whether the lease is fixed term or periodic. Our guide to the NSW rental law changes explains the reasons the law accepts.
Landlord insurance
Home and contents insurance written for an owner who lives in the home usually doesn't cover a rented property, so a landlord needs a policy written for renting it out. The details vary from insurer to insurer, but these are the questions worth asking:
- Loss of rent. Is rent covered if the tenant stops paying, or if the home can't be lived in after an insured event? For how many weeks?
- Damage by the tenant. Is accidental and malicious damage covered, and is damage by a tenant's pet included?
- Liability. If someone is hurt at the property, are you covered, and for how much?
- The building. For a house, is the building covered by this policy? For a unit, the building is usually insured by the strata scheme, so you may only need cover for your fixtures, contents and the rent.
- The excess, and what's excluded. Read the exclusions, especially for unpaid rent, wear and tear and gradual damage.
Premiums are generally a deductible expense for a rental property. As always, check your own situation with your accountant.
Most problems with a rental start as something small that wasn't written down. A good condition report, working smoke alarms and the right insurance cover most of what can go wrong.
This is a summary, not legal or insurance advice. NSW Fair Trading publishes the full rules for landlords, and your insurer's product disclosure statement sets out exactly what a policy covers. If you'd like us to check a property against this list, ask us when we come to appraise it.
