Background Check Fees Banned to Ensure Fairer Renters’ Rights

By Robert Heyward

The Minns Labor Government is set to change the law, banning background check fees that renters currently face when applying for rental properties in NSW. With 2.2 million renters in the state, this reform aims to alleviate an unnecessary financial burden increasingly imposed on them.

At present, some online rental application platforms encourage renters to pay between $25 – $30 for their own background checks, in addition to providing detailed information to leasing agents. These “optional” fees often come with the promise of improving an applicant’s chances of securing a home.

The new legislation will make it clear that renters cannot be charged for background checks. Under the proposed changes, the only payments renters can be charged when applying for a rental property will be:

• The deposit
• The rental bond
• Rent for the property
• Any fee for registration of a lease longer than three years

Landlords will retain the right to conduct background checks or refer to third-party tenancy databases, adhering to existing strict rules. Tenants can only be listed on these databases for two reasons: if they have vacated the property owing money or if the Tribunal has terminated the agreement due to tenant misconduct.

These changes are part of a broader package to modernise the NSW rental market, which includes reforms to end no-grounds evictions, to be debated by Parliament later this year. Currently, renters’ lives can be disrupted at any time, as owners can terminate a residential periodic lease for any or no reason. The proposed reforms, expected to begin early next year, will require homeowners to provide a reason to end a tenancy for both periodic and fixed-term leases.

Additionally, the Minns Labor Government has invested $6.6 million to develop and deliver the nation’s first portable rental bonds scheme. This scheme, currently out to public tender, aims to upgrade the existing rental bonds system by 2025. The new system will allow tenants to digitally transfer their existing bond to a new rental home, eliminating the need to pay a new bond before the old one is returned.

Premier Chris Minns said:

“With the rental market so competitive, many renters have felt pressured into paying for these checks. Owners will still be able to make sure their prospective tenant hasn’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. This gets the balance right between renters and homeowners, and is part of our plan to build a fairer rental market in NSW.”

Minister for Fair Trading and Better Regulation Anoulack Chanthivong added:

“A renter shouldn’t have to pay just for the privilege of securing a home. We need a more modern and fairer rental market in NSW because renters are being punished by a system that hasn’t kept up with change.”

These legislative changes signify a significant shift towards a more equitable rental market, ensuring renters are not unfairly charged and can secure homes without undue financial strain.

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