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NSW’s industry peak body has warned against an investor exodus, following the state’s latest rental reform requiring owners to allow up to four pets in their properties.
New details have emerged in the NSW’s latest rental reform, which limits pet refusals by investors, with renters now allowed to have up to four pets inside the property.
From 19 May 2025, landlords can only refuse pets based on specific grounds, including the number of animals being kept on the premises, inadequate fencing, potential damage cost, and specific conditions for open space and animal care.
According to the Real Estate Institute of NSW (REINSW), the new rules are a “slap in the face” for investors.
“The reforms require landlords to provide an environment commensurate with the animal’s requirements. Zoos have the same responsibility,” REINSW CEO Tim McKibbin said.
“For many landlords, this will equate to spending significant amounts of money to meet this responsibility.”
Under the NSW Residential Tenancies Amendment Regulation 2025, investors will have to allow up to four pets in their properties and cannot impose unreasonable conditions on tenants.
While fencing can be a reason to deny a pet, it is not deemed inappropriate if it is in a state of disrepair due to landlord neglect or if the animal is kept in an outside enclosure or inside the property.
Similarly, open spaces will only be considered inadequate if they do not permit the animal to defecate and urinate outside, be kept outside, or receive adequate exercise outdoors – unless these needs can be satisfied elsewhere.
If deemed reasonable, the new reforms will permit pets to defecate and urinate indoors.
In return, tenants will cover the costs of professional cleaning and fumigation if the animal is kept inside the premises.
To deny pets, investors will have 21 days to demonstrate that the property does not support animals' wellbeing or that the pets will cause more property damage than the amount of the rental bond and that such damages are likely to occur.
Pet approval will be automatically granted to tenants if owners do not respond to pet applications within 21 days.
McKibbin said the new reforms leave too much room to interpret what is reasonable.
“Demonstrating how out of touch these reforms are, much is positioned around what is deemed ‘reasonable’. Is that the investor’s reasonable, the tenant’s reasonable, or if it goes to NCAT, the tribunal member’s reasonable? Is it a subjective or objective reasonable?” he said.
“It appears the parties to any dispute will need a subject matter expert to assist with what is reasonable. I think it is reasonably certain that we can look forward to a lot of expensive disputes.”
McKibbin said many investors were anticipating the rental reforms and had already left the market and turned to other ventures to achieve financial independence.
“Telling an investor they must grin and bear it if a tenant wants to keep four pets is telling them to invest their money elsewhere,” McKibbin said.
Now that the details have emerged, he said more owners will be considering selling their properties, further deepening the rental crisis.
“It is no coincidence that while this has occurred, the rental crisis has deepened, and vacancy rates hover at less than half the healthy, acceptable rate for tenants.
“But now that the devil in the detail has been revealed, it’s a frightening prospect for tenants. The more investors sell, the more long-term rental properties are lost to the market, and the scenario for tenants gets much, much worse,” McKibbin concluded.
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