Renting out a house or investment property can provide a valuable source of additional income, but becoming a landlord involves more than finding tenants and collecting rent. Property owners must understand their legal obligations, maintain their properties and protect their investment.

For NSW homeowners considering entering the rental market, five important factors deserve attention.

1. Inspect and prepare the property

Before advertising, inspect the property carefully and address outstanding repairs. NSW Fair Trading requires rental properties to meet seven minimum standards, including structural soundness, adequate ventilation, lighting, plumbing and bathroom facilities. These standards must be maintained throughout the tenancy.

2. Choose tenants carefully

Checking rental history, employment details and references can help landlords assess prospective tenants. However, NSW Fair Trading advises landlords and agents to collect only information reasonably necessary to assess an applicant's ability to pay rent and maintain the property. Applicants' privacy must also be respected.

3. Prepare a proper tenancy agreement

A written residential tenancy agreement protects both parties by setting out their rights and responsibilities. NSW landlords must use the prescribed standard agreement and provide tenants with required documentation, including a condition report and tenant information statement.

4. Review insurance arrangements

Standard home insurance may not provide adequate protection for rental properties. Landlord insurance can offer cover for risks such as tenant-related damage, legal liability and lost rental income, depending on the policy. Owners should compare exclusions, excesses and coverage limits.

Tenants can obtain contents insurance for their belongings, but NSW tenancy agreements cannot require them to purchase insurance.

5. Understand changing rental laws

NSW rental reforms have introduced significant changes. Rent increases are generally limited to once every 12 months, landlords must provide valid grounds for terminating tenancies, and restrictions apply to refusing tenants' requests to keep pets.

Further changes introduced in October 2026 allow tenants moving into a property with a pet to keep it while a timely consent application is considered.

Understanding these responsibilities before accepting tenants can help property owners avoid disputes, unexpected costs and potential penalties.

Because the information here is general in nature, the next step is to seek professional and qualified advice specific to your needs.