Wednesday, December 23, 2009

Seasons Greetings

Having completed the TU's submission on the draft Residential Tenancies Bill – download your copy here – your Brown Couch correspondents will now decamp to their respective banana lounges for a few weeks.

On behalf of N.C. and myself, may I wish you all the very best of the holiday season. We look forward to seeing you again on the Brown Couch in the new year.

In the meantime, please enjoy the following Christmas-cracker-worthy jokes, japes and wheezes from that famous manual of mirth, the 1977 NSW Housing Commission Estates Management Field Officers' Handbook.

Ho ho ho. Plus, the sixpence in your pudding: some sage advice to housing officers from that same tome:

See you next year.

Saturday, December 12, 2009

Housing speculation culture studies: 'The Castle'

The boffins from the Brown Couch's Institute of Tenancy Culture Studies are still hard at work on the TU's submission on the draft Bill, so regret that their next eagerly-awaited study of tenancy culture has been delayed.

Instead, the Institute is very proud to host a very special guest lecturer, Prof Ross Garnaut, who will present some of his recent work in the allied field of housing speculation culture studies. Ladies and gentlemen, Prof Ross Garnaut.

(Prof Ross Garnaut)

And the subject of Prof Garnaut's study is: The Castle.


In 1997 a low-budget Australian movie dominated the national box office. The Castle cost $500 000 and took nineteen days to shoot. The movie's title was drawn from the platitude 'Each man's home is his castle'. Its major theme was an examination of the rights and value pertaining to home ownership.

(The Castle)

The lead character, Darryl Kerrigan, was an iconic figure of Australiana: working class, egalitarian, down-to-earth, someone who might have been described as 'a good bloke'. He was played by the lanky, laconic Michael Caton, whose moustachioed credulity encapsulated Australia's most adored self-image. The film held an ironic mirror up to Australia. On display were those dimensions of the nation that did not fit with with its self-image of giving everyone a 'fair go'.

The Castle's launch coincided with changes that curtailed the realisation of traditional, passionately held goals of home ownership. That great Australian (or American or British) dream was mutating into volatile and dynamic asset trading. There is no better symbol for this shift than the subsequent career of Michael Caton. After the success of The Castle, he was recruited to host a major television series called Hot Property. In a case of life ignoring art, the man behind Darryl Kerrigan, the embodiment of passionate owner-occupation, became the face of asset speculation. The program offered tips on how to buy, renovate and sell property. This theme grew so strong with passing seasons that in 2000 it was renamed Hot Auctions. This was the very opposite of the quaint owner-occupied culture venerated in The Castle.

What drove this transformation?

Anglosphere house prices had boomed before. They had surged in the late 1980s as corporate freewheeling stoked growth within economies that had experienced recent financial liberalisation. However, the rise in prices was soon brought to heal by high interest rates and then the early 1990s recession.

But the boom that emerged in the mid 1990s went much further. It was described by The Economist in 2005 as 'the greatest bubble in history'. The Economist estimated that from 2000 to 2005, global housing more than doubled in value to more than $70 trillion. From 1995 to the various peaks in 2006-07, median house prices grew by a total of 139 per cent in the United States, 261 per cent in the United Kingdom and 169 per cent in Australia.

The housing market was supercharged by a swing in perception away from home ownership for a roof over one's head, and towards home ownership as investment. The swing towards housing speculation was given a special boost when the US, UK and Australian governments altered capital gains tax laws within two years of one another. The changes made it much more advantageous to receive income from capital gains than from the sale of the services of one's brain or hands.


Thank you, Prof Garnaut. For further reading, see Ross Garnaut's very accessible and almost instant analysis of the global financial crisis and beyond, The Great Crash of 2008.

(from Melbourne University Press)

Wednesday, December 2, 2009

The draft Bill: a preliminary view from the Brown Couch

As promised, here’s the TU’s preliminary guide to what’s proposed in the draft Bill. (Please note: these are the TU's preliminary views only, and they might change as we continue to cogitate on the draft Bill... and as we hear the feedback from our colleagues and constituents – in other words, you).

Access to premises. The provisions for landlords accessing premises to show them to prospective purchasers are, in our view, probably the most disappointing and troublesome of the draft Bill. It envisages landlords and tenants making agreements as to the days and times for access, which is fine, but then undermines any negotiations by giving landlords everything they could want: access on 24 hours’ notice, without limit as to the number of visits, plus a big stick – fines of up $2 200 for tenants who refuse to give reasonable access. We think agreements as to access will only happen when landlords’ rights of access are restricted and they have a reason to negotiate for more. There’s a couple of other access provisions that could do with tightening up too.

Alterations. Tenants would still have to get their landlords’ written consent to make alterations and install fixtures, but where the alteration is minor or cosmetic, the landlord may not unreasonably refuse. Tenants would have to make good any damage or loss of value when they leave, and they would also lose their current statutory right to compensation for fixtures they’ve had to leave behind… but clever landlords know how to avoid that liability anyway. All in all, the draft Bill’s provisions are probably a little better.

Break fees. Tenants who break a tenancy early by moving out in the fixed term would be liable to pay a ‘break fee’ of four or six weeks’ rent (depending on how early they’re breaking) instead of the rent lost until a new tenant moves in, plus the landlord’s readvertising costs, reletting fee, etc. The break fee has the potential to deliver a windfall to landlords – particularly the six-week fee, which is too high – but a flat four week fee would be more straightforward than the current situation and, on balance, good for tenants.

Co-tenants. Big improvements for persons who are on tenancy agreements with one or more other tenants. Under current laws, a co-tenant who moves out cannot end their liability for rent and other costs; the draft Bill would fix this absurdity by allowing a co-tenant to give a termination notice to the landlord and the remaining co-tenants. The draft Bill would also improve the process for transferring tenancies when a new person moves in to replace a departing co-tenant and allow, in special circumstances, a co-tenant to apply to the Tribunal to terminate the tenancy of another of their co-tenants.

Domestic violence. Where a final Apprehended Violence Order excludes a person from premises of which they are a co-tenant, the draft Bill would automatically terminate their tenancy while leaving the tenancies of other co-tenants on foot. A very sensible reform that helps victims of domestic violence get their tenancy arrangements sorted out.

Exclusions. Those renters who are kept out of the current Act – for example, boarders and lodgers – are out of the draft Bill too. There’s one exception to this: educational institutions are excluded from the current Act, but not the draft Bill – though we anticipate they will be excluded later by regulation. The draft Bill would exclude some additional groups of renters too, such as residents of refuges and crisis accommodation, serviced apartments and sharehouses. In the case of sharehouse residents, only those who have written agreements or who have become tenants by transfer or Tribunal order are covered, otherwise you’re a lodger. The exclusions make more urgent the need for occupancy legislation that covers all marginal rental housing.

Holding fees. The deposit many prospective tenants pay in an attempt to hold or reserve premises to let will actually mean something under the draft Bill: if a landlord accepts a holding fee from a prospective tenant, it will be up to the prospective tenant as to whether or not to go ahead with the agreement. Makes good sense.

Long-term tenancies. Tenancy agreements with a fixed term of 20 years or more would be allowed to leave out many of the usual terms, like those relating to repairs. An interesting development, but of little practical importance: virtually no one – landlord or tenant – is interested in a 20-year fixed term tenancy.

Rent arrears. Landlords would be able to commence termination proceedings more quickly, but tenants would be assured that if they pay the arrears, their tenancy is saved – even if the Tribunal has already ordered termination. On balance, this is an improvement for tenants, and landlords too – at the moment, if they get a termination order, many tenants won’t pay the arrears and will use the money instead to move and set up their next tenancy. The draft Bill would see more tenancies saved and more landlords paid. Win-win.

Rent control. No, just kidding. We've searched high and low and there's nothing in the draft Bill that can justifiably be called rent control.

Rent payments and receipts. Some useful reform here: tenants would be able to request a statement of rent payments from their landlords, and landlords would have to provide at least one method of rent payment that does not impose a cost on the tenant – so tenants can say goodbye to those rent card companies that charge tenants for the privilege of collecting their rent.

Residential tenancy databases. Finally: legislated rules about tenant databases (sometimes known as tenant blacklists) that apply to landlords, agents and operators of databases, that set out how a persons may be listed, and that provide for resolution of disputes about listings through the Tribunal. These are some of the draft Bill’s most welcome provisions – but we know at least one tenant database operator cannot see a regulatory loophole without diving through it, so we’ll be suggesting a number of measures to tighten these provisions up.

Social housing. All the current special provisions relating to social housing are incorporated, virtually without change, in the draft Bill… except the drafters have omitted the grandfather clause that prevented pre-July 2005 social housing tenants from being given termination notices on grounds that they were no longer eligible. We think it’s an oversight and will be asking that it goes back in.

Terminations by tenants. Some useful new grounds for termination by tenants during the fixed term of a tenancy: the tenant has been offered social housing; and the tenant is to go into aged care. The draft Bill provides another new ground – that the premises are for sale, and the landlord did not disclose the sale before entering into the tenancy agreement – but this is too narrow to be useful: we think tenants should be able, without qualification, to give a notice of termination if the premises are put up for sale.

Terminations ‘without grounds’. One of the more disappointing aspects of the draft Bill. Landlords would retain their current ability to give notices ‘without grounds’, which makes renting unnecessarily insecure. Notice periods would be increased from the current 60 days to 90 days (and from 14 days to 30 days in the case of notices at the end of a fixed term), which is good for tenants, but the Tribunal loses its little-used but important power to refuse to order termination – that is, termination notices without grounds will always end a tenancy (one exception: the Tribunal retains its discretion where the tenant has been in occupation for 20 years or more). The law should be trying to get landlords away from using notices without grounds, not making them more attractive.

Uncollected goods. If you’re evicted, the draft Bill does not give you long to get your goods out of the premises – just 14 days before the landlord can dispose of them as they see fit (including dumping them at op-shops). Fortunately, personal documents must be stored longer – 90 days – and the draft Bill does give a former-tenant a right to compensation if the landlord disposes of goods unlawfully. We think the draft Bill’s protections for tenants’ uncollected goods should be backed up with some penalties, but overall it would help restrain some of the abuses that currently go on when goods are left behind after termination.