Wednesday, April 18, 2012

A year of living dangerously: part 2

Time for another look at the Residential Tenancies Act 2010, one year on... We're doing this to celebrate the release of our report on the Act (which we did back in March 2012).

Last time we talked about the need for strong renting laws to ensure tenants get a fair go, and we acknowledged that there have been some significant improvements in the law for tenants. But, in spite of this, a couple of negative changes will continue to undermine any semblance of balance, and tenants will remain reticent to enforce their rights until after their contractual relationship with the landlord has come to an end (or, at least, the decision to move on has been made...)

Today we're going to do something a little bit different. We're going to look at some of the good things the new laws are doing...

First and foremost, we must take a minute to reflect on the big-ticket changes. The introduction of rules around tenant 'blacklists'; provisions that ensure a tenancy will not prevent a victim of domestic violence from becoming contractually disentangled from their attacker; and a regime that reflects the very different needs of share-house tenancies, was nothing short of long-overdue. While it is still too early to suggest these changes wont ever need a tweak or two in order to fix things once and for all, we must remember that the old laws did absolutely nothing of the sort... we're taking some big steps in the right direction. We can also surmise (perhaps a little hastily) that the lack of controversy in the Tribunal over much of these changes means that they are doing what they are supposed to do, at least for the time being. None-the-less, we'll be keeping a close eye on them.

Along with these most welcome additions, the new law provides a number of small fixes for tenants that seem to be doing the trick. In our report, we've discussed these under the heading "what's working"...

So - what is working? There are two things in particular that are worth having a look at.

1. When a landlord gives a tenant a notice of termination, the tenant can leave at any time within the notice period.

It doesn't matter whether the notice was for 30 days, or 90 days, or any other number of days - the tenant can leave at a time that suits them. However, it does matter if the notice is given because the fixed-term is about to expire - in that case, the tenant can leave early, but must continue to pay rent right up until the end of the fixed-term.

Now, if we were to take a pedantic position on this, we might say that this has always been the case - a tenant could always leave at a time that suited them, even under the 1987 Act... But under that law, a tenant had to issue their own 21 day notice to the landlord, in order to limit their rent liability when vacating before the landlord's notice period had expired. They'd remain liable for rent during that 21 days, even if they left sooner.

In the past, tenants were cautious about looking for properties in the first weeks of a landlord's notice period, because they were conscious of the need to give that 21 days notice of their own. Now, they can leave when they want to, and the rent liability ends on the day the tenant leaves - provided they let the landlord know that vacant possession is returned.

Not surprisingly, tenants seem pretty happy with this. It means they don't have to double-up on rent payments quite as much as they used to, when moving house.

Landlords should be happy with this too... Tenants are much less likely to overstay a notice of termination if they can just up and move as soon as they find a new place. Unfortunately, though, we're hearing that landlords are not thinking of it in this way. We've heard reports of landlords and real estate agents insisting that tenants still give 21 days notice - even writing this into the tenancy agreement - as per the old law. When tenants question them on this, they say things like "oh, we know you don't have to, but we just think it's the polite thing to do..."

Ahem... politeness is all well and good, but with respect, if you didn't want the tenant to move out, you shouldn't have given them that notice of termination...

2. In some circumstances tenants can end tenancies during the fixed-term, and not have to pay compensation to the landlord.

Generally speaking, a fixed-term residential tenancy agreement is binding on both the landlord and the tenant, and neither party can end the tenancy without the others' agreement, or some indiscretion such as failure to repair or non-payment of rent. Absent such factors, tenants who need to move during a fixed-term tenancy have to compensate the landlord for their unexpected re-letting expenses.

The new Act recognises that circumstances sometimes change, and allows tenants to end a fixed-term tenancy if certain conditions are met. An offer from a social housing landlord, a place in an aged care facility, or the landlord selling are now all recognised reasons for ending a fixed-term tenancy, without compensation to the landlord. In such circumstances tenants can now give 14 days notice of termination during a fixed-term.

That last one - the one about the landlord selling - is a little bit controversial. It's something we've talked about before on the Brown Couch, and no doubt we'll talk about it again. Landlords, you see, don't seem to like it all that much.

But your landlord has always been entitled to a change of heart about being your landlord - because they could always decide to sell up. In the past, tenants have just had to put up with this - not to mention the interruptions and the uncertainty that the sale of your home invariably causes. But now, thanks to this improvement in the law, tenants also have a choice about sticking around when the landlord wants out.

There are one or two other improvements in the Residential Tenancies Act 2010, but these appear to be having the biggest impact for tenants. We can't help but notice that the two greatest improvements are only really useful when tenancies are coming to an end... and we return to our earlier point about balance. It's great that some things have been fixed, but we're still a long way off having laws that tenants could be truly pleased with.

Keep an eye out for our next installment, which will focus on some of the bad bits of the new law. In the meantime, you can find the report on our website if you'd like to give it a closer look.

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