Tuesday, August 14, 2012

Comment on the draft Boarding Houses Bill (part 3)

The TU has lodged its submission on the draft Boarding Houses Bill; you can read the whole submission on the TU's website. Here on the Brown Couch, we'll discuss the most important recommendations.

One of those recommendations we've already discussed in some detail: the Government should fix the loophole that would exempt dodgy head-tenants – and virtually any boarding house proprietor who makes their premises subject to a residential tenancy agreement. Now we'll discuss four more key recommendations.

1. More renters should be covered by the draft Bill's occupancy principles. (We discussed this briefly, in our initial comments on the draft Bill.) 


Because the draft Bill applies to 'registrable boarding houses', as defined in the draft Bill, it leaves uncovered a wide range of marginal renters who are currently excluded from residential tenancies legislation and subject to the inadequate provisions of the common law of lodging: lodgers in private homes, occupants of shared households, residents of refuges and crisis accommodation, students in halls of residence, etc etc. All these marginal renters would benefit from being covered by the draft Bill's provisions about occupancy principles and occupancy agreements. 

These provisions are  contained in Chapter 3 of the draft Bill; that Chapter (and only that Chapter) should apply wherever a person is granted, for value, a right to occupy premises for a residential purpose for a term or period and the agreement is not otherwise subject to residential tenancies legislation.

2. The occupancy principles should deal with bonds and security deposits. (We discussed this one in our initial comments too). Boarding house residents often pay significant amounts of money in bonds and other security deposits, and often have problems getting their money back. There should be an occupancy principle that limits the total amount of security that may be required to two weeks’ occupation fee, and requires that all bonds and security deposits be lodged with the Rental Bond Board. The Bond Board is already there to safeguard tenants' bonds, so let's use it as a safeguard for boarding house residents' bonds too.

As well as an occupancy principle about bonds, we recommended two more occupancy principles: one about utility charges (they should calculated based on the cost of providing the utility and a reasonable estimate of the resident's use of it), and one about penalty terms (simply, there shouldn't be any penalties or fines in residents' agreements). Each of these things is a present problem in marginal renting; the really big problem, however, is the lack of safeguards about bonds. 

3. Occupancy agreements must be made more effective. We touched on this in our initial comments when we noted that the provisions for the Consumer, Trader and Tenancy Tribunal to resolve disputes about occupancy principles expressly excluded a power to make orders for compensation. This, however, is just one part of a larger problem with the effectiveness of occupancy agreements, as provided for under the current terms of the draft Bill. 

Another part of the problem lies in the relation between 'occupancy principles' and 'occupancy agreements'. Properly understood, the occupancy principles are supposed to be the broad statements of principle in the legislation, and the occupancy agreements are supposed to be the individual contracts containing all the nitty-gritty detail of terms and conditions – within the broad confines of the principles. The draft Bill says an occupancy agreement cannot contract out of an occupancy principle – so far so good. But it does not say that an occupancy agreement must positively give effect to the occupancy principles. This means that an occupancy agreement could be the barest kind of agreement – 'John Jones may occupy the premises as lodgings for $100 per week' – containing no other contractual terms at all. The occupancy principles would still say that John Jones is entitled to certain things (eg premises is a reasonable state of repair), but this entitlement would not be a contractual entitlement – just a statutory entitlement, the remedies for which are, as noted, limited to what's provided for in the legislation (that is, no compensation). 

Occupancy agreements should give effect to the occupancy principles – and where an agreement does not actually give effect to the principles, it should be taken to give effect to them. And in the event of a breach, residents should have the usual contractual remedies, including compensation for any loss suffered. 

A final recommendation to improve the effectiveness of the occupancy provisions: some of the occupancy principles should also be backed up by penalties (in particular, the principles about written agreement, written receipts, quiet enjoyment and reasonable notice of eviction). As it is currently drafted, Chapter 3 contains no penalties for breach of its provisions at all.

And it should be said – there's already in Parliament a piece of legislation that shows how each of these three recommended improvements could be achieved. If Chapter 3 of the draft Boarding Houses Bill covered the same persons as Clover Moore's Bill covers, and provided for the same occupancy principles as Moore's Bill provides for, and made occupancy agreements as effective as Moore's Bill makes them, it would be a stronger piece of legislation and a landmark reform.

4. Better consumer protection through the Boarding Houses Register. We haven't previously mentioned the draft Bill's new Boarding Houses Register. This would be a list, maintained by NSW Fair Trading, of registrable boarding houses; proprietors would be required to register their premises, or be guilty of an offence if they don't. 

Getting registered doesn't mean the premises are approved for use as a boarding house (this would still be for the local council to decide under planning laws); it just means that the premises are on the list, and that members of the public can see that they are registered.

We support the Register, but it should be made into a stronger measure of consumer protection. In the draft Bill's current terms, the Register would make public the name and address of the premises, and whether the premises is a Tier 1 or 2 boarding house. And that's all. 

This is well and good if you're a neighbour and you suspect the house over the road is an unapproved boarding house: you just check the address against the Register and if it not there, you dob them in to the local council. 

But if you're a prospective resident, or someone helping a prospective resident, you might like to find out a little more, such as the name of the proprietor, and whether there has been any disciplinary action taken against them. The Government Licensing Service provides this sort of information to members of the public in relation to tradespersons and other licensees; the Register should provide the same information – and the same level of consumer protection – to prospective residents of boarding houses.  


  1. The whole Act is utterly useless if the landlord can kick you out with 'reasonable notice' without reason. I would PUT MONEY on the fact that NCAT has received almost NO applications from current residents.

  2. Hi Anon

    Please note that this post is about a draft Bill. Along its way to becoming an Act, changes were made to the Bill that addressed a number of our concerns. For more info about the Act, please see our factsheet or the Tenants Rights Manual (links in sidebar at right).

    About termination notices: one of the good things about the BH Act is that a BH resident is 'entitled to know why... the occupancy may be terminated' (occupancy principle 9).

    About applications from residents: no, there haven't been many at all. But we are aware of cases where residents and advocates have used the principles, including the requirement for 'reasonable notice', to negotiate a decent outcome.


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