Wednesday, November 7, 2012

Sick of over-regulation (part 1)

Do you rent? Ever had a cold, flu or other bug?

If yes, did you notify your landlord? Because it's probably a term of your tenancy agreement that you do.



Up the back of the standard form of residential tenancy agreement published by the Real Estate Institute of NSW – and used widely by agents and landlords throughout the State – there's an additional term under which you're obliged

47.8... To notify the landlord promptly of any infectious disease....

We're yet to hear of any actual cases of landlords asserting their contractual right to know about tenants' lurgies or other ailments. But the infectious diseases term is a symptom of the bothersome, burdensome overegulation of tenants, by their landlords.

In our view, probably the most bothersome common additional term is one we've discussed previously: the term against pets (and you can see our recent submission of this point to the NSW Companion Animals Taskforce, here). We object to this additional term because it bars many tenants from one of life's simple pleasures and from making decisions that responsible adults should be free to make for themselves. And in terms of legal liability, it is entirely unnecessary: under the prescribed terms of every tenancy agreement, the tenant is liable for any damage they intentionally or negligently cause or permit – whether that's damage done by an occupant with two legs or four.

It should be said: the additional term about pets comes courtesy of NSW Fair Trading, which included it in the standard form of agreement under the Residential Tenancies Regulation 2010. Otherwise, most additional terms come from the version of the standard form published by the REI, or are cooked up by individual agents and landlords.

We've seen some shockers. We've seen additional terms that purport to prohibit tenants from having sex at the premises, from drinking alcohol, and from even possessing (never mind playing!) a musical instrument. We've seen additional terms that purport to reserve for the landlord the right to inspect the tenant's furniture and refuse to allow it inside if it doesn't suit.

And then, less extreme, there's the dreary lists of everyday proscriptions: no blu tack, no posters, picture hooks, no nails, no screws, no smoking, no clothes drying on balconies, no clothes drying inside, etc, etc.

Our practical advice about bothersome additional terms is this. First, there are some additional terms that the Act expressly prohibits (section 19). The prohibited terms are:
(a)  that the tenant must have the carpet professionally cleaned, or pay the cost of such cleaning, at the end of the tenancy,
(b)  that the tenant must take out a specified, or any, form of insurance,
(c)  exempting the landlord from liability for any act or omission by the landlord, the landlord’s agent or any person acting on behalf of the landlord or landlord’s agent,
(d)  that, if the tenant breaches the agreement, the tenant is liable to pay all or any part of the remaining rent under the agreement, increased rent, a penalty or liquidated damages,
(e)  that, if the tenant does not breach the agreement, the rent is or may be reduced or the tenant is to be or may be paid a rebate of rent or other benefit.
And clause 5 of the Residential Tenancies Regulation 2010 adds another prohibited term to the list:

A residential tenancy agreement must not contain a term having the effect that the tenant must use the services of a specified person or business to carry out any of the tenant’s obligations under the agreement.

Note that there's a big qualification on the prohibition of the 'carpet cleaning term' at section 19(a). Section 19(3) provides that such a term is allowed 'if the landlord permits the tenant to keep an animal on the residential premises.'

Apart from that, prohibited additional terms are void and unenforceable, and it's an offence for your landlord or their agent to put them in (maximum penalty: $2200).

Second, even if an additional term is not on the prohibited list, there will be a question about its validity. The Act allows additional terms, but only if they are consistent with the prescribed terms, and inconsistent terms are void to the extent of their inconsistency (section 21). (To be precise, the Act does allow contracting out of certain prescribed terms in the case of tenancy agreements for a fixed term of 20 years or more – and we have never seen such a long fixed term.)

Easily offended prescribed terms include the term protecting your reasonable peace, comfort and privacy (section 50(2) – so we wonder if the infectious diseases term might be void, at least to some extent) and the term obliging you to keep the premises reasonably clean (section 51(2)(a) – so no additional terms are allowed that impose a heavier obligation than keeping the place 'reasonably clean').

That's the practical advice, but at a deeper level, there's the question of why so many landlords and agents – who would no doubt otherwise call themselves as the sworn-enemies of 'over-regulation' and 'red-tape' – would engage in such bothersome, burdensome, boring over-regulation of tenants.

Speaking generally, our impression is that the longer the list of additional terms, the less the landlord or agent actually knows what they're doing, and the less well they're actually managing the property and the tenancy. They micro-manage, instead of effectively manage.

Where the ineffective, micro-managing landlord freaks out about blu tack and picture hooks, the effective landlord plans and budgets to repaint the premises after so many years – and is more likely to have longer tenancies, and shorter vacancies.

Where the ineffective, micro-managing landlord presumes, by virtue of their status – and not any actual  expertise – to know more than their tenant about how to run the tenant's household, the effective landlord knows that a good tenant is like quicksilver, or even love: clutch it and it darts away, but open your hand and it will stay.

Private rental housing is a $28 billion per year industry run mostly by amateurs. Most engage agents to manage tenancies on their behalf. Agents could do landlords and tenants alike a power of good by ruling out bothersome, burdensome over-regulation in tenancy agreements.  

[UPDATE: thinking of having your partner move in? Having a baby? Better check with your landlord about that too – see part 2.]

6 comments:

  1. As both a tenant and a landlord, I have to agree with every word. Tenants need to be free to enjoy the home as their won - that's what they pay for after all.

    Giving tenants a greater degree of 'ownership' provides them a great satisfaction.

    My rule of thumb if that if I didn't want my landlord to do it, I won't do it.

    So pets allowed, bluetack, nails, etc fine. I tell the tenants to treat the home like their own. And they do - they often fix niggly little things themselves, and I don't hesitate to pay for reasonable requests. After all, in the long run you want long run tenants who look after the place. They are your customers.

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    1. I think I love you LOL
      A model landlord at last.

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  2. We take our hats off to you, Anon, as a landlord and a tenant. Well said.

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  3. Should you have competition to find the most repressive clause?
    I will start this one off. A housing association in the UK inserted a clause that all young people under the age of 16 should be inside their homes by 9pm, a curfew that did not effect home buyers or owners on the estate. The discussion was not about whether this should be allowed but where else they could us it on other states. Can you imagine.

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    1. Indeed, Ameli? It's not at all surprising to read about such attempts to micro-manage tenants' lives. Thanks for sharing it.

      There's an obvious distinction to be made here though - there's the manner in which social housing forms part of the "state apparatus", where institutional landlords can be used to influence resident behaviour (usually in areas of concentrated disadvantage), versus regular but often far less conscious intrusions by "mum and dad landlords" (ie amateurs) into the reasonable day-to-day decisions of their grown-up tenants.

      Both of these issues are worthy of our reflection.

      Cheers,
      N.C.

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  4. I think that the world is full of would be controllers who are attracted to jobs that allow them to be controllers and that the 'mums and dads' also like to feel in charge and superior. We encourage this sort of behaviour and reward it from cradle to grave.
    The state apparatus mirrors the people and visa versa and dissenting voices are drowned out by those who wish to keep the status quo. The 'state apparatus' has a life of it's own though and makes it's own rules to stay in control, to varying degrees, and the people on the ground follow. The state is always a dictatorship more than a benevolent democracy to a more or less degree, depending on how the economy is going and what threats are emerging. This is what people are used to and understand. And around and around we go. The poor and defenceless controlled blamed and shunned. Those who are poor and do defend themselves come up against the dictatorship constantly. there is so much resentment against this system that is supporting this ghettoisation whilst cheering on those who keep the status quo. This is a simplified version of the many layers of dictatorship and the ghettoisation of the poor and defenceless and the people who attempt to resist rather than conform. You need a bit more than a slogan to win the argument these days. We are all the poorer for it. In my humble opinion.

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