Flat out on the Brown Couch - Part 2

Last week we brought you Part 1 of ‘Flat out,’ our breathless overview of the NSW Government’s proposed strata reforms. That was all about box office – the increasingly contested redevelopment proposals, and plans for tenant representation in strata governance. Like a kind of ersatz Jurassic Park: ‘50 Million Years in the Waiting’.

But not all that is golden glitters, and there is plenty more besides to interest tenants - in the Strata Schemes Management Bill particularly.

Look out for Flat Out 2 on PC wherever good tenancy games are sold

I’m a fixer; I fixed it

For one, the management bill should go some way to addressing a common impasse between tenants and landlords. Too often, tenants are frustrated in their efforts to obtain basic repairs to common property – including any structural wall - with the landlord refusing to take action because the owners corporation won’t sanction the works. This intransigence often persists even in the face of Tribunal orders requiring the landlord to do the work. Of course, such circumstances are far from ideal; Tenants are denied a basic right under the Residential Tenancies Act 2010, and landlords are forced to choose between breach of their residential tenancy agreement and defiance of building governance.

Under the new regime, owners will be able to undertake ‘minor cosmetic works’ to common property connected to their lot without reference to the owners corporation. Such works include replacing carpets or curtains, painting, and filling minor cracks. And an owner will only need a standard resolution – that is, a bare majority of votes – for ‘minor renovations’ such as replacing wiring, kitchen works, and addressing faulty light fittings.

Whilst these provisions are clearly no panacea, and do not touch on major works such as structural repairs, we suspect they will come in handy for a good number of tenants with hamstrung landlords looking to do the right thing.

Everybody in the house

The Management Bill also takes aim at another common ill of the strata tenancy – overcrowding. Any Sydney resident will have heard stories of students and others crammed into every conceivable nook and cranny of inner city apartments, far beyond any sensible capacity. Famously, Domain brought us the story of the man renting a Newtown balcony for $215 per week: breezy. The serious health and safety risks of such arrangements are self-evident.

Mike D, Ad Rock, and MCA enjoy a night in at their city apartment

The proposed new laws will allow strata committees to enact by-laws limiting the number of occupants per bedroom to two or more. An owners corporation will be able to pursue contraventions of these laws through the Tribunal, to the tune of up to $5,500 for an initial breach, and up to $11,000 for further breaches within 12 months.

It is appropriate that committees are empowered to make and enforce rules forbidding the unsafe renting arrangements created by overcrowding. But we are concerned that, as it stands, an owners corporation can chase enforcement against “any person” in breach of the by-laws. This leaves it open for the many sub-tenants that end up in overcrowded apartments as victims of unscrupulous head tenants, the dearth of affordable rentals, or the difficulty of obtaining social housing, to be held liable for significant penalties.

This is, we say, obviously unjust. These provisions should be enforceable against responsible head tenants and lot owners, certainly, but not sub-tenants.  And we would gently note that not even perfect strata legislation, handed down from a divine legislator, could comprehensively address the serious issues that drive renters into overcrowded apartments in the first place. Clearly a broader response is needed.

On the subject of enforcement, the Bill also includes general provisions allowing owners to challenge by-laws in the Tribunal. NCAT may invalidate by-laws it finds to be harsh, unconscionable, or oppressive.

Unfortunately, these otherwise welcome measures are a closed shop. Tenants cannot make the relevant Tribunal application, so anybody affected by an unjust by-law will need their landlord to pursue it on their behalf. And presumably ask nicely for the favour, Sir. It’s not hard to see a great number refusing to go down the time-consuming Tribunal road in a fight against their own strata company.

We think this option should instead be open to any occupant affected by harsh, unconscionable, and oppressive by-laws. More so because lot owners who refuse to take this action may also be in breach of their tenancy law obligation not to permit interference with tenants’ comfort. So opening up these provisions to all affected would provide the added bonus of preventing disputes between owners and renters.

Return to redevelopment

Finally, we return briefly to the battleground that is the Strata Schemes Development Bill. The new rules have overlooked an important consideration – what happens to tenancy agreements when the owners corporation affirms a decision to redevelop. As it stands, seldom used ‘fall back’ provisions in the Residential Tenancies Act, concerning a party gaining superior title to a property over the landlord, will apply. These would allow a developer-purchaser to terminate all tenancy agreements without notice, and seek Tribunal orders for vacant possession immediately.

This must be addressed, as it will place tenants who have broken no law and breached no contractual obligation at the serious risk of short-term eviction. The easiest way around this problem is a simple amendment to the Residential Tenancies Act - extending provisions that protect tenants for 30 days when a mortgagee comes into possession to tenants affected by strata redevelopment.

That’s it for our Brown Couch series on the strata reforms package. But feel free to put any further comments or questions in the box below. Alternatively, we encourage you to check out the Tenants’ Union’s full, formal submission here.