Friday, January 22, 2016

Renting laws in review: repairs and rents

Two of the biggest discussions to be had in the current review of our renting laws are tenants' rights when it comes to getting repairs and maintenance done, and rent increases. So, here we go...
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The basic principles of how repairs to a property work under the Residential Tenancies Act will be familiar to most. All landlords have a basic obligation to maintain the rental property in a "reasonable state of repair". When a repair issue becomes apparent, the tenant must inform the landlord, who must then carry out the necessary repairs unless the tenant has caused the need for repair themselves. This is the case even if the repair issue pre-dates the tenancy agreement.

Repair issues can be an un-holey mess for tenants

Of course, what appears straightforward from the stuffy confines of a statute book is often anything but. Perhaps the most common tenants' complaint is that the landlord is well aware of an issue but still declines - even outright refuses - to arrange for repairs. This is an issue of compliance rather than an improper division of the parties' obligations under the law, and tenants may apply to the Tribunal for a remedy where required.

But any tenant willing to bring a repairs matter before the Tribunal is also forced to wrangle with what amounts to a get out clause allowing landlords to evade responsibility. Section 65 of the Act provides that the Tribunal may only determine that a landlord is in breach of their repairs obligation if they "failed to act with reasonable diligence to have the repair carried out."

Potentially, this allows a landlord to abandon this most basic obligation where efforts to act responsibly have failed. Or, more specifically, they may avoid being found to be in breach of the repair obligation. The irony is that this is most likely to occur in cases where a repair is somewhat difficult to see to, which are also the cases where a tenant will be in need of a remedy the most. But if a landlord is able to avoid the Tribunal finding they are in breach  of the repair obligation because of the "reasonable diligence" defence, no remedy can be obtained.

Also ironically, the Tribunal has discretion over what remedy to order in repairs matters. It is open for it to order that no action must be taken after finding a landlord has failed to carry out a repair, if it finds the circumstances of the case warrant it. In such cases, tenants should be entitled to another remedy, so we say this part of section 65 needs to go.
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Rent increases, though never popular amongst those made to pay them, have been brought into sharper focus recently by the renting affordability issues affecting so many in New South Wales. The many complexities of this issue are something The Brown Couch has considered at length - most recently here and here.

But for most tenants, the law on how and when the landlord may up the rent are simple.
- No increase is allowed during a fixed term of less than two years unless it is detailed in the agreement.
- For fixed terms of more than two years, one increase every 12 months is allowed.
- A landlord may increase the rent for a periodic (i.e. 'week to week') agreement an unlimited number of times by providing the tenant with 60 days' written notice.
- A tenant can also apply to the Tribunal for an order voiding an increase, on the grounds that it is excessive.

The tenant is burdened with proving that the increase is excessive, and the Tribunal may not consider a tenant's capacity to pay the increased amount in its deliberations. Obtaining such an order is notoriously difficult and time consuming.



Are rent increases the Bane of your existence?


We think tenants deserve additional certainty, as well as protection from retaliatory or otherwise wanton rent increases - in a time of widespread rental unaffordability more than ever. Rent increases should be limited to once per 12 months for all tenancies, rather than the tiny minority of agreements with a fixed-term of more than two years.

Provisions around excessive rent increases also require reform. We would like to see the evidence burden reversed for large increases, so that when a landlord issues notice to increase the rent above the rise in the Consumer Price Index, they would be required to demonstrate that the increase is not excessive. Tenants would retain that obligation for increases below the equivalent CPI rise.
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Given their near-universality in the tenant experience, we're sure these issues will be the focus of many a submission to the Government's ongoing review of the Act. But for anybody who hasn't yet had their say, make sure you grant them a mention. Submissions can be made by email to policy@finance.nsw.gov.au, or by post to Statutory Review of Residential Tenancies Act 2010, Policy and Legislation, NSW Fair Trading, PO Box 972, Parramatta NSW 2124.

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