Tuesday, April 5, 2016

Fair Trading lights damp squib for tenants

As the main regulator of direct trade and commerce in New South Wales, Fair Trading receives over 45,000 complaints from consumers each year. It should come as no surprise that these include gripes from tenants about the behaviour of landlords and real estate agents.



In order to give consumer complaints a meaningful edge, Fair Trading is launching a new “Complaints Register”. This will provide a record of businesses that are subject to multiple consumer complaints received over the preceding two years. According to its guidelines, the Complaints Register aims ”to provide an incentive for businesses to deliver better customer service, and help consumers make informed decisions about where to shop".

We can see how a public 'name and shame file' could drive informed decision-making by consumers (tenants) in their hunt for a new product or service (a home). Avoiding such a register could also be a real incentive towards improved behaviour from service providers (landlords and real estate agents). So far, so good.

But, as with all things, the devil is in the detail. This register is unlikely to be of much use to tenants because a business may only be listed if it is subject to 10 or more complaints in a single calendar month. For the private rental market, this proviso could scarcely be more lenient. Real estate agencies largely operate as small businesses, and well over 90% of landlords own three or less rental properties. Given the modest scale of most operations, and the nature of the service provided, even the most scurrilous operator is unlikely to receive so many complaints in such a short space of time. Incredible though it seems, an agency subjected to over 200 complaints across the two year period could nonetheless avoid a listing.

The prospect of a listing represents the best reason for most tenants to lodge a complaint in the first place. The likelihood that a complaint will result in punitive action or provide a tenant with any direct redress is distinctly slim. Fair Trading will attempt to negotiate an outcome for a complainant - but this process requires the voluntary participation of the other party, and any agreement reached is unenforceable. Fair Trading also has powers to prosecute businesses suspected of engaging in certain types of unlawful conduct, including breaches of some provisions of the Residential Tenancies Act. But these are almost never utilised in tenancy matters: just two prosecutions under the Act took place in 2015, with five occurring the previous year.

But there is another serious shortcoming that many prospective complainants will encounter. Complaints may only be made against a 'business’, which captures real estate agencies, institutional landlords, and possibly some individuals with a large number of investment properties. But 'mum and dad' landlords with a smaller portfolio are considered passive investors, rather than active participants in the shelter business. So most tenants with a landlord that has not engaged an agent need not be disappointed by the new register: they remain entirely excluded.

Still, we'll be the last to tell tenants not to lodge a complaint with Fair Trading. Just make sure you get a good idea of where you stand before taking the plunge...

Fair Trading’s lack of attention to the private rental market might make you wonder just what the New South Wales Government makes of the landlord/tenant relationship in the first place. A light touch on tenancy issues reveals an ongoing misunderstanding of the structural imbalance in the bargain between those who need homes to live in, and those who want to use them for building wealth. Perhaps this is an unhappy sign of things to come, as we await the outcome of a statutory review of our renting laws?

3 comments:

  1. Good idea if each complaint is followed up by an internal process with a negative points system before the 10/20 complaints.

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  2. Your comment on the NSW Government and tenant/landlord relationships makes me wonder if the majority of them are landlords.
    It became evident when the Federal Government was discussing Negative Gearing that a very significant portion of the people voting are actually, or have been, landlords.
    My (admitably personal) feelings in this matter is that not enough people in Government, at any level, are renters who struggle to keep a roof over the heads of their families. The Poliliticans who rent a house near Parliment are not struggling.

    ReplyDelete
    Replies
    1. Hi Anonymous
      We occasionally wonder the same thing- a perusal of the Register of Interests, which must still be done manually down at Parliament House, generally confirms the assumption.
      We are generally friendly and optimistic types and hope we can convince the civic-minded people in politics to create good laws no matter their tenure type.

      Delete

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