The BROWN COUCH

Bad landlords in history: the Hares

2012-01-29T01:00:00.001+11:00

The Institute of Tenancy Culture Studies presents a study in an allied field: Bad Landlords in History.

In the 1820s, in Tanners Close, just off Edinburgh's West Port, Margaret Hare ran a lodging house. Her husband, William, was, like many of the lodging house's clientele, a labourer, employed digging out the Edinburgh-Glasgow Union Canal (actually, he was Margaret's second husband, and formerly a lodger in the same house).

(Old Edinburgh)

Sometime in 1827, one of the Hares' lodgers, a dissipated veteran called Donald, died, owing 4 pounds in rent. What's a landlord to do?

(a) give him a decent burial - brotherhood of man and all that;
(b) inform the relevant charities - it's their duty to do something; or
(c) get your husband and one of his mates to sell the poor man's corpse to an anatomist for dissection in front of a paying audience?

Margaret Hare choose (c).

So William and his mate, William Burke, another navvy on the canal, filled Donald's coffin with bark and hauled his body over to Edinburgh University, where they found Dr Knox, surgeon and private anatomy lecturer, who happily paid 7 pounds 10 shillings for the body and didn't ask too many questions.

The transaction thus completed, what's a landlord to do?

(a) repent and confess the whole sordid business to the authorities;
(b) try never to think of it, or Dr Knox, ever again; or
(c) consider who amongst your lodgers would make a good corpse for sale?

The Hares choose (c).

Another of the Hares' lodgers, an old miller named Joseph, wasn't dead yet, but he was sick – so William Hare and William Burke plied him with whisky, then suffocated him. Knox paid well for the corpse. With no more likely candidates amongst the lodgers of the house, the Hares began inviting drunks, beggars, prostitutes and other indigents into the house, to be dispatched by Hare and Burke, and their corpses sold to Knox for dissection.

This enterprise came undone in October 1828, when a couple of guests in the house discovered the body of Margaret Docherty, with whom they'd shared a drink just the previous night, stashed under a bed. The police were alerted, but found no corpse at the Hares' lodging house; but when they later called on Dr Knox, there was Docherty's body on the slab, ready for anatomy class.

William Hare was arrested, along with Burke. What's a landlord to do?

(a) confess and pay the price of one's crimes;
(b) exercise one's right to silence; or
(c) do a deal for immunity from prosecution in return for becoming the Crown's principal witness against one's co-accused?

William Hare choose (c).

Faced with Hare's evidence, William Burke confessed, was found guilty and, on this day 183 years ago, taken to the public gallows and hanged. The Hares went free. (But not entirely unpunished. So the story goes, William Hare was shamed, set upon by a mob, blinded and eked out his days as a beggar. As for Margaret Hare - what's a landlord to do? She emigrated to Australia.)

If the tone of our account of Burke and the Hares is a little jocular, that's because it's a form of self-preservation: the horror of these crimes is difficult to contemplate. In the course of a year they murdered not less than 16 persons, and subjected them to indignities beyond death, all for filthy lucre. Writers and artists have been fascinated: Burke and the Hares have inspired a Robert Louis Stevenson story, no less than seven films, and numerous mentions in Ian Rankin's tenurially significant Rebus novels.

Indeed, the first poetical response to the crimes was probably that of the trial judge, who sentenced Burke not merely to be hanged, but to be thereafter dissected in the same anatomy theatre as his and Hare's victims. And so he was, with the presiding anatomist writing in blood taken from Burke's head and his flayed skin tanned and tooled into a card case. Burke's bones and skin remain on display in museums in Edinburgh today.

And this whole bloody history sprang from a poor lodger's rent arrears, and the greed lurking in the hearts of two bad landlords.

Field trip to a former reserve

2012-01-26T00:10:00.004+11:00

It's hot, and it's been a long day. We arrive a little after four, but we've been driving since lunch-time. We'd arranged to meet Auntie and the mob down in the village at three, but we got held up talking to some fellas back in Dubbo. They don't seem to mind.

"We're here to help," we tell them. "We just need to figure a few things out about the situation. Can you tell us what's been going on…?"

Over the course of two hours a steady trickle of cars roll in to our meeting place, with three or four people piling out of each one. Everyone has something to say - these houses are all falling down … nobody wants to talk to us all the way out here … they keep blaming us for all the problems of the Lands Council … someone told somebody not to worry about the rent until the company sorts out the headlease … we don't even know who the company is anymore …

Thirty years ago these houses were poorly built. Since then there's been a bit of money here, a bit of money there… but not much has been done. Much of it has been given to out-of-town tradies, who tend to breeze in and do half the job before disappearing with the cash. Nobody can be accused of nepotism that way. The houses aren't in such good shape, either.

"Up in town, they're building new houses for Aboriginal people," says Auntie. "They want us all to move up there… but we want to stay here. Down here, we're safe. We know where our kids are. We look after each other."

"Well," we tell them… "There are a couple of things we might be able to do. We'll have to come back tomorrow and talk to a few people one-on-one… go through some of the options and get a feel for what everyone wants to do…"

There's a big bloke - arrived later than the rest and waited quietly in his car for about half an hour. He's finally opened the door and stepped over towards us… "Listen," he says quietly, "we're sick of people coming in here and telling us they're gonna fix things. What are you blokes gonna do that no-one else has been able to up until now?"

It's a good question…

The next afternoon we run into someone from the Lands Council. They've decided not to try for P ARS registration, opting instead to headlease all their properties to the AHO. They've got plenty of houses up in town, plus the dozen or so down on the former reserve. But for one reason or another, the houses on the reserve aren't going to be headleased. Everyone down there is going to have to move up to town. The houses down on the reserve are going to be bulldozed. There's simply no money to fix them.

"But," we point out, "Auntie says you're building new houses in town. Can't you spend some of that money on the houses on the reserve?"

Well, no, because the money comes with some pretty heavy strings attached. The only way to get money to fix up the former reserve is to become registered through PARS, and that decision has already been made. It's just not something the Lands Council believes they'll be able to do.

The Lands Council is responsible for everything on the former reserve, too, not just the houses. The roads, the lighting, the water and the sewerage works… everything.

They also have to pay rates to the Local Government, and the rent barely covers it. Even if these houses and all the village infrastructure could be fixed tomorrow, the debt to Local Government would still be crippling.

The Build and Grow Aboriginal Housing Strategy promises better housing outcomes for Aboriginal people in NSW. For the mob on the former reserve, it means being moved off the land…

"I've lived her for fifty years," says Auntie. "I grew up here in an old tin shed and I remember when these houses were built. We thought they were pretty amazing back then, but I'd rather have the old shed back now…"

For earlier Brown Couch commentary on the Build and Grow Aboriginal Housing Strategy, visit this old post.

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On this the anniversary of the original displacement of Australia's Indigenous people, we acknowledge the traditional owners of the land on which the Brown Couch sits: the Gadigal people of the Eora nation. We pay our respects to elders past and present.

Strata - it surrounds us and penetrates us.

2012-01-22T21:53:00.002+11:00

Living in a flat or townhouse in a strata scheme means living in a regime of laws and personal relations that has the potential to very significantly affect your life. And lots of people do it – but this regime has received relatively little consideration in research.

(The Owners Corporation meeting could have gone better.)
The NSW State Government would like to know more about your experience of strata laws – so has instigated this online consultation forum.

The Tenants' Union would like to know more, too, particularly if you rent: so please leave a comment in the online consultation forum (we'll be reading), or here on the Brown Couch, or directly to me at the Tenants' Union (chris[underscore]martin[at]clc[dot]net[dot]au).

Legislation for occupancy agreements - TU comment

2012-01-17T11:03:00.006+11:00

Late last year independent MP Clover Moore introduced into the NSW State Parliament a Private Member's Bill for occupancy agreements for marginal renting.

Here's the TU's comment on the Bill.

General comments
The Tenants’ Union of NSW (TU) supports the Residential Tenancies Amendment (Occupancy Agreements) Bill 2011 (the Bill) introduced by the Member for Sydney, Clover Moore, and commends it to other Members of Parliament.

The Bill would implement much-needed law reform in relation to marginal renting. It would do so in a sound and balanced way that is fair to marginal renters (‘occupants’) and accommodation providers (‘grantors’).

Marginal rental accommodation includes:

• boarding houses;
• lodgements in private residences;
• refuges and crisis accommodation;
• residential colleges; and
• most share housing arrangements.

Marginal renting is currently excluded from mainstream residential tenancies legislation. It is instead subject to the common law of lodging, which has changed little since the nineteenth century and is inconsistent with current community expectations as to housing rights and standards. Dispute resolution is also deficient: most marginal rental disputes are excluded from the jurisdiction of the Consumer, Trader and Tenancy Tribunal (the Tribunal), and dispute resolution through the court system is not a practical option.

The Bill reflects the ‘occupancy agreements’ model of law reform implemented by the Australian Capital Territory in amendments made in 2005 to its Residential Tenancies Act 1997 (ACT). The ACT’s amendments are widely regarded as a success and the occupancy agreements model has been recommended by the NSW Government’s Interdepartmental Committee on Reform of Shared Private Residential Services (the IDC) as its preferred approach to law reform. The NSW Legislative Assembly’s Social Policy Committee has also recommended, in the report on its Inquiry into International Student Accommodation in NSW, that the NSW Government consider implanting legislation for occupancy agreements.

The Bill’s provisions are fair and balanced. It would provide for ‘occupancy agreements’ between occupants and grantors where residential tenancies legislation does not otherwise apply.

These agreements would reflect the 12 ‘occupancy principles’ in the Bill, which set out the entitlements of occupants and grantors in a general way, without prescriptive detail. This level of detail would be left to individual occupancy agreements, and any standard occupancy terms that may be made by regulation. This means the occupancy principles would have a flexibility that is appropriate to the wide variety of rental arrangements covered by the Bill.

Occupants and grantors could apply to the Tribunal to resolve disputes relating to an occupancy agreement. Grantors would not need to apply to the Tribunal for termination of occupancy agreement, but an occupant could apply for orders where they disputed a termination. This is a balanced and effective regime for resolving disputes and dealing with terminations.

Detailed comments

Coverage
The Bill would define an ‘occupancy agreement’ as ‘an agreement under which a person grants to another person for value a right to occupy specified residential premises as a residence (whether or not with other persons)’ (s 186B(1)). The Bill illustrates, without limiting, the definition with a list of persons and rental arrangements at s 186B(2), and then limits the definition with the qualifications at s 186B(3).

We submit that the general definition, the illustrative list, and the qualifications, are all sound. They provide for appropriately broad coverage, while ensuring that agreements already subject to residential tenancies legislation remain subject to the respective legislation.

Occupancy principles
The Bill would provide for 12 occupancy principles: nine are adopted from the ACT’s legislation, one with a substantial change; three are innovations. We submit that all are sound.

The general scheme of the principles is that they would be reflected in the content of occupancy agreements, which would include:

terms to the effect of the occupancy principles;
terms to the effect of any standard occupancy terms prescribed by regulation, provided they are consistent with the occupancy principles; and
additional terms, provided they are consistent with the occupancy principles and standard occupancy terms.

This scheme is sound and appropriately flexible to the wide variety of rental arrangements covered by the Bill.

We extract and discuss each of the principles below (the text and numbering is per the Bill; the subheadings are our own).

State of repair

(a) an occupant is entitled to live in premises that are:
(i) reasonably clean when the occupant moves in, and
(ii) in a reasonable state of repair, and
(iii) reasonably secure,

This principle does not prescribe absolute standards in relation to the physical conditions and state of repair of the premises. We submit that what is ‘reasonable’ in relation to cleanliness, the state of repair and security will vary according to the type of rental arrangement and the individual case, including the amount of rent paid. The principle would appropriately balance the respective interests of grantors and occupants.

House rules

(b) the grantor is entitled to set reasonable rules that the occupant will be required to comply with and an occupant is entitled to know the rules of the premises before moving in,

This principle does not prescribe any rules, nor does it prescribe the matters about which rules may be made. It requires that rules be ‘reasonable’, which will vary according to the type of rental arrangement (for example, a women’s refuge might reasonably set a rule prohibiting male visitors at any time, whereas a women’s residential college might reasonably set a rule prohibiting male visitors from staying overnight). It also requires that the occupant be entitled to know the rules before moving in. This is fair to both occupants and grantors and would help prevent disputes.

Written agreements and receipts

(c) an occupant is entitled to the certainty of having the occupancy agreement in writing,

(d) an occupant is entitled to be given a written receipt for the payment of any money to the grantor,

Principle (d) is an innovation (the ACT occupancy principles are silent as to receipts). We submit that it, and principle (c), reflects basic expectations on the part of consumers and sound business practice. Provision of written agreements and receipts is not onerous and helps prevent disputes.

Quiet enjoyment and access

(e) an occupant is entitled to quiet enjoyment of the premises,

(f) a grantor is entitled to enter the premises at a reasonable time on reasonable grounds to carry out inspections or repairs and for other reasonable purposes,

We note that principle (f) does not prescribe a period of notice or grounds, but does require that the grantor’s entry take place at a ‘reasonable time’ and on ‘reasonable grounds’, each of which may vary according to the type of rental arrangement. It and principle (e) appropriately balance the respective interests of occupants and grantors.

Rent increases

(g) an occupant is entitled to reasonable notice before the grantor increases the amount to be paid for the right to occupy the premises and is entitled to know before moving in how much notice will be given,

This principle is substantially different from the corresponding ACT occupancy principle about rent increases, which prescribes six weeks’ notice. The present principle does not prescribe the period of notice for a rent increase, but does require that notice be given, that the period of notice be reasonable (which would vary according to the type of rental arrangement) and that the period of notice is set out before the occupancy agreement begins. We submit that this is appropriate to the general scheme of the occupancy principles, and appropriately balances occupants’ and grantor’s respective interests.

Prohibition of penalties

(h) an occupant is not liable to pay a penalty or fee for breach of any term of the agreement or any of the rules of the premises,

Like principle (d), this principle is an innovation (the Act occupancy principles are silent as to penalties). From our experience, penalty clauses are a common problem in marginal renting, especially for international students, whose agreement often include exploitative penalties and charges for ending their agreements during semester. The principle would appropriately address the problem.

Utilities charges

(i) a grantor is entitled to charge for the use of a utility, provided that the amount charged is determined according to the cost to the grantor of providing the utility and a reasonable measure or estimate of the occupant’s use of the utility,

Like principles (d) and (h), this principle is an innovation (the ACT occupancy principles are silent as to utilities charges). The present principle would allow grantors to pass on the cost of utilities, including where an occupant’s use of utilities is not separately metered, but would prevent exploitative or unfair charges (such as exorbitant charges for internet access – a problem frequently reported by international students). The principle would appropriately address the problem and balance the respective interests of grantors and occupants.

Termination and eviction

(j) an occupant is entitled to know why and how the occupancy may be terminated, including how much notice will be given before eviction,

(k) an occupant must not be evicted without reasonable notice,

These two principles would allow grantors to terminate occupancy agreements, and evict persons remaining in occupation after termination, without applying to the Tribunal. Principle (j) does not prescribe grounds for termination, nor the period of notice of termination. However, an occupant would be entitled to know how and why the agreement is being terminated (principle (j)), and the period of notice would have to be ‘reasonable’ (principle (k)), which would, we submit, vary according to two sets of factors. First, ‘reasonable notice’ may vary according to the reason for termination (for example, if it is because the occupant has been violent to the grantor or another occupant, the period might be very short indeed; if it is because the grantor is selling the premises, the period might be relatively long). Secondly, it may also vary according to the type of rental arrangement (for example, if the agreement is being terminated because the premises are being sold, ‘reasonable notice’ may be shorter in the case of an ordinary boarding house than in the case of a licensed residential centre for people with disability (LRC)).

We note that in Mercury Advisory’s ‘Report on targeted consultations for the reform of the boarding house sector’ (the Mercury report), commissioned by the IDC, boarding house operators were concerned particularly about termination and eviction. In particular, the consultants reported that

LRC and Unlicensed Property owners would like to see some protection for owners and other residents, with ability to evict disruptive residents immediately in line with “typical house rules”. … At present there seems to be some confusion about what they can and can’t do in relation to evicting.

The Bill accommodates this interest, and would clarify confusion around the process for termination and eviction. The principles would appropriately address the problems of terminations without reasonable notice, and uncertainty around how terminations may be effected, and balance the respective interests of grantors and occupants.

Dispute resolution

(l) a grantor and occupant should try to resolve disputes using
reasonable dispute resolution processes.

This is a sound principle, supported by the Bill’s provisions in relation to the Tribunal.

Bonds
In our experience, bond disputes are common in marginal renting, especially in relation to international students, where they are so common that we suspect that some operators treat bonds as part of their ordinary revenues, regardless of whether they actually have a legitimate claim.

The Bill would limit the amount of bond payable by an occupant to the equivalent of two weeks’ rent, and require that the grantor lodge the bond with the Rental Bond Board. These provisions would appropriately balance the respective interests of grantors and occupants. They also make efficient use of the already existing systems of the Rental Bond Board.

Dispute resolution
Currently, disputes arising from marginal rental contracts are excluded from the Tribunal’s Tenancy Division, but some applications by marginal renters may be heard as consumer claims under the Consumer Claims Act 1998 in the General Division. Whether such a claim may be made depends on whether the accommodation provider is carrying on a ‘business’ for the purposes of that Act, which is not always clear or straightforward. We note that accommodation providers cannot apply in the Tenancy or General Divisions.

The Bill would amend the existing provisions of the Residential Tenancies Act 2010 (RTA) relating to the powers of the Tribunal to additionally provide that the Tribunal could hear disputes and make orders on the application of grantors, occupants, former grantors and former occupants. Section 190A would provide that applications could be made by any of these parties in relation to a breach of an occupancy agreement or a breach of an occupancy principle. Sections 186G(5) and 187(1)(k) would provide that applications could be made respectively in relation to the payment of bonds and the return of goods left behind after termination. In making a decision on an application, the Tribunal would be required to give effect to the occupancy principles (s 189A). As we noted in our discussion of occupancy principles (j) and (k), there would be no requirement for a grantor to apply to the Tribunal in order to terminate an occupancy agreement, but an occupant who disputed a termination (because, for example, reasonable notice had not been given, or because the basis of the notice was defective (say, termination for rent arrears where the occupant was actually paid up to date)) could apply to the Tribunal for orders resolving the dispute.

These provisions would establish a clear jurisdiction in the Tribunal for the resolution of disputes arising from occupancy agreements, for the benefit of both grantors and occupants. Section 189A would provide appropriate guidance to the Tribunal in its decision-making and ensure that the occupancy principles are given effect.

Additional matters

We make the following suggestions with a view to enhancing the operation of the provisions of the Bill.

Standard terms for LRCs
Section 186E would provide for regulations about occupancy agreements, including standard occupancy terms (provided they are consistent with the occupancy principles). We suggest that upon passage of the Bill, the Government should develop, as a matter of high priority, a set of standard occupancy terms for licensed residential centres for people with disability. We would welcome working with the Government, operators, residents and other advocates in a process of consultation on possible standard occupancy terms for LRCs.

Uncollected goods
The Bill provides that the Tribunal can hear disputes, and make orders, about uncollected goods (that is, goods left behind at the premises by a former occupant after termination of an occupancy agreement) (s 187(1)(k)). It does not, however, include an occupancy principle relating to uncollected goods and so would leave this matter to individual occupancy agreements and the common law of bailments.

The TU is working with Clover Moore’s office on amendments to clarify how uncollected goods may be dealt with. We suggest that the matter may be dealt with by regulations under the provisions of the Bill; alternatively, the procedures under the Uncollected Goods Act 1995 (UGA) could be made to apply. This would require an amendment to the Uncollected Goods Regulation 2011, which currently provides that the procedures of the UGA are not available where the RTA applies (cl 4). We submit cl 4 could be amended to exclude occupancy agreements from the operation of the exclusion of the RTA, hence placing them with the operation of the UGA.

Penalties
The Bill makes no provision for penalties in the event of breach of its provisions (for example, where a grantor does not give a written agreement or written receipts, in breach of principles (c) and (d), or fails to lodge a bond, in breach of s 186G(1)).

We are working with Clover Moore’s office on amendments to introduce appropriate penalty provisions to enhance compliance with the provisions of the Bill. In particular, we suggest making provision for penalties of up to 20 penalty units for breach of ss 186D, 186F and 186G(1) and (2). This would be appropriate and consistent with similar provisions elsewhere in the RTA (specifically, ss 22, 159(4) and 162(5)).

End of an era

2012-01-14T19:32:00.009+11:00

The Herald reports today that

THE era of big, new public housing estates is over, according to the state's Finance Minister - with the O'Farrell government to pursue new public-private partnerships to redevelop NSW's biggest estates to include a mix of public and private housing.

The paper quotes Finance Minister Greg Pearce:

''It's finished. It's a proven failure, it's a proven failure in other parts of the world. It just creates cycles of disadvantage and it can't be managed,'' he said.

(... and the start of the era, 100 years ago: the plan for Daceyville)

The era of big new public housing estates really ended in the 1980s, with the completion of the last of the large 'Radburn' estates, such as Rosemeadow and Ambervale in western Sydney. (If you want to put a single date on it, the era ended 1 January 1985, when the old NSW Housing Commission was abolished and replaced by the Department of Housing. According to Frank Walker, the Housing Minister at the time, one of the new Department's first achievements was to stop building large estates.)

And ever since, Housing Ministers from both sides of politics have proclaimed that the estates are 'a failure', a 'failed social experiment', etc etc. Meanwhile, closer to the ground, the DoH (lately restyled Housing NSW) has set about improving, regenerating, renewing and 'de-Radburnising' the estates, and in the course of which has conducted hundreds of community consultation sessions in which the estate form and, in particular, 'Radburn' is condemned, almost ritualistically: the dread beast sliced to pieces in powerpoint slides, and community members inculcated in how to scrutinise the estate as a text of 'broken windows', 'indefensible spaces' and crimes waiting to happen.

It's true that the estates have more than their share of problems, and that there may be benefits to particular areas, and to the social housing system generally, from a program of redevelopments; but it is also true that many people make their homes on the estates, and raise their families there... and indeed make a success of it.

So it's important to be respectful of the estates as peoples' homes, both in the planning and conduct of redevelopments, and in talking about them generally.

Perhaps its time to declare the end of the era of declaring the end of the era of large public housing estates.

Find us on Facebook...

2012-01-12T11:02:00.004+11:00

Dear beloved Brown Couch reader,

Now you can truly indulge your enthusiasm for all things tenancy by liking us on Facebook. Hurrah!

All the best,
The Brown Couch

Dates for your diary

2012-01-09T12:18:00.005+11:00

... and we're back. Happy New Year, Brown Couch readers.

Grab your diaries and keep a place for these upcoming events:

First, the TU and Shelter NSW are holding a seminar, 'What's the Rent?', to discuss the possible futures of social housing rent policies and Commonwealth Rent Assistance. As we've noted before, there are a number of fronts of pressure bearing on the current state of rental assistance policy, and it's time for tenants and their advocates to start thinking about what sort of policy they'd like to see in the future.

'What's the Rent?' is a half-day seminar on Wednesday 15 February, 9 am- 1 pm, at the Sydney Mechanics' School of Arts, Pitt St Sydney. Cost is $45 (waged) and $20 (unwaged); registration closes 1 February.

Next up is Shelter's very popular 'Housing Economics for Non-Economists' lecture series, covering everything from matters of planning, tax, affordability and supply to the political economy of housing. The series comprises four lectures on consecutive Monday afternoons , starting 5 March (4 pm -6 pm). Cost is $150 for the series, with some 'scholarships' available; registration closes 24 February.

Contact Shelter NSW through those links for more information and to register. See you there!

A sesquicentenary of recaption

2011-12-15T10:43:00.000+11:00

The year is 1861. The place: stately Burghley House, ancestral seat of the Marquess of Exeter. The grand house and magnificent grounds are usually a balm to Brownlow Cecil, the 2nd Marquess, but today his lordship is in high dudgeon.

A poacher has been trespassing on his grounds again, filching his lordship's rabbits.

(Dead Hare and Partridges, by Jan Weenix)

Word reaches Mr Higgs, the Marquess's faithful servant, that the poacher is selling the rabbits in a local pub. With another of the Marquess's men, Mr Higgs is dispatched to the pub; the scoundrelly poacher has already departed, but one of his customers, a Mr Blades, is still there – with the dead rabbits. A fight ensues; Mr Higgs emerges with the prize – the dead rabbits – but he and his fellow servant are subsequently sued for assault by Mr Blades.

'Not to worry, Mr Higgs', says the court, 'you were merely exercising your master's ancient common law remedy of recaption. There's no liability for assault. Judgment for the defendants.'

We couldn't let the year pass by without noting that it is the sesquicentenary of Blades v Higgs [1861] ER 693; (1861) 10 CB 713, that seminal case on the law of recaption: that is, the ancient common law self-help remedy of taking from someone, including through the use of reasonable force, something that lawfully belongs to you.

You might ask: what (on earth) does this have to do with tenancy? Does it mean that tenants who have been evicted can forcibly recapture their goods from their ex-landlords?

Well, the short answer is 'no'. Even if Blades v Higgs was admirably straightforward, the whole of the caselaw on recaption is old, complicated and inconsistent. Furthermore, in the most recent development in the law, the case of Toyota Finance Australia Ltd v Dennis [2002] NSWCA 369 (which involved – sign of the times – a car finance company and a pie van, rather than a marquess and his dead rabbits), the NSW Court of Appeal declined to follow Blades v Higgs, and restricted forcible recaption to where the wrongful possession was wrongful from its inception (and a landlord who finds themselves in possession of a former tenant's uncollected goods has not taken them wrongfully).

There is, however, a deeper connection between Blades v Higgs and tenancy law in present-day New South Wales.

For you see, Brownlow Cecil, the 2nd Marquess, had a son, William Alleyne Cecil, the 3rd Marquess -

(Note the dead rabbit worn under the chin)

- and the 3rd Marquess had a daughter, Lady Catherine, who married one Henry de Vere Vane, the 9th Baron Barnard -

- and great-great-great-great-great-grandson of the statesman of the English Commonwealth, Sir Henry Vane the Younger.

As such, Baron Barnard was also the third-cousin thrice-removed of Sir Henry Vane-Tempest, the 2nd Baronet Vane-Tempest of Wynyard, from whom descended...

...the Vane-Tempests of Condoblin, New South Wales, the respondent landlords in Rosberg v Vane-Tempest, an important case on the law relating to goods left behind after termination of a tenancy. In that case, the landlords unlawfully disposed of goods belonging to the applicant tenant, who did not seek to forcibly recapture the goods, but instead applied to the Tribunal for compensation. Despite the advocacy of legendary Koori advocate Cecil See, the Tribunal held that under the Residential Tenancies Act 1987, as the law then was, the Tribunal lacked the power to make orders for compensation for goods left behind and unlawfully disposed of.

For the TU and the TAASs, this became an important point of law reform – one that was achieved with the passage of the Residential Tenancies Act 2010, which expressly provides that the Tribunal may make an order 'requiring the landlord to pay compensation for goods disposed of by the landlord or landlord’s agent otherwise than in accordance with this Division' (s 134(1)(a)).

Or so it seemed. Now, developments in holiday law mean that awards of compensation for non-econonic loss – and many cases about goods left behind are about their sentimental, non-economic value – are subject to the thresholds and limitations of the Civil Liability Act 2002, which would have the practical effect of ruling out compensation in these cases altogether.

So the work of law reform continues. We'll be at it again next year, which also promises anniversaries even more auspicious than that of Blades v Higgs. Early in the new year it'll be the first anniversary of the 2010 Act, and we'll be having a close look at how it is going. And 2012 is the centenary of the Housing Act 1912, and hence the public housing system in New South Wales. We'll celebrate and otherwise observe it here on the Brown Couch.

Until then, best wishes for the season.

Welcome, Minister for Housing and Homelessness

2011-12-13T09:45:00.009+11:00

Forget the horse-race journalism about which individuals are the 'winners and losers' in the Federal Government's ministerial reshuffle: the important thing is that housing is a winner, with the creation of a new, Cabinet-level portfolio of Housing and Homelessness.

Congratulations to the Minister for Housing and Homelessness, the Hon Robert McClelland.

A Housing Minister in Cabinet is something that housing advocates and their industry counterparts have asked for for years, so it's a very welcome development. (Since the last federal election, we've not had a 'Minister for Housing'; instead, we've had a Minister for Social Housing and Homelessness, who did double time on several other portfolio areas, while housing affordability was one of a hundred other responsibilities given to the hard-working Minister for Water.)

In creating the new portfolio, the Prime Minister stated that she did so 'conscious of the challenge of housing affordability' and sought 'to ensure a stronger focus on this issue in the future.' This statement of renewed priorities is very welcome too.

We might also note that the new Minister, having served previously as Attorney-General, has a legal mind – so we hope he advances the Commonwealth's involvement in tenancy law reform, as recommended by National Shelter and the National Association of Tenant Organisations in the 'Better Lease' report (that's a 1.8M pdf).

Welcome, Minister.

Still making sense of sales

2011-12-07T00:43:00.002+11:00

Fair Trading NSW has just released its latest edition of The Letterbox - this time it's all about "privacy and access"...

Now, just like in the last issue, the latest Q & A session includes some comments that we're not so comfortable with.

Q: What rights do tenants have when the owner is selling the property and requires frequent access for inspections? Can tenants be asked to leave during inspections?
A: If a landlord wants to sell a rental property, the tenant must be given 14 days written notice before the first property inspection. If the landlord intended to sell the premises but did not inform a new tenant of this fact before the lease was signed, the tenant can terminate the lease with 14 days notice and doesn’t have to compensate the landlord.

Okay. We agree, but we think they've forgotten to include a closing sentence of considerable importance:

"If the landlord had no intention to sell the premises when the tenancy agreement was signed, and only later decided to sell, then once so informed the tenant can terminate the lease with 14 days notice and doesn't have to compensate the landlord."

By way of explanation, we refer to this previous post on The Brown Couch, where we extracted a relevant passage from the CTTT's decision in Kutzner v Kamp (NSWCTTT unreported). We reproduce this passage here again:

The issue for determination is whether in these circumstances the tenants were entitled to give notice of termination under section 100(1)(c) of the Residential Tenancies Act 2010. I am satisfied that it is not a requirement of this provision that the landlord must have an intention to sell the property at the time of entering into the residential tenancy agreement which was not disclosed. It is only necessary for the landlord to have notified the tenant of such an intention during the fixed term without notice prior to commencement of the tenancy. "Disclosure" in the sense used in s100(1)(c) does not mean disclosing what was known to the landlord but rather whether prior notice had in fact been given of the landlord's subsequent decision.

The question arising upon the Tenant being told of the intention to sell, is whether the Tenant had been told at the commencement of the tenancy that this would happen. It is not an answer to say that the landlord did not know then that this would occur.

It is our view that Kutzner v Kamp is based on a correct interpretation of the law.

As has been noted in comments on our earlier posts, and in conversations with tenants' advocates across New South Wales, Fair Trading NSW has sometimes given information to tenants that is not consistent with the decision in Kutzner v Kamp. To that end, it is disappointing, but not surprising, to see the information published today in The Letterbox.

On the other hand, the CTTT's annual report for 2010/2011 includes the following case study on page 35:

Click on the image to enlarge

You can find more information about what to do when the landlord wants to sell here, here and here.

As with all things, if you are not sure about a situation with your tenancy, contact your local Tenants' Advice and Advocacy Service for a chat. You can find their details here.

Happy 173rd Birthday, Octavia Hill

2011-12-03T06:00:00.014+11:00

The nineteenth century was the great age of the reformer, and one of the greats of the age was today's birthday girl, British housing and charity reformer Octavia Hill (1838-1912). She's not much remembered these days, but in her own time she occupied a pedestal similar to Florence Nightingale's; indeed, at the First Australasian Conference on Charity in Melbourne in 1890, the convenor, when asked about the proper organisation of charity, could answer 'oh, the best authorities are St Paul and Octavia Hill.' And her unacknowledged influence persists in social housing tenancy management today.

(Octavia Hill, looking not a day over 130.)

Hill was a reformer in the classical liberal tradition of working upon the 'character' of poor and working people – 'character', in this intellectual tradition, being a kind of mediating substance between the degrading, demoralising circumstances of the modern city and the free will of the liberal subject. Character consisted in habits, particularly of thrift, restraint and duty; these habits applied could build up more character.

Hill's particular innovation was to work upon the habits of character through the landlord-tenant relationship. She described her philosophy in evidence given to the 1885 Housing Royal Commission:

The people's homes are bad, partly because they are badly built and arranged; they are ten-fold worse because the tenants' habits and lives are what they are. Transplant them tomorrow to healthy and commodious homes, and they would pollute and destroy them. There needs, and will need for some time, a reformatory work which will demand that loving zeal of individuals which cannot be had for money, and cannot be legislated for by Parliament.

Thanks for the 'love', Octavia! Hill pursued her 'reformatory work' by managing tenancies for poor households, on a ‘five per cent philanthropy’ basis, in houses owned by private landlords and her own supporters. Bernard Bosanquet, a contemporary and supporter, described Hill’s techniques as proceeding on ‘the simple but not familiar idea that a landlord has a moral duty to his tenant’:

The system consists in the employment of trained women as agents and rent-collectors, who manage the property as any decent owner ought to manage it, but with a good deal of individual supervision…. [I]t is absolutely indispensable for the houses of people who have lost the habit of living in comfort and cleanliness.

Hill and her workers attended to repairs and improvements, and in return insisted on payment of the rent strictly as it fell due – less for any commercial reason than for the lesson in thrift it taught her tenants. And Hill knew her tenants: in particular, she used the practice of collecting rent directly from tenants at their premises to insinuate a surveillance of character into their households, by inquiring after the circumstances of household members and giving advice and warnings.

This work, Hill insisted, was to be done by women only – ‘ladies must do it, for it is detailed work; ladies must do it for it is household work’. Her system was, in effect, a new application of the technique of the ‘lady visitors’ developed earlier by charitable organisations in almshouses, workhouses and asylums, and Hill herself explicitly articulated the disciplinary power of her techniques with classical liberal reformism:

It is a tremendous despotism, but it is exercised with a view of bringing out the powers of the people, and treating them as responsible for themselves within certain limits… you cannot get the individual action in any other way that I know of.

This 'tremendous despot' did not establish a formal organisation through which to conduct her system of management – it is estimated that she managed about 2 000 tenancies at the time of her death, and her workers managed more in their own schemes – but several Octavia Hill Societies were established in Europe and North America, and in 1916 her workers established the Association of Women House Property Managers. At the time, Hill’s methods of individual visiting, questioning and advice were accepted as the state of the art in reformist tenancy management, as well as being taken up more widely in the emerging field of social work.

In other respects, however, Hill's vision for housing reform was overtaken by events. She refused to countenance the public provision of housing or housing subsidies – corrosive to the character of the poor, you know – so she did not have a direct hand in the development, at the close of the nineteenth century, of the first public housing schemes. On the contrary, these schemes where much more influenced by the vision of Ebenezer Howard and the Garden City reformers, and questions of physical form, rather than tenancy management. (Hill backed the wrong pony on female suffrage too – she was opposed to it.)

But Hill's method was still a ready resource for the growing housing authorities, so over the twentieth century the very personal aspect of Hill’s method became something of a minor theme in social housing practice. In Britain and around the world, housing officers would continue to perform intensive investigations into the circumstances of applicants and tenants, and counsel them in the correct uses of their dwellings and surrounding spaces. At New South Wales's own Erskineville estate, built in the 1930s by the NSW Housing Improvement Board, a genuine English woman housing officer was employed, in the words of Pix magazine, for ‘the delicate task of choosing the families most suitable…. Miss Margaret Ratcliffe, housing manager, investigated all their personal problems, individual requirements and visited their homes to see for herself under what conditions they were living’. Decades later, the NSW Housing Commission's field manual would instruct housing officers to 'observe sleeping arrangements when visiting the premises in connection with arrears reports, etc, and take appropriate action when irregularities are found.'

And this scrutinising, moralising, 'despotisic' theme in social housing tenancy management continues today. Ironically, it is in the operation of Housing NSW's income-related rent rebate system – which Hill would have deplored – that some of the strongest expression of this theme can be found. Under the rental rebate system, tenants are required to seek their landlord's 'approval' for any additional occupants, and keep the landlord apprised as to the amount and source of each of their household members' income. And when it comes to actually paying, rent in public housing has, as in Hill’s system, a moral significance. If anything, this moral significance is heightened by the fact that they are not economic rents. In a sense, the rent rebate system objectively and precisely accounts for each tenant’s need and inability, adjusts their legal liability accordingly, and what is left is the tenant’s responsibility. Where tenants fail in their responsibility in this regard, their own culpability is emphasised. What starts out as a system for administering to people's needs ends up as a regime for policing their domestic diligence and honesty.

Many happy returns, Octavia Hill.

Marginal renters in Parliament today

2011-11-25T10:15:00.003+11:00

It's a big day for marginal renters in NSW Parliament House today.

First there's the publication of the report of the Parliament's Inquiry into International Students Accommodation, which recommends, amongst others things, law reform for occupancy agreements with dispute resolution by the CTTT, and a scheme of registration and reformed standards for boarding houses, with regular inspections.

Then, showing how law reform for occupancy agreements can be done, Clover Moore (Independent MP for Sydney) introduces her Residential Tenancies Amendment (Occupancy Agreements) Bill 2011, which would provide for a set of fair and flexible 'occupancy principles' for all residential rental arrangements not otherwise covered by residential tenancies legislation, plus standard terms by Regulation, and dispute resolution by the CTTT.

These two pieces of work come at the end of a year that also saw the publication of the results of consultations for the Government's Interdepartmental Committee on boarding house reform, in which occupancy agreements law reform emerged as a strong theme; the Ombudsman's damning report on licensed residential centres for people with disability; and the TU's own 'Reforming Marginal Renting' paper.

On coming to power the Government identified marginal renting as a 'key' area for reform. The reports are in; it's time to act.

Think child safety

2011-11-21T08:01:00.010+11:00

We've had a few warm days, and there's more to come as summer rolls around. For the Children's Hospital at Westmead, it's also peak season for kids being injured from falls from buildings, as people open up their windows and balconies.

With that in mind, the NSW State Government has recently launched a public education campaign to make people aware of the dangers of windows and balconies and what you can do to make them safer.

The first thing is just that: be aware. Go and have a look at your windows and balcony now. When you enter a room with a child, make it a habit to do a quick scan of the windows. When you're visiting friends and relatives over the holidays, make a check of the windows and balconies the first thing you do when you arrive.

In particular, the things to look out for are:

Windows that can be opened more than 10 cm. You'll want to put a lock or some other barrier on these. For ordinary aluminium sliding windows, this is usually pretty straightforward: one or two of these clamp-style locks should do the trick.

For other types of windows, you may have to consider something more permanent, like a lockable bolt or a lockable winding chain, or some form of barrier, like bars (not more than 10 cm apart). An ordinary flyscreen is not a safety barrier - they keep flies out, not kids in.

Balconies that have a balustrade less than 1 m high, or that has horizontal elements. The danger of a low balustrade is obvious (it's easy for adult to overbalance over these, too). What is surprising is just how many balustrades - including new ones, as pictured below - have horizontal elements, which essentially serve as a handy ladder for children.

You'll want at least some kind of barrier - glass, perspex or even a heavy mesh - covering the inside of this sort of balustrade. And, in any case, a proper lock on the door to the balcony.

Furniture and fixtures near windows and on balconies. Chairs, beds, tables, toilets, baths, toy boxes, planter boxes... you can find any number of things, both moveable and fixed, that kids can use to boost themselves up and over a window sill or balustrade. And keep a look out for things that aren't near a window - but which a child could drag over to one.

Whether you own or rent, there's a lot you can do yourself to make kids safer around windows and balconies. Watch them. Arrange the furniture away from the windows and balconies. Use those clamp locks, if that suits your windows. If your windows already have locks that allow them to be locked open, lock them open to 10 cm, no more, if kids are about.

If you're a tenant and more needs to be done to make your windows and balconies safer, consider asking your landlord to install some new locks, or a barrier, or a better balustrade. Unfortunately, there is nothing in the Residential Tenancies Act 2010 that you can point to that specifically requires window limiting devices that can be set to no more than 10 cm.... but the premises do have to be in a reasonable state of repair, and fitted with locks and other devices to make the premises reasonably secure. You can point to these to get defects fixed, and you might suggest that if they're doing work anyway, they might as well do it so that you can lock the windows open to 10 cm, etc.

Alternatively, you can ask if you can get the work done at your own expense. Because fitting locks or barriers will invariably be a minor alteration, your landlord cannot refuse consent unreasonably. Depending on the work, this can be expensive, but you might also think it is a small price to pay to prevent an awful injury - or worse.

(But - and this is our own education campaign directed at politicians and policymakers - how easy it is for tenants to think, 'getting windows locks fitted is expensive... and we don't know how long the landlord will let us stay here... we could spend several hundred dollars getting work done and then have to move out in three months... I'll just try to keep an eye on the kids all the time....' Far better to amend the Act to specifically require that landlords install window limiting devices, and make a safer rental housing sector for everyone.)

Fixing the system - one question at a time...*

2011-11-15T11:37:00.004+11:00

There can sometimes be a difference between what a policy is intended to achieve, and what actually happens on the ground. A good example can be found in the repair and maintenance of rental properties. For over twenty years, it has been government policy in NSW to require landlords to provide their properties for rent in a state fit for habitation, and to keep them maintained in a reasonable state of repair – this is currently reflected in the Residential Tenancies Act 2010. Despite this, one of the most common complaints of NSW tenants is that it can be difficult to get repairs done (the statewide network of Tenants’ Advice and Advocacy Services takes between 6,000 and 7,000 calls about repairs each year).

That is not to say that landlords always avoid their repair obligations. But even with the best of intentions, the policy does not uniformly achieve its objective. (Thankfully another policy – that of dispute resolution through the Consumer, Trader and Tenancy Tribunal – means that the objective is not thwarted in its entirety… Well, at least not in every case.)

A key strength of the Tenants’ Advice and Advocacy Services is our ability to identify and monitor practice that does not properly align with an established policy. We do this by talking to tenants – or, more specifically, by answering questions about tenants’ rights and providing advice on how best to resolve tenancy disputes. This provides us with a formidable insight into how well renting laws, and the policies on which they are based, are working.

As a statewide network, we can observe the proliferation of trends in tenancy management practices throughout NSW, because we get a clear picture of the types of situations tenants are faced with on a daily basis. We’re well placed to see how trends affect tenants, and, because we are uniquely focused on residential tenancy law and practice in NSW, we’re also well qualified to comment. We are able to speak with our collective observations in mind.

On the strength of this, the network’s primary resourcing body – the Tenants’ Union of NSW – is recognised by the NSW Government and its agencies as a key stakeholder in matters concerning residential tenancies in NSW. The Tenants’ Union is frequently invited to share its perspectives through regular meetings with government departments such as Fair Trading NSW and Housing NSW, as well as other relevant bodies.

When all of this comes together, we can affect systemic change. Here’s an example of how it can work…

Some time ago, Housing NSW changed the way it processes requests for repairs. It moved from a system where organising repairs was included in the role of a client service officer, to one where it is solely the responsibility of an asset management team. The change has had an unforeseen result, because when a tenant takes Housing NSW to the Consumer, Trader and Tenancy Tribunal, it is a client service officer who turns up to respond, not an asset manager – even if the application concerns repairs and maintenance. A client service officer might enter into an agreement with the tenant and obtain consent orders about how and when repairs will be done, but they actually have no control over what the asset management team does. Asset management teams have, in many cases, taken their “scheduled work” plans to over-ride an order from the Tribunal, and declined to conduct repairs as per such orders. This is clearly wrong, but it has been a regular occurrence. There have been numerous cases across the state where Housing NSW has failed to comply with a repair order from the Tribunal. Some of these have resulted in tenants obtaining compensation once the matter has gone back to the Tribunal for an alternative remedy.

Tenants’ Advocates first spotted the issue through conversations with tenants in the Greater Sydney area, but it soon became apparent that this is a statewide problem. The Tenants’ Union raised the matter with Housing NSW as soon as we had the evidence to demonstrate both the nature and the extent of the problem – evidence that we obtained from Tenants’ Advice and Advocacy Services who gave it with the permission of their clients. Housing NSW agreed that the issue was of concern, and undertook to look into it.

Now, it has taken some time, but we understand that Housing NSW has recently restructured its internal processes to ensure client service officers and asset managers are in more effective communication when it comes to responsive repairs.

The proof, of course, will be in the pudding – and we’ll be relying again on our conversations with tenants to see whether or not this proposed solution works.

Thus, by contacting your local Tenants’ Advice and Advocacy Service with a question about your tenancy, you’re also helping to fix the system.

* This article was recently published in the 'Tenant News', the TU's quarterly newsletter. For more articles and back-issues, see here!

Patronising the patrons

2011-11-03T16:53:00.009+11:00

Ever wondered what it feels like to be regarded as purely second rate?

If you're among the one in four people in New South Wales living in rented accommodation, chances are you already know.

Not only may you have to endure the absurdity of a no-cause eviction without a right of reply - rendering your home unnecessarily insecure, and undermining the 'balance' between landlords and tenants that our current renting laws were supposed to achieve (we've talked about this many times before - see here, here and here) - but you will also, from time to time, come across standards of behaviour amongst the propertied 'elite' that will leave you in little doubt as to your apparent position in the Australian social hierarchy.

Examples of this phenomenon can be found all over the Brown Couch: wedged down the back of the seat, under the cushions, and scattered throughout the mass of well-thumbed tomes over there on the old pine coffee table... It's almost as though someone stuck a "kick me" sign to your back, just as you stooped forward to sign your latest residential tenancy agreement.

Here's another example of the sort of thing we're talking about, courtesy of a tenant on the NSW mid-north coast:

... and as it happens, this particular tenant wasn't even in arrears. They'd just missed a payment and were thus not the expected 14 days in advance. (Technically, any termination notice issued on that basis would be invalid - but of course that rarely stops it from happening.)

Many landlords, and the real estate agents who work for them, tend to lord it over their tenants. Quite simply, this is because they can. Indeed, our national obsession with wealth creation through property acquisition almost requires it - and our renting laws well and truly enable it. You see - for the time being at least - there's not the kind of money in rents that you can get from capital gains, and this means that when it comes to dabbling in real estate, tenants often just seem to be in the way... so naturally the law allows landlords to move them on without needing a reason.

But it runs deeper than that. Without the security of knowing that you can't lose your home without some kind of crisis attached to your own ability to pay for it, as a tenant you become accustomed to simply sucking up really shabby treatment. Property managers (be they DIY landlord or professional real estate agent) become just as accustomed to dishing it out. Because you don't really have a choice - they could just kick you out, and tell all their mates not to rent a place to you either.

They've got you over a barrel, and some of them just can't help but rub it in... This, we suspect, is why whenever asked whether we're renting or buying, tenants often sigh, "oh, we're just renting at the moment".

Okay, so the law has to change to ensure renting in New South Wales is not unnecessarily insecure. But more than that, we need to adjust the lens through which we see the landlord/tenant relationship. The tenant is, after all, the consumer of the landlord's (probably tax-payer subsidised and highly leveraged) 'housing service'. Without a tenant, most landlords would simply not be able to meet the monthly payment on the loan that's allowed them to buy the place to begin with. Yes, they might be in it for the capital gains, but they sure can't do it without cash-flow in the meantime.

Of course, potential new tenants are a dime a dozen at the moment, due to the unbearably high cost of buying property (we've talked about that plenty on the Brown Couch too) - so there's not a lot of 'consumer power' to be exercised on this side of the property divide. But that doesn't mean tenants should just put up with being treated like a lower class of idiot...

This is, after all, somebody's home we're talking about. Have another look at that letter above. Then ask yourself - what would you expect the bank to say to you if you were a day or two behind on the mortgage?

Getting passed on

2011-11-01T16:56:00.006+11:00

Any Brown Couch readers ever had an interest rate cut 'passed on' to you in the form of lower rent?

No? Didn't think so.

Maybe we need to get the Federal Treasurer to include that message in his pre-RBA Board meeting media messages. For the past week Wayne Swan has been in the media saying that there would be 'absolutely no excuse for the banks not to pass on any rate cut that was delivered by the Reserve Bank'.

OK, so he wants to put what pressure he can on the banks – there's no harm in that, is there? Actually, we think there is, when it distracts the government from our real problem with debt, and particularly housing debt. The really important problem is not interest rates, but the huge size of the debt on which interest is levied.

(Source: RBA Chart Pack – Interest Rates, October 2011)

(Source: RBA Chart Pack – Household Sector, October 2011)

But it is the banks' interest rates that have caught the government's attention, so that its reform agenda is directed to increasing competition amongst lenders – including by encouraging new sources of credit (and there's been about $14 billion worth of tax-payer funded encouragement so far, through purchases by the Australian Office of Financial Management of residential mortgage backed securities).

The risk is that lenders will compete not only through lower interest rates, but also by drumming up more business through reduced lending standards – hence more debt, and more risky debt.

What the banks really need is not the supposed discipline of the market, but the discipline of regulation, that actually gets at the amount of debt that households, and the economy, is carrying. Countercyclical captial adequancy requirements, perhaps? New controls on credit, such as maximum loan-to-valuation ratios? For more, have a look at the Joseph Rowntree Foundation's recent report on 'Tackling Housing Market Volatility' in the UK, around pages 35-40 or so.

Tenancy culture studies: Housos

2011-10-26T14:24:00.006+11:00

Following the premiere on Monday of SBS's long-awaited/dreaded new series, Housos, the Institute of Tenancy Culture Studies convenes a colloquium of the Brown Couch's regular correspondents: Chris, N.C. and Leo.

Chris: Housos depicts life in public housing in suburban Sunny Vale, with Shazza and Dazza and their assorted friends and enemies – notably Franky, played by the show's mastermind, Paul Fenech. We're told by series narrator, pokie-lounge lizard Wazza, played by Ian 'Turps' Turpie, that Franky is the sort of fellow who has very good luck, and very bad luck, while Shazza and Dazza seem more consistently unfortunate. So, in this week's premiere, Dazza attempts to acquire a disability for the purposes of qualifying for the pension, while Franky literally falls into one, after resisting arrest and fleeing from the police, then stealing a fire engine, then sparking a rampage by the local Lebanese gang. (Franky loses it all when he administers an incriminating beat-down on his ex-fiancee's de facto in the Centrelink car park.)

Ostensibly a madcap satire, Housos transcends the conventions of the genre, effecting a shift in the satirical subject from the characters to the viewer. It ridicules not just its characters, but our own recognition of, and implication in, the stereotyping on which the humour depends. In this sense Housos is, so to speak, a post-satire -

No, sorry, I can't go on in this vein. The show is rubbish. I wish it wasn't. I wanted to have something other than the predictably negative reaction to it, but Housos is so predictable, and so bad, that it deserves the predictable response.

Housos is a tedious rehearsal of old insults and stupid antics. It's just wretchedly unfunny. What did you think, Leo?

Leo: Housos isn't for the latte-sipping yuppies. Paul Fenech says it's by, for and with the "real people", the ones who are never shown on TV because the rest of us don't like them. Fenech knows his audience, and he plays to them. When his first series, Fat Pizza, started, it was beloved in the first place by the wogs, the young men in cars who've maybe watched Scarface a few too many times, who've listened to Tupac a few too many times.

He's continued this tradition here, along with enough hangovers of the older shows to retain the audience built in Pizza (his one-man revival effort of the word stooge cracking on after more than a decade). Is it a high-brow, intelligent comedy that Oliver Wilde fans will quote to each other as wittily constructed repartee? No, no it's not. This tickles the funny bone with just a little bit of petrol, a little bit of flesh, and a lot of crude humour. That may be exactly what his audience is after.

The gallow's humour of those faced with a horrible reality is often incomprehensible by observers. The Brown Couch has discussed the work disincentives that "Housos" face, the inadequacy of the benefits and the hoops recipients have to jump through. Is it surprising this becomes fodder for comedy? It's a ridiculous situation after all. There seems to be no political will to effect change, and there's no shortage of people willing to decry the residents of Housing as various forms of lazy, undeserving and so on. Maybe that's the way to see this show – it appeals to and deals in the life that the rest of Sydney and Australia don't want to deal with. It's the laughter of the hopeless, perhaps even the voice of the voiceless.

Chris: Oh come on, Leo! Housos employs the same sort of humour as dwarf-throwing, and is probably enjoyed by the same people.

N.C.: Well I'm not too sure about any dwarf-throwing, Chris, but look I agree. It's shaping as a series of predictably unfunny cheap shots and tired insults that have ultimately diminished my opinion of Fenech. I have struggled to find something to redeem him, given the calibre of his previous work Pizza, but I keep coming up short. There is nothing funny or clever about Housos....

It's a misguided piss-take on how 'poor people' live – but it could so easily have been something good. It could have – no, it should have taken a shot at the very bureaucracies that routinely fail to alleviate the kind disadvantage it pokes fun at. During the first episode we saw enough glimpses of incompetent cops, ambivalent Centrelink workers and a dysfunctional public health system to get a sense of just how badly Housos misses the mark. Instead of shining a light on the maze of absurdities and inconsistencies that are inherent within our welfare system – the kind of thing that would make you laugh if it didn't make you cry – we get half an hour of name-calling, money-grubbing, substance abuse, child neglect.... Need I go on?

Chris: You know I wanted it to be better, but I'll admit, going into the show I wondered: could this sort of show – given its subject (public housing tenants), given its intended approach (sharp, skewering humour) – ever be funny? And as I watched Housos, desperately wishing I was watching something else, I thought of other similar attempts at humour. Good Times (same subject) was pretty funny, though the approach is a lot more friendly. Andy Capp was occasionally funny (when it wasn't making light of domestic violence), including when it skewered Andy's own conduct. Then I thought of other recent shows, not about public housing tenants, but about other 'little guy' subjects – like Kath & Kim, The Office and, yes, Fat Pizza – which were cruel to their subjects, and funny. They worked because they exposed pretension, vanity and other foibles that all of us recognise, including in ourselves.

As you say, Leo, public housing has ways of making people poor, and to insist that there must be no joking about public housing is to inflict an appalling additional degree of poverty upon public housing tenants. And I'm sure, like you N.C., that the 'situation' of public housing can elicit responses like pretension, vanity, greed, cunning and other human qualities that are the stuff of comedy. So to answer my own question, I think Housos could have been funny – which makes its failure all the more disappointing. If I had to say something nice about it, it would be that the stunts were OK.

N.C.: If you want to see how this subject matter can be dealt with far more sensibly and sympathetically – heck, I'll even go so far as to say humourously – go and track down a copy of the British series Bread. Now there was a household of scheming Housos, who could do whatever it took to stay above the bread-line... and still have you wanting them in your neighbourhood.

Leo: Don't forget the immensely popular UK series Shameless, a comedy-drama that also focuses on a public housing family. Occassionally violent and crude, and yet it clearly connected with a wider audience than just the housing estate dwellers it is based on.

On the subject of the audience: Fenech has created a dedicated following around this brand of humour and I expect a large number of those fans to follow him here. His inclusion of characters very similar to previous shows will certainly help with that. At the same time, he also proclaims that the show is for the people living in public housing. Angry Anderson claims that one third of the cast grew up in housing commission and are simply portraying themselves.

N.C.: I keep thinking to myself, "look it's only been the one episode. Maybe we should reserve our judgement for another couple of weeks. After all, these are the guys who brought us Pizza. When it comes to stinging social satire and holding up a mirror to PC backlash, they've got runs on the board. It's possible that they've got something up their sleeves, and will surprise us next week..." But I'm not sure I really believe that. Because with Pizza you had a bunch of self confessed "ethnics" making jokes about ethnic stereotypes. With Housos they've moved into an entirely new arena, and it's one that they appear far less comfortable with.

Chris: I see next week's show is about Dazza getting Shazza to hospital to give birth – a jesting jab at the feckless fecundity of the poor. Count me out.

N.C.: Certainly they're missing the key ingredient of self-reflection that made Pizza so marketably funny.

Leo: Pizza, at its core, was about sticking it to the stooges – the customers, the boss, the cops, anyone in authority who didn't understand what really mattered to the heroes. The core here is the same, but the range of authority figures has grown as the characters are further down the ladder. That finger-in-the-air attitude has appealed to Fenech's fans for over a decade, I think it will continue here.

N.C.: I'll give it one star.

Chris: Me too. One star. For the stunts.

Leo: The jokes, the stunts and a fair number of the characters could all be lifted directly from Pizza – and that's the way the fans like it. Three stars from me.

Spruiker spooked

2011-10-25T09:58:00.008+11:00

Washington Irving's short story, The Legend of Sleepy Hollow, in which the Headless Horseman dashes about on autumnal New York nights, is a Halloween favourite.

It's creepily fitting, then, that a week out from the holiday another Ryder is losing his head.

Terry Ryder, property spruiker, hurls the following pumpkin at the campaign group, Australians for Affordable Housing, in the business pages of The Australian:

SOME activists see property investors as the great enemies of first-home buyers.
Their core belief, unsupported by evidence or logic, is that homes are unaffordable because investors drive up prices.
Australians for Affordable Housing appears to think that nobbling investors will strike a telling blow for first-time buyers: remove negative gearing and increase capital gains tax, and homes will be affordable.

Our own modest attempt at furnishing some evidence and logic about negative gearing's contribution to the high cost of housing can be found here. Ryder, on the other hand, supports his argument by referring to a survey of opinions of first home buyers (conducted by an originator of residential mortage-backed securities) as to whom they're having to outbid.

Evidence and logic? Riiight.

The argument itself is a strange one too. Ryder says that it's not investors (we call them speculators) who are pushing up prices, it's other owner-occupiers. We might agree up to this point: as we've noted previously, the tax preferencing of owner-occupied housing is at the heart of house price inflation.

But then Ryder makes an abrupt about-turn: he says that to 'attack Australians who buy rental properties' is to 'undermine the financial base of 70 per cent Australians' [ie those who own a house].

Sounds like those speculators have been pushing up prices after all. Good thing too, says Ryder: there's a 'strong national interest in having people invest in this way.'

There's heavy pressure on people to plan for a self-funded retirement, given the stress our ageing population is placing on the taxation and welfare systems.

Let's be clear: as an investment strategy, negatively geared property speculation is not 'self-funded'. It is 'funded' by a greater fool coming along to pay more for the property than the speculator paid (being the price paid to the person from whom they bought it, and interest to the bank from which they borrowed the money) – and every other tax payer who foots the bill for public services that the negatively geared speculator is allowed to cast aside.

In fact, about $6 billion worth of the 'stress our ageing population is placing on the taxation and welfare systems' comes precisely from 'having people invest this way'!

Ryder wheels about again. Too bad, he warns:

There are limited options. Buy shares or buy real estate. Superannuation alone won't cut it.

No, actually, just buying real estate won't cut it (particularly if, as Ryder says, the population is ageing – are there going to be enough greater fools to buy all the property?). Here's another option: put your money (or, if you're game, your credit-worthiness and some borrowed money) to something that makes more than it costs. Something productive.

A final pass by Ryder:

The anti-property voices in the community not only wish for a big devaluation of our homes but are lobbying government to make it happen.
It's an extraordinarily irresponsible stance...

No, actually, encouraging people to think that they can fund their retirements by unproductive speculation in real estate on the basis that prices will keep going up has a much greater claim on 'extraordinary irresponsibility'.

For a much more sensible discussion of the issues than provided by Ryder, follow this link to a recent piece by Australians for Affordable Housing spokesperson, Sarah Toohey.

Well done, Australians for Affordable Housing: you've got at least one spruiker spooked.

Maintaining relations and tenants' alterations

2011-10-21T16:45:00.018+11:00

By now we expect you will have received and devoured the latest edition of Fair Trading NSW's monthly e-newsletter on all things residential tenancy, The Letterbox. If you haven't already done so, now is as good a time as any to sign up to have it delivered straight to your inbox.

Each month The Letterbox undertakes to answer questions from tenants and landlords about a particular aspect of NSW's renting laws. We were particularly interested in the current issue, because it covers alterations to premises. We were rather hoping that Fair Trading would mention some of the likely implications for tenants and landlords of the coming rollout of the National Broadband Network... Alas, they did not.

But we did get an interesting little snippet that's caused a bit of a stir over here on The Brown Couch. The Q & A session provides:

What responsibility does the landlord have during the tenancy to maintain alterations made by the tenant?

None. Unless the landlord agrees otherwise, the tenant is responsible for the cost of installing and maintaining any fixtures they add to the premises.

On the face of it, we can't be so sure.

The common law of property says that once a tenant affixes an item to real property it forms part of the 'landlord's inheritance', until such times as it is properly removed by the tenant (ie according to a set of developed rules) [Bain v Brand (1876) 1 App Cas 762]. Put simply, a tenant retains a limited right to remove a fixture that they have added, but while ever it remains affixed it is the property of the landlord.

The Residential Tenancies Act 2010 does not include anything that would unambiguously displace this common law principle, and it offers no clear guidance on the maintenance of tenants' fixtures.

The Act does set out some pretty clear rules about how and when a tenant can install or remove a fixture. Included in these rules are provisions that state:

66(4) A fixture installed by or on behalf of the tenant, or any renovation, alteration or addition to the residential premises by or on behalf of the tenant, is to be at the cost of the tenant, unless the landlord otherwise agrees.
67(3) Despite subsection (1), a tenant is not entitled to remove a fixture without the consent of the landlord if the fixture was installed at the landlord’s expense or the landlord provided the tenant with a benefit equivalent to the cost of the fixture.

These provisions could be interpreted to displace the common law - but for this to be so we'd need to accept a broad definition of the word "cost". If it refers to ongoing costs of upkeep, as well as the one-off cost of installation, then Fair Trading's contention about maintenance responsibilities of tenants' alterations could hold true. But this may be a bit of a stretch, because neither of these provisions contemplate the ongoing maintenance of a fixture - they deal only with installation and removal.

The Act also sets out the landlord's repair obligations - in which the definition of residential premises includes:

everything provided with the premises (whether under the residential tenancy agreement or not) for use by the tenant (s62).

Perhaps this definition displaces the common law, by excluding tenants' fixtures from the definition of 'residential premises'. If this is so, then the landlord's repair obligation would not extend to tenants' fixtures, because the obligation is to maintain the residential premises, as defined to exclude anything the landlord has not provided, in a reasonable state of repair. Accepting this exclusion would require a narrow take on the phrase "provided with the premises" - that is, an alteration made by the tenant, with the landlord's consent, would have to be seen as something that was not "provided with the premises". It is not clear that this interpretation could be universally applied to every conceivable set of potentially relevant circumstances.

There is one thing we can be sure of. The Act says:

63(3) A landlord is not in breach of the obligation to provide and maintain the residential premises in a reasonable state of repair if the state of disrepair is caused by the tenant’s breach of this Part.

Clearly, a tenant who alters premises without first obtaining the approval of the landlord cannot expect the landlord to help out with repairs and maintenance of that alteration...

But what of the tenant who does obtain the landlord's approval? Indeed, how will a landlord respond to a request to alter premises if they believe they may be liable for its upkeep?

The key message from all of this, it seems, is to make sure you reach a complete agreement with your landlord before you make any alterations to your premises. In particular, be clear from the outset whether you intend to one day remove the fixture, or to leave it behind at the end of your tenancy. Because if you are to ultimately make a gift to your landlord, it would be wise to factor in and reach agreement as to who will be responsible for the ongoing upkeep of your alteration during the course of your tenancy.

Which really brings us back to The Letterbox Q & A.

Unless the landlord agrees otherwise, the tenant is responsible for the cost of installing and maintaining any fixtures they add to the premises.

This may simply be a case of Fair Trading taking an optimistic view of the law as it stands. Sure, it's easy to explain, but we bet it's even easier to sell to all those landlords who cried foul when the idea of "no unreasonable refusal for minor alterations" was first raised. If it is as simple as all that, we'll be surprised. Then again, perhaps we're just being picky.

Regardless, it's always a good idea to be clear on what you're agreeing to whenever you set out to alter the status quo.

Tenancy Culture Studies: Let's Lynch the Landlord

2011-10-11T09:26:00.009+11:00

The Institute of Tenancy Culture Studies welcomes guest lecturer, Wazdog (aka 'The Illawarra Wheeler'). Wazdog has plied his trade as a Tenants' Advocate with the Illawarra and South Coast TAAS for more than half a decade. Also a renowned commentator of all things musical in his hometown, Wazdog occasionally branches out and mixes business with pleasure...

Today, Wazdog kicks off the conversation with a look at The Dead Kennedy's iconic anti-hit 'Let's Lynch the Landlord'.

Throughout history, music has been used to express the concerns of the common wo/man. From the subversive work songs of the African American slaves in the nineteenth century to the heavy metal/rap fusion of Rage Against the Machine, musicians have attempted to connect with their audience with lyrical themes they can relate to. No better example of this exists than perhaps the great traditional folk song 'Worried Man Blues' popularised by The Carter Family in the 1930's and later the dust-bowl balladeer Woody Guthrie. A simple chord progression is supported by the simple but effective lyric "It takes a worried man to sing a worried song."

Not surprising then that popular music is littered with landlord and tenant references. The struggle of the working man against the greed of land-owners has been the inspiration behind many a song. But few are as abrasive and confrontational as Dead Kennedy's 'Let's Lynch the Landlord'.

Fronted by the outspoken prankster Jello Biafra, the band courted controversy in the early-80's with their cover-art offending future Presidential candidate Al Gore's wife Tipper, prompting the establishment of the Parents Music Resource Center (PMRC) - the group responsible for all those 'Parental Advisory' stickers slapped on albums deemed unsuitable for minors.

Taken from their 1980 debut album Fresh Fruit for Rotting Vegetables, 'Let's Lynch the Landlord' expresses a sentiment that many tenants in NSW feel, though thankfully few act upon.

Throughout the song Jello details problems with his tenancy. It's the usual smorgasbord of tenancy complaints: lack of running water, inadequate heating, a leaking roof, an oven that smells like a death-camp, disturbance from neighbours (ironic coming from a man who's made a career out of disturbing the peace), vermin, unauthorised access, and - the pièce de résistance - an excessive rent increase.

To remedy the problem, Jello urges his flatmates (along with his audience) to attack the landlord, mob style.

Now, I'm not too familiar with tenancy law in San Francisco circa 1980, but in NSW circa 2011 such a response to a poorly maintained property could see you lose your tenancy and quite likely attract criminal charges.

Though street justice is oft times tempting in a landlord/tenant relationship, the reality is that Jello would do better to seek a remedy through appropriate dispute resolution processes. In NSW this is the Consumer, Trader & Tenancy Tribunal (CTTT) - the arbitrator for tenant/landlord disputes in NSW.

All the matters raised in Jello's ode to his landlord may be dealt with in the CTTT, usually without the spilling of blood.

Taking matters into his own hands however, will only see Jello's problems worsen, as the landlord (if s/he survives the lynching) could apply straight to the Tribunal, seeking an order for termination due to injury to the landlord by the tenant.

And if the landlord was successful then poor old Jello would need to find himself a new pad for him and his punk buddies to hang out in. Of course, if convicted of assaulting the landlord, Jello may even find that his new pad comes courtesy of Her Majesty and that the phrase "unauthorised access" takes on a whole new meaning.

Strata Wars (feat. @MyFlatChat)...

2011-10-06T13:02:00.000+11:00

We recently spotted a tweet from @MyFlatChat that said "Tenants can take Owners Corps to Fair Trading and CTTT over common property. They're 'interested parties' under Act" - along with a link to a brief discussion about repairs to a noisy lift that had taken place over on the Flat Chat forum.*

We entered into a bit of a dialogue over this because we don't think tenants in strata units should be taking an Owners Corporation to the CTTT over repairs - they should be taking the landlord instead!

Perhaps we should explain...

Owning a strata unit means sharing many things with others - like walls, guttering, walkways, stairs... essentially anything that is "common property". When one of these things wants fixing, it's up to all the owners to pitch in and make good.

The mechanism by which this happens is the "Owners Corporation" - once known as the "Body Corporate" - and the rules by which this sometimes disparate group are made to play nice are found in the Strata Schemes Management Act 1996. The Owners Corporation is, quite simply, the owners in committee... and being required to talk to each other on a regular basis is seen as a good way to keep the peace, and have the place running smoothly. And everybody can be happy.
Well, it's a good theory.

We really must stress that there are ways of making an Owners Corporation far more complicated than the rather naive picture we've just painted - and no doubt our mates over at Flat Chat can tell you more about that. But, on our simple analysis, what happens when things don't work out?

The Strata Act sets out a process for the resolution of strata scheme disputes in the Consumer, Trader & Tenancy Tribunal. It involves, in the first instance, mediation. If that doesn't work, the matter can progress to adjudication. If adjudication doesn't satisfy the disputing parties, they can appeal to the Tribunal, where the matter can be determined and orders can be made. Each of these things will cost you over $70.

Now, technically a tenant, who is not an owner, can take an Owners Corporation to the Tribunal over repairs to common property, because they are considered an "interested party" under the Strata Act. But when you look at what's involved in the strata division, why would you when there is a sensible alternative?

Compare the above process to that for tenancy disputes - you apply for a hearing in the tenancy division - for $36 - and you get one... and even if you have to have a crack at a conciliation conference in the meantime, if you can't settle the matter you will usually get your hearing pretty soon after.

"Aha!" I hear you say... "but if it's common property, then that's a strata issue, and you can't take the Owners Corporation into the tenancy division of the Tribunal. That place is strictly for landlords and tenants! Have you lost your mind?"

Well, no, actually. Of course, you'd be correct in saying you can't sort out strata issues in the tenancy division, but you've got to admit, it is an ideal place to take a tenancy dispute.

If you're a tenant in strata, it should be your landlord who takes the Owners Corporation to task over repairs to common property. It is, after all, your landlord who has the relationship with them, not to mention a longer-term interest in the success of the strata scheme. Tenants can ask nicely for repairs (and should do so in writing), but when it comes to turning the screws on a recalcitrant Owners Corporation through a legal process, things are best left to the landlord.

If the landlord doesn't get on your side, then they're in breach of obligations to you under your residential tenancy agreement. On that basis, you can take them into the tenancy division of the Tribunal. Among other things, you can ask for an order that they take the Owners Corporation to the strata division - or at least begin the process by commencing mediation.

... and that's how you get your lifts fixed. For more information on renting in strata, see the TU's factsheet. As with all things, get advice from your local TAAS before taking your matter into the Tribunal.

*Nb - the comments on the Flat Chat forum have been updated following our Twitter conversation with @MyFlatChat.

Tax forum ends

2011-10-06T09:45:00.004+11:00

... but we'll have to wait a little while to see what endures after the delegates go home, the chairs are packed and the data projectors are turned off.

For now, this anecdote from the Herald's Peter Martin serves as a nice ending – the People's Economist, David Koch, propounds an end to negative gearing.

NEGATIVE gearing was already on the nose when ''Kochie'' delivered his verdict.

Property manager Eddie Kutner of Central Equity Ltd had just finished putting the case for the rule that allows investors to write off losses made on rental properties against other income before selling the property and pocketing a capital gain taxed at only half their marginal rate.

It was "a responsible part of providing accommodation, a very defensible proposition".

David Koch, the finance journalist and Sunrise host, was at the summit as a community representative.

"Negative gearing on an unproductive asset? Does it just go on for time immemorial or is it time to actually put some limits on it - to say, OK for the first five years, but if it's not producing an income after that why are you there?

"It's done purely for the attraction of letting the taxman pay half. I'm not saying get rid of it all together, but there's got to be a limit - it just can't go on forever."

Mr Australia had spoken. No one returned to the topic.

Well said Kochie!

Keep an eye on TaxWatch for developments.

Tax forum continues

2011-10-05T09:16:00.003+11:00

Wish you were there? Then try the live video stream!

If, on the other hand, yesterday's links have left you hankering for more good sense on tax reform, try Saul Eslake's recent's lecture, 'Australia's Tax Reform Challenge' (that's a 150K download) for the Australian Parliamentary Library.

(Saul Eslake)

In it you'll find a clear statement of some basic principles of taxation, and a cracking critique of Australia's mad negative gearing provisions.

Tax Forum begins

2011-10-04T11:43:00.004+11:00

The National Tax Forum begins today: let's hope housing is front and centre in the discussion. It certainly has been in the media, with some very good pieces on last night's 7:30 report, and today on 'The Drum', as well as in last week's Herald.

(Groan.)

The Irvine piece on land tax, in particular, moved Brown Couch reader and legendary tenants advocate, Dr Robert Mowbray, to write to us and second our motion that it be made required reading for anyone interested in housing justice.

And as Robert points out, this is not just about affordability – land tax reform would also go a long way to helping achieve greater security for tenants. This is because security is not just of matter of what the law says about the termination of tenancies by landlords (and as N.C. has recently discussed, our laws still say landlords can give termination notices without disclosing any grounds for termination whatever); it is also a matter of the structure of the rental market and the investment strategies of landlords.

The structure of the Australian rental market is distinctive for absence of large institutional investors, and the dominance of individual landlords who own one property only. These are the so-called 'mum and dad investors' – or 'amateur speculators', as they are known around here. And because land tax is levied on the total value of land holdings above a certain threshold, it strongly favours these small-holding players above large-holding institutions.

And what are these small-holding players playing at? They're after capital gains, and this means being able to sell when it suits them, including into the market for owner-occupied housing. And this means being able to readily oust a tenant and regain vacant possession of the property.

Across Australia, residential tenancies legislation reflects the basic structure and strategy of the amateur speculator-dominated market. And it, in turn, reflects our tax system.

International Tenants Day

2011-10-03T08:23:00.000+11:00

It's 3 October, which means...

Happy International Tenants Day!

(Beautiful 2011 poster by our Swedish comrades)

When's International Landlords Day, you might ask. Why, it's every other bloody day of the year.

Enjoy the long weekend!

No cause for no-cause evictions

2011-09-30T17:44:00.003+10:00

A no-cause eviction happens when a landlord gives their tenant a 90 day notice of termination. There's not a lot the tenant can do about a no-cause eviction, unless it can be proven that the landlord has given the notice in response to something the tenant has done to assert their rights. This is no good, and it's something that Tenants Advice & Advocacy Services have been talking about for some time...

Now, it must be said that there is nothing in the law that compels a landlord to use no-cause evictions. Housing NSW, for instance, makes it a habit to not use them. That's because HNSW knows that, as a Social Housing provider, their tenants are entitled to know the reasons behind having their tenancy agreements ripped up. (It's also because they got dragged through the Supreme Court over the issue in 1991, and lost - in the famous case of Nicholson v NSW Land & Housing Corporation (Unreported, Supreme Court of NSW, 24 December 1991)). There are, of course, several ways to end a tenancy with cause, and generally these days HNSW tries these on instead...

But several Community Housing Providers (CHPs) do resort to no-cause evictions. According to our colleagues in the Tenants Advice & Advocacy Services, there are three observable trends in their use:

1. Managing transitional or temporary accommodation - that is, signing an otherwise homeless person up to a 'week-long' fixed-term tenancy in a refuge, and handing over a 90 day termination notice as a sort of appendix to the lease. (This rather interesting practice highlights the need for reform of the marginal rental sector - you can read more about that here).

2. Managing relocations when head-leases evapourate - that is, using a 90 day notice of termination to end the lease on a property that is owned by a private landlord, rented out by a CHP, then sub-let to a social housing tenant, when the private landlord wants the property back. This is, in theory, followed by the CHP finding another place for their sub-tenant to live.

3. Avoiding scrutiny when trying to evict a tenant for a tricky or hard to prove breach - that is, choosing to use no-cause evictions so that tenants can't argue against the reasons behind having their tenancy agreements ripped up, or properly respond to any allegations made against them.

Reliance on no-cause evictions is irksome in any circumstance, but it is particularly so when it comes to Social Housing landlords. They should, by the very nature of their business (not to mention their Regulatory Code), take a more open and transparent approach to ending tenancies.

It is also much more irksome now under the Residential Tenancies Act 2010 than it was under the Residential Tenancies Act 1987, because under that Act tenants did still have some hope of getting through a no-cause eviction without actually being evicted - back then the Tribunal was required to consider the circumstances of the case when deciding on matters of eviction, and had the discretion to call the whole thing off if the CHPs reasons for seeking termination were unsound. (For more information on this change to the law, see the discussion on Swain and the 'circumstances of the case' in this previous post).

But what would a more open and transparent approach to ending tenancies actually look like?

Let's have a look at each of our three scenarios above:

1. Managing transitional or temporary accommodation - for short term and temporary accommodation that is intended to last only as long as it takes to find a person a secure tenancy, occupancy agreements should be used instead of residential tenancy agreements. While there is currently no law requiring (or regulating) the use of occupancy agreements, we hope that this will soon change. In the meantime, CHPs and other socially responsible organisations providing temporary or crisis accommodation are well placed to pioneer the use of occupancy agreements. A sound occupancy agreement would set out the circumstances in which an occupancy can be terminated, and how much notice will be required.

2. Managing relocations when head-leases evapourate - there's simply no need to issue a notice of termination, by either the private landlord to the CHP, or the CHP to the sub-tenant. That's because a tenancy can quite properly be terminated by repudiation and acceptance, or by consent (under section 81(4) of the Act). In either case, the tenancy lawfully ends when vacant possession is returned to the landlord - which happens as a matter of course whenever a tenant moves out of one place and into another. A notice of termination is, in this scenario, nothing but unnecessary double-handling.

3. Avoiding scrutiny when trying to evict a tenant for a tricky or hard to prove breach - for every tricky situation that a Social Housing landlord might encounter, there are probably two notices of termination that could be applied - other than the 90 day notice. These have the added benefit of providing an opportunity for tenants to respond to any allegations made against them. The Tribunal - unless it is sorely mistaken - will not terminate a tenancy with cause unless it is satisfied, on the balance of probabilities, that the alleged cause has been established. In other words, the landlord must prove their case against the tenant before an eviction can occur.

Notwithstanding all of that, there are some compelling reason to regard no-cause evictions by CHPs as unsupported by law. We've run out of time to go into more detail on that side of things this time around... and we'll keep our fingers crossed that the issue will be dead and buried well before Social Housing Month comes around again. Because when it comes to Social Housing, there's really no cause for no-cause evictions.

Land tax and housing

2011-09-30T10:34:00.005+10:00

This is a short diversion from Social Housing Month - but a necessary one. The Herald's Jessica Irvine has written a terrific piece on tax and housing, and especially the great advantages offered by reforming land tax. With the Commonwealth Government's Tax Forum on next week, it's essential reading.

(Well said, Ms Irvine!)

If you want to check out the research to which Irvine refers, you'll find Gavin Wood's presentation here.

Community Housing - what's not to like?

2011-09-27T17:04:00.003+10:00

"Public housing is sometimes blamed for social problems ... However, that's the wrong way of looking at it because it's not the cause but the symptom."

So says Keith Jacobs from the University of Tasmania, in an article recently published by The Australian, called New ways of looking at social housing.

He also says "there's no question public housing is stigmatised in the eyes of many people, which is a real shame because 20 or 30 years ago it wasn't seen that way. I think part of the reason is that it's seen as a public policy failure, but I don't agree."

Indeed. But as the article in which he's quoted goes on to show, there's already a policy-shift taking place. Public Housing is on the decline. It's being swallowed up by the more politically attractive (and fiscally flexible) Community Housing - that is, non-government organisations who manage the government's housing assets (and, let's not forget, those consequential tenancies) for them...

Perhaps we're being a little melodramatic when we say "swallowed up". But there's certainly been a strong push in NSW to grow the Community Housing sector over the last three years or so, and this is not about to subside. Almost 3500 properties have been transferred over from HNSW's books to a number of Community Housing Providers (CHPs) since 2009, and the vast majority of properties built under the Federal Government's Nation Building stimulus plan are being handed over to CHPs as well.

...and in more good news for CHPs, a recent report into the social value of Community Housing in Australia has found them to be, well, significant. According to this report, the social benefits of a first year of living in community housing could add up to a substantial amount in monetary terms.

(Extract from "The Social Value of Community Housing
in Australia Report" page 3 - click to enlarge)

To break it down:

The economic benefit for residents due to greater financial flexibility and less ‘housing stress’ was assessed at $2,500 per person or $78.5 million across the sector.
Improved education opportunities for adults and children were valued at $75 million.
Health benefits due to improved health and less demand on public health services came in at $23 million.
The total social value of community housing was calculated at $176 million per year or $665 million over a five-year period.

Numbers like those should have everyone jumping on the Community Housing bandwagon. It would be interesting, of course, to see how the social value of Public Housing in Australia stacks up... and more interesting still to see what the cost of stigma really is. But that's not on the agenda right now. Right now it's all about Community Housing... and with so many of the benefits of Public Housing, minus the negative associations, what's not to like?

At the risk of sounding like a bit of a nark, here's a short list:

1. There's not enough of the stuff. Despite its recent growth, Community Housing still only accounts for about 1% of the NSW housing market. For comparison, private rental accounts for about 25%, and Public Housing accounts for 5%.

2. It's pretty tricky to get into. There are two reasons for this - the eligibility criteria is fairly tight, and on top of that there's not enough of the stuff. The successful applicant will be on a low income and experiencing some kind of difficulty obtaining or sustaining a tenancy in the private market... before being placed on a waiting list until a suitable property becomes available.

3. It's complicated. The sector operates within a complex maze of legislation, regulation and contractual obligation - and much of this is new. For many, finding a way through this web of complexity is a very daunting task. But quite aside from that, the very nature of the system results in inconsistencies across the sector, as each CHP is entitled to set its own policies and procedures as long as it complies with a general set of rules. While this is hailed by some as a key strength of the sector, it is felt by others as a new source of frustration.

Tenancy Culture Studies: The Fringe Dwellers

2011-09-22T16:11:00.008+10:00

The Institute of Tenancy Culture Studies returns with a look at Bruce Beresford's 1986 feature The Fringe Dwellers.

The Fringe Dwellers tells the story of Trilby Comeaway, a young Aboriginal woman who struggles to reconcile her expectations with her ambition. Trilby lives with her family in a makeshift shack on the outskirts of a country town, where she dreams of better things. She doesn't ask for much - just a life where she can study, work and live as an equal among the white, middle-class townsfolk... but for these dreams she is consigned to a life of derogation by both the mainstream she covets, and her family, who she would rise above. She fits nowhere - but she can't be ignored.

Trilby discovers that you can't escape yourself simply by changing your material circumstances. When her father Joe finds steady work, the Comeaways move into a neat fibro cottage in town, courtesy of the Housing Commission. It has all the mod-cons they had to go without on the fringe - running water, venetian blinds, a local school and a short walk to the hustle and bustle of Main Street. For awhile it looks as though all Trilby's dreams have come true.

Alas, it's not to be. Family and friends start to move in, and the house soon ends up as a microcosm of life on the fringe. But town-life comes with the entrenched racism and stigma that often follows Aboriginal people wherever they go. The neighbourhood fails to embrace the Comeaways and the townsfolk continue to malign them, as they struggle to live up to the expectations of their new community. Indeed, they rally against them, as Joe Comeaway proudly insists that no-one can remove his relatives from his home but he.

He needn't worry, because in all this time nobody's actually paid the rent. A simple oversight - an indication of the family's uneasy relationship with the town, and their failure to adapt to their new form of tenure - no-one's been down to the Housing Commission office since they moved in. Joe takes it on himself to sort this out, but is sidetracked on his way by an opportunity too good to pass up - an easy game of cards and a chance to double his money... He loses the lot, and goes walkabout rather than face the shame of telling his family what he's done.

Thus, the Comeaways are forced to give up life in town, and move back to their old shack in the bush. Here they can be themselves again - truly at home... But Trilby still doesn't see it that way. She leaves for the city, and an uncertain future.

The Fringe Dwellers presents a caricature of Aboriginal Housing - and a 25-year-old one at that. But there are many tales within that should still resonate today, particularly those of struggle, paternalism and prejudice. Because unfortunately, the Aboriginal Housing sector in NSW faces all of these things today...

Aboriginal Housing is a complicated beast. In NSW, it currently exists in two main forms - housing owned and managed by Local Aboriginal Lands Councils (LALCs) on behalf of LALC members; and housing owned by the Aboriginal Housing Office (AHO), often managed by an Indigenous Corporation specifically set up for that purpose. Each of these has their own administrative or legislative context within which to operate, and each is responsible to its own chain of command. These organisations have survived years of policy neglect and poorly targeted resourcing from various governments, to which they've adapted as best they can. The upshot of this is that a relative amount of rental housing is owned and managed directly by Aboriginal people in their own interests. The downside is that much of this housing is in poor condition, with significant maintenance and repair costs (on top of administrative costs and other expenses for many of these organisations) making the Aboriginal Housing sector as it is today largely unsustainable.

But the sector has the capacity to evolve, and it had begun to emerge from its predicament with a hint of confidence through a policy framework known as the Sector Strengthening strategy. A key aspect of this strategy was to support Aboriginal Housing providers in their tenancy and property management, predominantly through the use of Regional Aboriginal Management Services (RAHMS). RAHMS provide sector specific, independent, professional management services at arms-length, by Aboriginal organisations established for the purpose - and they take a huge amount of pressure off many small, struggling providers.

Another key aspect of the strategy was that it was based on a great deal of consultation and discussion amongst providers, tenants and relevant government agencies. It provided a solution that many people saw as workable, and those affected felt at least some ownership over it. So it came as a surprise when a new policy direction was announced shortly after the Sector Strengthening strategy kicked off...

The Build and Grow Aboriginal Housing Strategy follows reasonably closely the reforms to the mainstream Community Housing Sector - at least in spirit. It requires Aboriginal Housing organisations to register under a new registration scheme (the Provider Assessment Registration System - or PARS) in order to become eligible for funding made available under the National Agreement on Remote Indigenous Housing (even though the vast majority of Aboriginal people live in urban locations). But the registration requirements are more onerous than anything previously encountered by the sector, and the funding will not be recurrent... so there are concerns that many Aboriginal Housing organisations will opt not to register. Those who take this path will have a choice - to offer their properties to the AHO to be head-leased for a minimum of ten years to a registered provider, or to go it alone without further assistance.

Anyone with even a vague understanding of Aboriginal disadvantage will see that this is no choice at all. But the thought of handing properties over to the AHO is completely unpalatable to many Aboriginal people - who have fought long and hard for all that they've got - so there's a high probability that some Aboriginal Housing organisations will just opt out of the strategy completely.

This brings us back the The Fringe Dwellers, and its messages for Aboriginal Housing:

- Aboriginal people face a particular disadvantage that can't be overcome by simply requiring them to behave like their non-Aboriginal peers. Genuine support is needed.

- Aboriginal people are best placed to determine solutions to many of the specific problems they face - but paternalism, prejudice and the shackles of disadvantage will often prevent them from seeing these solutions through.

For all it might achieve, the Build and Grow strategy has failed to address these two critical points. For those who make it through PARS, we will applaud with gusto. But for those who don't, an uncertain future awaits...

Falling down in the best part of town

2011-09-20T10:10:00.006+10:00

We make it a rule to stay away from the property pornography in the weekend Herald, but this story of a couple taking on a 'renovator's delight' in Millers Point caught our attention. The property in question is one of many historic buildings in the area owned by Housing NSW, having previously been owned by the Maritime Services Board and, before that, by the Sydney Harbour Commissioners, who resumed the area upon an outbreak of bubonic plague in 1903. Now these old buildings are being sold on 99-year leases*, with heritage conservation plans attached, to persons of means.

(Millers Point)

The sales started a couple of years ago, with 16 vacant properties put on the auctioneer's block. Now another 20 properties are to go. We don't mean to knock the new residents, but we have to admit to feeling uneasy and sad about what these sales mean for Millers Point.

We can understand Housing NSW's position. The houses are old and in need of repair. (We should know: until a few years ago, the Tenants' Union had its office in a terrace house on Bettington Street, Millers Point, and it was falling to bits. When the floor gave out under our litigation solicitor, it was time to go.) They are also historically significant, which makes the repair work very expensive.

So it would be costly to keep them... and letting them go to the bourgeoisie is proving to be lucrative. The house in the article went for $1.75 million. Last month another went for $1.25 million, and another for $980 000 – so far, $34 million has been raised, with which Housing NSW has purchased additional properties for public housing in the inner west.

But.... the decision to go further than the initial 16 properties rankles. It also makes Housing NSW's assurances that only vacant properties will be sold off less than completely comforting, particularly to public housing tenants at Millers Point. These people feel acutely the calculating gaze of Housing NSW's bean counters – and that of the media's self-appointed custodians of the public interest – and consequently enjoy less real security and peace of mind than they deserve.

It also seems a poor return for what public housing has done for the area. Sure, the buildings need repair; but the fabric of the area as a whole is a rare marvel. Walk up from the Quay: when you step out from the shade of the Argyle Cut, everything slows down; the residential streets and lanes are beautifully quiet. You can spend an afternoon walking through the history of inner Sydney: grand Georgian houses, Victorian terraces, working-class walk-up flats and boarding houses; the Observatory; the pubs and wharves and the sandstone cliff of the Hungry Mile; the Harbour Bridge.

Now, with the wharves being redeveloped as the Barangaroo parklands/office/floating hotel precinct, and the old houses being auctioned off, Millers Point is on the National Trust's 'heritage at risk' list. Intentionally or not, public housing helped keep Millers Point as it is. And we'd like to see it kept as public housing, with specific funds from the State's consolidated revenues for the repair and conservation of its heritage value.

* Why 99-year leases? According to community sector oral history, the resumption and redevelopment of the area has left the titles in a mess. More reliable explanations and evidence gratefully received.

How to win appeals and influence social housing landlords!

2011-09-16T14:34:00.009+10:00

... and what would Social Housing Month be without an invitation to a Housing Appeals Committee forum making its way across your desk?

(click on the image to read the fine print!)

"A forum for Community and Advocacy Agencies - to help you advise clients on how the appeals system works in NSW, and how to help them appeal."

For more information on the Housing Appeals Committee, please visit their website, or contact your local Tenants Advice & Advocacy Service.

Sporting chance

2011-09-12T16:36:00.005+10:00

Adele Horin must know it's Social Housing Month: she's written a fine column that challenges the negative stereotypes about two subjects that do tend to cop it: young single mothers and public housing.

Horin writes about Gemma, a young single mother of two – and, contrary to the stereotype, an 'articulate, intelligent and thoughtful' young woman who is looking ahead to finishing her education and commencing a career. She has also been in some dire situations, housing-wise: what's flippantly called couch-surfing or, more objectively, tertiary homelessness. So for Gemma – and contrary to another set of stereotypes – 'public housing is the only hope of a stable life'.

But, as Horin observes:

But being 21, pregnant, homeless and with a toddler to care for is not enough to speed access to public housing in NSW. You have to be on the streets, she was told, and then Community Services would probably take her child....

The federal government, through the stimulus package, has invested $5.6 billion in public housing, the biggest investment in 15 years. It is an unheralded success story. But even with this initiative, which is drawing to an end, Australia will be 100,000 properties short of what it would have had if governments had maintained the pre-1996 level of investment.
Stereotypes can be dangerous. Young single mothers deserve help, not disparagement, and public housing, in its modern guise, is an essential that should remain firmly on the government's agenda.

We agree completely. But this piece – and particularly its statement of the rule that you need to be on the street to get priority housing – invites further reflection on the rules of public housing, and indeed on the nature of rules generally.

All too often, rules are thought of (especially by those who make them) as if they are the program for a robot, and the intended outcome slavishly follows the operation of the rules. To the extent that people aren't robots, and from time to time break rules, the thing is to penalise them and bring them back into conformity with the rule. So, in the case of public housing, the rule is that it for those most in need, so people will have to submit to an assessment of their need, both at the point of applying for housing and, after they've entered the system as a tenant, at the point of lease review. This operation is backed up by penalties for those who are not in need but say they are.

If you think about rules this way, there's a lot about the way they work that you're going to miss. More insights are to be gained by thinking of rules as rules of a game, to which human agency applies, and out of whose operation any number of outcomes may be created as people pursue the prize. (This is not to cast aspersions on applicants for public housing, or to be cynical about people's motivations generally; it is just applying the lessons nearly all of us know about rules, through games and sport.*)

In sport, so as in public housing. On this view, the rule about lease reviews can become a matter of improving your circumstances, if you can – but not by too much, lest you lose your housing. In practice, of course, this can be difficult. The rule about priority applications, on the other hand, can become a matter of making your circumstances worse – but not so bad that you lose your children. Playing to this rule of the game is positively dangerous.

But people will play, because of what's at stake. Public housing is affordable and relatively secure – an all too scarce and valuable prize in our grossly inequitable housing game. We need to reduce the stakes. As Horin says, we need more public housing and social housing... but we also need a private rental market that is a lot less hostile to low-income households, and that is itself less of a plaything in the strategies of tax-minimisers and speculators.

* Except rugby league, where the rules do operate robotically and slavishly: tackle, tackle, tackle, tackle, chip-kick to the corner.

More on the NSW State Budget...

2011-09-08T15:40:00.009+10:00

The O'Farrell Government has missed a golden opportunity to provide Social Housing Month on the Brown Couch with some good news, despite the unusual step of releasing the State Budget in September this year...

Of course, we've always got our fingers and toes crossed for a sudden increase in funding for the construction and maintenance of affordable dwellings (or 'homes', as the more practically minded among us like to call them...) and that would have made for some good reading on the Brown Couch. But alas, we'll have to hold onto our hopes for at least another year.

As Chris has already discussed in his earlier post, social housing tenants on a pension can expect a couple of rent increase in the coming year. But what else will the budget deliver for social housing in NSW?

The Government's own glossy press release reads like the who's who of handouts. Says Pru Goward, Minister for Family and Community Services.:

“This budget will assist more than 450,000 people across NSW, including more than 330,000 people living in public, community and Aboriginal housing,

“This Budget will also assist 38,000 people with crisis accommodation.

“$45.7 million will be available to help at least 37,000 households with Temporary Accommodation and Rentstart to help secure accommodation in the private rental market.

“A further $119 million has been set aside for new leases from the private rental market and to continue leases on 9,285 homes already let for public and community housing.”

Yes, yes. That all sounds very good... but will you build anything new?

Greg Pearce, Minister for Finance and Services, chimes in:

“This investment is underpinned by a new approach in social housing investment targeting the building of communities rather than construction of towers.”

Hmmmm. Construction of towers? But when exactly was the last tower built? Didn't this new approach start a few years ago already?

Says Mr Pearce:

“This will lead to reduced concentrations of social housing, support the social and economic participation of residents, and contribute to a more sustainable and affordable social housing system,"

Righto then. But this all sounds very familiar...

Well, perhaps we'd better get down to brass tacks. Can you show us the money?

Areas of expenditure in the 2011-12 Budget include:

- $221.5 million to build 529 new social housing homes and to complete 1,072 units that were started in previous years.

- $203.2 million for routine repairs and maintenance in public and community housing.

- $195 million to upgrade public and community housing, including crisis accommodation such as women’s refuges and emergency accommodation for homeless people.

- $23.6 million for private rental subsidies to assist people with disabilities.

- $17.7 million for the Building Stronger Communities program to improve the quality of the built environment and community in seven major locations.

- $5.5 million to continue with the rollout of Start Safely, a program to provide assistance to 567 households leaving domestic and family violence.

- $2.4 million to improve environmental sustainability in public housing by replacing electric hot water systems with solar systems and retrofit ceiling insulation.

Alright... and how does this compare to the last budget?

According to analysis provided by NCOSS, the total budget of $1.93b is down from $2.53b in the last financial year. This is largely due to the winding up of the Commonwealth stimulus plan, which was good for $418m in the last budget. There is no new growth plan for social housing. The National Rental Affordability Scheme (NRAS) has stalled.

So what should we make of all this, as advocates for social and affordable housing? It appears to be a "business as usual" kind of budget that should just about keep the business ticking over - or maybe we should say ticking?

It offers no real innovation or inspiration, and could be used to persuade the cynics among us that the State government doesn't believe that a sustainable social housing sector will make a key contribution to an affordable housing market.

Fingers crossed for next year, eh?

(A note to our friends in the Aboriginal Housing sector - this information does not include any of the budget allocations for the AHO. Apologies, but we did not want it to look like we'd simply tacked it on as an afterthought. More on that later...)

Social housing rents bite on pension increases

2011-09-07T08:38:00.004+10:00

We suggested pensioners in social housing should watch the State Budget to see what would happen to their rents... and so it was announced yesterday that the 2009 pension increase would henceforth be included in rebated rent calculations.

This will happen in two steps: half the increase will be included from next month, then the full amount of the increase will be included from April next year.

By then, the 2009 increase be treated like most other types of income... including the run-of-the-mill increase in the pension ($9.05 per week) that is due this month.

So, if you've been looking forward to that increase, be aware that it's going to feel like you're not seeing most of it. That's because your landlord will take 25 per cent of it, as usual, but then take more on account of the new treatment of the 2009 increase – in total, $6, according to the Herald's figures.

You'll probably feel the same way in April next year, when the pension is supposed to go up another $8.60, and your rent goes up $5.90.

It might be pointed out that pensioners in social housing did get the benefit of that 2009 increase without a rent take for a good two years, which amounts to about $800. But that's to take a bird's (bat's?) eye view; the perspective on the ground, in the present, is different. That 2009 increase money has disappeared into people's budgets by now, and has little power to sweeten the bitterness of the coming two quarters in which about two-thirds of each pension increase will go in rent.

Social Housing Month

2011-09-01T09:17:00.004+10:00

It's September, which means it's Social Housing Month at the Brown Couch!

In each of our two previous Social Housing Months, we've focused public housing, as provided by Housing NSW, the Grandpa Munster of the New South Wales social housing system. This year we'll share the attention around to our other forms of social housing: warm and fuzzy community housing –

– sexy, but hard-to-get Affordable Housing –

– and 'deadlier than Dracula' Aboriginal Housing.

But first, we return to one of the issues that kicked off Social Housing Month in the first place: social housing rent increases – and in particular, the fate of that $30 per week increase in pensions granted by the Commonwealth Government back in 2009.

Brown Couch readers will remember that the Commonwealth had declared the increase would be, for one year, off-limits to social housing landlords when they calculated tenants' income-related rents... and that when the year was up, Housing NSW figured the increase was fair game. The indignation of fiesty pensioners, however, scared Housing NSW off, for another year.

Now that extra year's grace is about to expire. What will become of the increase? I guess we'll see in next week's State Budget.

There may be another issue like this on the horizon too. The Commonwealth Government's carbon price package, Clean Energy Future, includes increases to Centrelink payments and Family Tax Benefit payments, and a Low Income Supplement, to offset increased energy prices. And the Commonwealth states:

Assistance is not intended to be included in state government public housing rent setting calculations so that public housing residents get the full benefit of assistance.

Worth making a note of that.

And as always, it is worth sparing a thought for the more than 800 000 low-income households who rent privately in Australia, and what may become of their assistance.

But, to be honest, there is a larger problem in social housing rent setting than that of Housing NSW clutching at small supplements to people's incomes. This is the problem of what happens when a social housing tenant earns additional income through work.

For each additional dollar earned by a social housing tenant, 25 cents is clawed away by their landlord – and if they're a public housing tenant, and they earn enough to put them into the 'moderate income' range, Housing NSW clutches away almost 50 cents in each additional dollar.

And if they're so foolhardy to earn more than that moderate income range, they face losing their house altogether. But virtually no public housing tenants are so foolhardy.

This is the truly enervating effect of social housing rents.

Negative gearing is not your friend

2011-08-23T11:47:00.021+10:00

On this day 38 years ago, a gunman walked into the Kreditbanken branch at Norrmalmstorg Square in Stockholm, Sweden, to hold up the bank. Police were called, the gunman took hostages, and a six-day siege ensued. When the police finally took the bank and the gunman and his associate, there was observed amongst the hostages a feeling of solidarity with their captors. A criminologist dubbed this feeling 'Stockholm syndrome.'

In the Brown Couch's never-ending quest for elaborate extended metaphors by which to describe the Australian housing system, Stockholm syndrome sounds like an appropriate diagnosis for our relationship with negative gearing – that is, Australia's almost unique tax arrangement that allows landlords to deduct interest payments from not just their rental income or capital gains, but from all their income, thus reducing the amount of tax they pay.

Talking with tenants, we occasionally hear them mutter ruefully about how their negatively geared landlords are making out like bandits, but then say, 'oh well, I wouldn't be able to afford to live here if it wasn't for negative gearing.'

Our political leaders feel captured too, repeatedly refusing to countenance any changes to negative gearing and, furthermore, positively supporting it. Politicians of otherwise such divergent points of view as John Howard and Tanya Plibersek have defended negative gearing, claiming that if it were ever changed, rents would go up.

That's the claim: that negative gearing makes renting cheaper than it would be otherwise.

We need an intervention. Negative gearing does not make renting cheaper. On the contrary, negative gearing pushes rents up. Tenants, policy makers: negative gearing is not your friend.

First, let's be clear: landlords set the rent at what they can get. If you really think that because of negative gearing, a landlord will accept less, try this experiment: pay your rent $50 short, and tell your landlord that you're helping him reduce his tax. Observe his angry reaction. Note his insistence that you must pay the going rate and if you don't, he'll find another tenant who will. Try another experiment: offer to pay more rent. See if your landlord doesn't take you up on it.

The committed negative gearist who finds themselves faced with the prospect of actually making money – that is, their revenues are greater than their costs – is not going to cut their revenues just to keep posting a loss. They are going to refinance, take on more debt, and buy another property.

But, we hear you say, negative gearing works to reduce rents by expanding the supply of rental housing.

Well, it certainly has expanded the supply of landlords. The popularity of negative gearing saw the number of Australian landlords grow by almost 50 per cent over the last decade-and-a-half, and the proportion of them posting a net loss grew similarly.

(ATO TaxStats, various years)

But look what they've spent their (borrowed) money on: established dwellings, not new construction.

(RBA, Table D06)

So they've expanded the supply of rental housing, but only by turning dwellings that might otherwise be owner-occupied into rental. In other words, along with any expansion in the supply of rental housing goes an expansion in the supply of renters.

This is reflected in the declining rates of home-ownership amongst younger households (25-44 year-olds) – and, for that matter, middle-aged households (44-65 year-olds).

(Source: Flood and Green (2010) 'Australia's Changing Patterns of Home Ownership' AHURI Research and Policy Bulletin no 133. Click here for more.)

These households are in the prime income-earning years of their lives, and many would be owner-occupiers if they weren't priced out by big-spending negatively geared landlords. Instead they are renting – alongside the low income households who have always rented. AHURI researcher Maryann Wulff and her colleagues have charted over the period 1996-2006 the rise in the number of renters who are in the higher segments of the income scale:

(Wulff, et al (2009) 'Australia's private rental market: changes (2001-2006)', AHURI positioning paper. Click here for more.)

Wulff et al explain: 'overall, the number of private renter households in the lowest seven income categories (Y1-Y7) stayed relatively stable over the three census years [ie 1996, 2001 and 2006]. The growth in private renter households occurred in the top five income segments.'

Now, these higher-income renters can afford to pay more than their lower-income competitors, so their presence in the market helps push up rents. They also out-compete the lower-income households in terms of risk and general attractiveness to landlords, so if they want to save a bit of money and live in a relatively cheap rental dwelling, they very often can – which means a lower-income household, who really needs the lower rent dwelling, will have to look at renting another, more expensive dwelling.

We can put some number on this problem, thanks to the National Housing Supply Council. As of 2007-08 (the latest figures), Australia has 814 000 low-income households (that is, in the bottom 40 per cent by income) who are renting in the private market... and the private rental market has 1 410 000 dwellings that would be affordable for these households. That's apparently more than enough affordable rental dwellings... except that fully 1 089 000 of those relatively cheap dwellings are occupied by households above the 40 per cent line. That leaves 493 000 low-income households paying a higher rent.

And it is not just a problem of how the relatively low-rent properties are shared around, because the number of low-rent properties is declining, too – thanks to negative gearing. As a strategy, negative gearing depends on the prospect of capital gains: the negatively geared landlord makes a profit only if the (lightly taxed) capital gain at the end of their speculative adventure is more than the total income lost to interest etc along the way. So negatively geared landlords will go for properties where there's strong expectations of capital gain... and pass on properties that are not so blessed. The latter properties, as economists Woods, Ong and Stewart point out (in a paper for the Henry Review), are the relatively low-value, low-rent properties that low-income renters seek out. Over time, as properties are bought and sold, these sorts of properties drop out of the rental sector, and as they become scarcer, they become less cheap.

We can put numbers on this too, again courtesy of the National Housing Supply Council. Between 1996 and 2006, Australia's private rental stock grew by 234 000 dwellings. All of this growth was in dwellings that rent for more than $200 per week – and mostly more than $300 per week. Over that period, we lost 125 000 dwellings in the $232 or less price range (and all those dollar amounts are 2006 dollars, so we're comparing apples with apples). The Council provides a graph to illustrate the changing shape of the rental market, under the influence of negative gearing. Notice the bulge in properties around $200 flatten down and push up further along the scale of rents at $300 per week, $400 per week....

To recap:

negative gearing does not cause an individual landlord to charge less rent;

negative gearing does not create net additional rental housing;

negative gearing has contributed to more higher-income households renting, which both pushes rents up, and pushes lower-income households out of lower rent properties;

negative gearing has contributed to low-value proprties dropping out of the rental market, which pushes up the rent for those that remain in rental; so therefore

negative gearing is not your friend.

A postcard from the Older Persons Tenants Service

2011-08-17T16:09:00.007+10:00

We like getting mail at the Brown Couch, especially when the sender is legendary tenants advocate Dr Robert Mowbray... and doubly especially when the subject is the excellent work of the Tenants Advice and Advocacy Services. Robert points out that it is now over 100 years since this sort of work first began in New South Wales:

Tenancy services existed as early as 1910 when the New South Wales Rent Payers Association acted as advocates for tenants in early cases before the Fair Rents Court.

(No harpies! An election dodger c 1910)

Contemporary tenants' services only appeared in the 1970s due to the fillip provided by the Commonwealth Government’s Commission of Inquiry into Poverty. The Tenants' Union of NSW emerged in 1976 and has played a crucial role in lobbying for tenants. From its establishment it built up a network of tenants' services, initially relying on volunteers.

In 1986 the NSW Department of Housing funded a Housing Information and Tenancy Services Program. In 1994 NSW Fair Trading refunded a revamped program now called the Tenants’ Advice and Advocacy Program.

The need for tenants' services in 2011 is as great now as it was one hundred years ago, as tenants get pushed from pillar to post, with a shrinking private rental market and landlords extracting very high rents. 'Affordability' and 'housing stress' are now words in our lexicon.

To illustrate his point, Robert has kindly provided a 'postcard' from the Older Persons Tenants Service, noting some of the cases that he and his fellow tenants advocates have been conducting recently.

Hello from OPTS.... let's take a look at some of the cases that crop up on a typical day at a Tenants Advice and Advocacy Service.

First, an update on an OPTS client, Arthur, an elderly tenant in the southern suburbs who has developed dementia. Arthur's family had moved him to a nursing home, but forgot to place a stop on rent payments from his bank account to the real estate agent and these continued for many months. After the threat of legal proceedings against the real estate agent, combined with a complaint to NSW Fair Trading, the real estate agent has refunded the full amount overpaid, which was around six and a half thousand dollars. Apparently the real estate agent had re-allocated the account number to another landlord at another address, who never queried getting two lots of rent for the same property!

Now the case of Hilda, a tenant of a social housing provider in Western New South Wales, who sought our help to recover $2,500 overpaid rent. After a letter plus reminders over a number of months, the social housing provider has written back acknowledging double payments because, in bureaucratic language: ‘We were installing a new computer system. The retrospective subsidies created in the new system duplicated actions taken in the old system just prior to the implementation of the new system’.

A case under the Landlord and Tenant Amendment Act 1948 – Maria lived in a small cottage on the Lower North Shore for over 60 years, and with her now-deceased husband raised their family there. Maria is a protected tenant under the 1948 Act, but that legislation is silent on the issue of repairs. Nevertheless, Maria asked for some essential repairs and in response received a ‘Notice to Quit’. The house timbers had become riddled with white ants, so we organised a builder’s report and this advised that the house was fix-up-able without the need for Maria to vacate. However, Maria has decided to negotiate a settlement payment in return for her giving vacant possession.

Another protected tenant, Shirley, lives with her son in a beachside cottage owned by her local government council. Her landlord applied to the Fair Rents Board, asking that it set a fair rent on the property. There have been very few fair determinations across New South Wales in recent years. However, Council were unable to pull together the necessary documentation. (Remember ‘Yes, Minister’ and ‘the floods of 1967’.) After three hearings of the Board, we're negotiating a new rent through a deed to be signed by both parties, which also will comply with the requirements of the legislation.

Bob and Beryl have rented a flat over a shop front on the Northern Beaches for 27 years. The landlord has done his little repairs over the years and the flat needs a good coat of paint. But when the hot water system broke down, Bob sent a letter to the real estate agent asking for it to be fixed. The next day he was served with a termination notice. The landlord's story is that he intends to refurbish the flat. Bob and Beryl have stayed put and so the real estate agent has taken them to the Consumer, Trader and Tenancy Tribunal. Bob was prepared to defend the matter on the grounds of a retaliatory application and his and the landlord’s circumstances, but we had to advise him that there was no certainty that the Tribunal Member would dismiss the landlord's application, even if it ruled that the application was retaliatory. The Tribunal still might give more weight to the landlord's intention to refurbish the flat, given its age and condition. If this was the case it might only give Bob and Beryl 90 days to leave (this being the statutory minimum for long leases under the new legislation). Besides, even if the Tribunal had dismissed the landlord's application, the landlord may have re-applied for the same orders at any time or increased rent upon 60-days' written notice. Bob and Beryl feared that any rent increase would make their rent unaffordable and thus force them out, given that their current rent is substantially below market rent. So, in the end, the parties have settled, with Bob agreeing to give vacant possession some six months down the track.

Isabelle and Claude are both in their seventies. Claude faces hefty medical bills because of emphysema. They have been renting their current house on the South Coast for nine years and have a long association with the area. Recently they received notice of a hefty rent increase of $55 per week. They cannot afford the new rent. And then they were told that the property is to be auctioned. They received a no-grounds termination notice. Isabelle seized the initiative and approached the owner of a holiday house a few blocks away. She asked whether he would be interested in renting. The owner said that he didn’t want to rent to strangers, but he’s would consider renting to her. But first he’d need to finish some building work. Isabelle said that that would be OK … let’s hope it works out, because it would take years for Isabelle and Claude to re-establish a network of friends in a new area and, also, Claude needs to be close to his specialist.

Kris has only just moved into social housing. His landlord has provided him with a copy of his residential tenancy agreement and a condition report, the landlord's part of which is clearly fudged, with all squares marked 'Y' saying everything was rosy, including for one non-existent room! We're seeing a lot of this sort of thing. In total there were 45 discrepancies and eight matters requiring immediate attention ... although, overall, the premises were in good shape. OPTS has asked the social housing provider to re-do its part of the condition report. We're also looking at recent changes to the law in New South Wales – both under the new residential tenancy legislation and the Australian Consumer Law – that may give redress to a tenant in this situation. Hopefully that won’t be necessary here.

The injustices and anomalies that occur in the lives of tenants who seek advice and help from OPTS all get fed into the policy development activities of the Tenants Union, so that in the long term tenants get a modicum of justice from the system. The day is never dull at a tenants’ service…

Too right, Robert. Thanks for the postcard, and thanks OPTS for everything it does for older tenants in New South Wales. (Thanks also to Shelter NSW, which has previously published some of Robert's case studies in its newsletter, Around the House.)

Ombudsman reports on Licensed Residential Centres

2011-08-16T21:39:00.009+10:00

The media has recently shone a light on Licensed Residential Centres (LRCs, sometimes called licensed boarding houses) for people with disability. Now it's the turn of the NSW Ombudsman – again, with yet another report on LRCs and their regulator, NSW Ageing, Disability and Home Care.

Read it and you will be appalled, both at what it shows of life – and death – in LRCs, and at a decade of government inaction in the face of desperate need for reform.

We reproduce the Ombudsman's introductory message, with our own emphasis added:

This report is about marginalised and vulnerable people living in accommodation that does not afford them adequate protection, support, or rights; and the need for significant reform to address this longstanding and unacceptable situation.

For nine years, my office has highlighted the vulnerability and poor circumstances of people living in licensed boarding houses. The majority of residents have a mental illness or a cognitive impairment, or both; have considerable health problems; and require daily supervision and support. They are typically reliant on income support, and hand over most, or all, of that money to the boarding house operator to pay for their board and lodging.

While there are standards and conditions that licensed boarding house operators are required to meet, our work has identified that these requirements are often not met, and the health, safety and wellbeing of the people living in these facilities suffers as a result. We have repeatedly found critical failings on the part of Ageing, Disability and Home Care (ADHC) to fulfil its responsibilities to monitor licensed boarding houses and ensure their compliance with requirements.

However, the problems are much larger than poor monitoring and enforcement. The current legislation governing licensed boarding houses and the standards expected in such facilities are inadequate to protect already vulnerable residents from harm and violations of their fundamental human rights. People living in unlicensed boarding houses have even fewer safeguards and protections.

Significant reform is required to provide adequate protections and appropriate support, and to uphold the rights of people living in the boarding house sector. At a minimum, our work demonstrates that there is a critical need for legislative change to improve the circumstances of, and outcomes for, people living in licensed boarding houses. In part, this is about improving standards to enable people with disabilities to obtain appropriate support to meet their needs; and delivering greater protections, that are rights-based. This must be accompanied by a rigorous system for ensuring compliance and removing providers that are exploitative or do not meet minimum standards.

My office has made many recommendations over the past nine years aimed at improving the circumstances of people living in licensed boarding houses and progressing the broader reforms. We have received repeated advice from ADHC about its intentions to progress a review of the legislation governing licensed boarding houses, and interagency work to explore options for reform of the boarding house sector. However, almost a decade in, the legislative review has not been completed, and no decisions have been made about the proposed reforms.

The slow pace of work and the lack of practical action to commence necessary reforms are unreasonable given the implications for the individuals living in boarding houses. The need for concerted and sustained cross-government action to achieve real and improved outcomes for people living in licensed and unlicensed boarding houses is overdue.

The Ombudsman has, in journalistic parlance, 'slammed' ADHC and the previous State Government. And if the Ombudma's message is not blunt enough, consider the first of the several case examples from the Ombudsman's investigative work that's cited in the report:

The death of a licensed boarding house resident in 2008 raised questions about living conditions in the facility and the adequacy of monitoring by ADHC. Our review of the man’s death found that hospital staff had raised concerns about his hygiene and nutrition during an admission to hospital for pneumonia three months before his death. At that time, hospital staff noted that the man was at high risk of malnutrition and staff had to use a peroxide solution to remove dirt from his skin and nails.

The man was found in his room by a staff member at the boarding house. He had been dead for at least 12 hours and had blood stains on his fingers, head and clothes. There was also evidence of blood stains on the walls and body tissue was found on two exposed nails on the back of the door to the room.

The police officers who attended the scene reported that the man’s bedclothes were covered with cobwebs and dust, and faeces and used toilet paper were strewn around the room. There was also several unopened sandwich packages in the room.

At the same time as our review of the man’s death, Official Community Visitors complained to us about the failure of the licensed boarding house manager to address concerns they had identified. These included domestic duties not being attended to, smoking by residents indoors, the selling of cigarettes on the premises, broken windows, limited access to bathrooms and the dining room, and unsecured medication left on a shelf in the kitchen.

We met with ADHC to discuss these concerns. They told us about initiatives in place to improve the support provided to residents at the boarding house and to monitor compliance with the licence conditions. They also advised us that they were seeking legal advice in relation to the boarding house operator’s ongoing failure to comply with many of the conditions of their licence.

ADHC subsequently told us they received legal advice that they did not have the power to enforce the licence conditions that apply to the health, wellbeing and cleanliness of residents and the facility. They said they were considering their options – including prosecution and/or revocation of the licence – in relation to the licensee’s failure to comply with a fire safety order issued by the local council.

As a result of unrelated factors, the boarding house subsequently closed and the residents moved to alternative accommodation.

In the midst of this awful scene, note the reference to ADHC's legal advice regarding the unenforceability of licence conditions. This legislative defect was repaired in the Youth and Community Services Regulation 2010... 11 years after the problem was first identified. And as the Ombudsman says, the review of the Youth and Community Services Act is still not complete, and the government has yet to commit to a broader reform of the boarding house sector.

In response, the new Disability Services Minister, Andrew Constance, has stated that he shares the Ombudsman's concerns. And prior to the tabling of the report, his colleague, Fair Trading Minister Anthony Roberts, also indicated to the Parliament that boarding house sector reform is a 'key issue' for the new State Government. Amongst these positive, encouraging signs from the O'Farrel Government, the Ombudsman's report is a powerful reminder of past promises unfulfilled, and a warning that the new government must do better – and urgently.

Know your residential tenancy agreement

2011-08-11T15:31:00.010+10:00

Brown Couch enthusiasts will recall our recent comments on real estate agents seeking to charge tenants for their time in the CTTT. Well, since then, a residential tenancy agreement with a strange set of additional terms has caught our attention.

It reads:

clause (x) - Should a dispute arise as a result of the tenants responsibilities, or neglect or failure to follow the Residential Tenancies Act or this agreement & the agent or its employees is required to prepare for &/or attend a CTTT hearing the tenant will be charged at a rate of $xxx.00 +gst per hour or part thereof.

clause (y) - The tenant agrees that inspections of the above property will be held on a quarterly basis. If the home is found in an unsatisfactory condition at these inspections a second inspection will be made and you will be charged $xx.00 for this return visit.

Now we've already suggested that it's a silly idea for real estate agents to try and charge tenants for their costs in the Tribunal. But it's worth revisiting some of that information because it similarly applies to fees for a 'second inspection' of the home. Here's what we said earlier:

The Residential Tenancies Act 2010 stipulates that tenants can only be required to make certain types of payment to the landlord under their residential tenancy agreement. These are bond and rent, and in many instances charges for water consumption ... Requiring a tenant to pay [other, non-prescribed costs], would be in breach of the law, and could leave a landlord liable for a $2,200 fine.

Clause (y) presents an additional problem, because a landlord (or their agent) is only allowed to inspect the property a maximum of four times in any twelve month period. Technically, a 'second inspection' would be okay (as long as proper notice is given), but it should be counted as one of the four... so sensible landlords might want to consider other ways of harassing tenants into doing the washing up more frequently.

Right. So legislation doesn't allow landlords (or their agents) to ask tenants for more money, or to visit too often. But what if terms allowing such things are actually written into the contract? Can a landlord or a real estate agent use additional terms in a residential tenancy agreement to hold a tenant to a higher standard of behaviour, or to place upon them further liabilities, than are allowed under the Act?

The answer is a resounding 'NO'! The Act is clear (at section 219) that 'contracting out' is prohibited. Any term that excludes, evades or limits the operation of the Act (or the Regulations) is void, and steep penalties can apply to anyone who tries it on.

"Great news!", you might be thinking... "we can all relax and give thanks to the Parliamentary Council for drafting such a useful law, and to the NSW Government for keeping it intact! Our rights as tenants are impervious to the innovations of the real estate industry!"

But let's not get carried away...

Something that has also caught our attention of late is the curious case of Grima v Plummer - a decision made under the old (1987) Act, to which a similar 'contracting out' provision applied. In this matter, the CTTT allowed a landlord's claim for cleaning charges, after the tenancy had ended, based on additional terms that created obligations "more onerous than those contained" in the standard form residential tenancy agreement. These terms required the tenant to leave the premises "in a clean and tidy state (as per the condition report)", and to "meet the full cost of flea extermination"; whereas the 1987 Act required tenants to "leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, as set out in any condition report".

With respect, we'd have thought that an outgoing tenant's cleaning obligations were pretty bread and butter stuff for the Tribunal. For a decision this kind - which relies on terms that contracted out of sensible legislative provisions - to appear on the record is surprising. But it serves as a pertinent reminder that additional terms can bite - even when they're not actually allowed!

If you've got a residential tenancy agreement that contains strange additional terms, do what the lucky punter with clauses (x) and (y) did - call your local Tenants' Advice service for a chat.

When landlords sell: part 3

2011-08-09T10:32:00.008+10:00

So you've found out that your premises are on the market and you're ready to drive a hard bargain about a schedule of access for your landlord to show prospective purchasers through.

But there's a few more things that the landlord or agent may want spring on you and that you should be prepared for. What do you say when the landlord wants to put up a for sale sign? Conduct an open house inspection? Conduct an auction on-site?

(Malloy has a good look around at the open house.)

None of these things are expressly mentioned in the Residential Tenancies Act 2010. What is mentioned, specifically and repeatedly, is that the premises will be available for 'inspection by prospective purchasers' (mentioned in each of the subsections (1)-(4) of s 53). In s 55, which deals with access without consent, the wording is only slightly different: at s 55(2)(f), it's access to 'show the premises to prospective purchasers.' (This difference in wording is really just one of perspective: prospective purchasers inspect what landlords show).

So, to be clear: the purpose of the access allowed by the Act is to 'inspect' or 'show' the premises, and that's it. Coming onto the premises to erect a 'for sale' sign is not access for the purpose of inspecting or showing the premises – and it doesn't fit with any of the other allowed purposes for access at s 55. So no 'for sale' signs without your consent.

It's the same for coming onto the premises to conduct an auction: that purpose goes beyond the allowed purpose of inspecting/showing. Likewise where the proposed access is for entertaining or victualling the prospective purchasers. (A little while ago, the Tenants' Union heard of a case where a selling agent proposed to host a 'champagne and canapes' soiree for prospective purchasers at rented premises. No word on whether the tenant was expected to serve the drinks or help with the washing up. In any event: this is beyond the allowed purpose, so there's no right of access under the Act.) None of this is allowed without your consent.

What about 'open houses' – which are, after all, for the purpose of inspecting or showing the premises? An open house may pass the 'purpose' test, but there's an argument (we doff our caps to legendary tenant advocate Robert Mowbray for this one) that an open house is not allowed under the access provisions of the Act. This is because an open house would admit not only 'prospective puchasers', but also cat burglars, neighbourhood stickybeaks and anyone else who cares to wander in.

There's another argument you can make against open houses – and this one doesn't turn on the wording of the Act, and goes straight to your landlord's hip pocket nerve. Point them to s 61(2) of the Act:

(2) The Tribunal may, on application by a tenant, order the landlord or the landlord’s agent to pay compensation to the tenant for damage to or loss of the tenant’s goods caused by any person in the exercise of a power of the landlord or landlord’s agent to enter residential premises under this Act or the residential tenancy agreement.

In other words, if a so-called 'prospective puchaser' knocks off your iPod, or camera, or antique netsuki, the landlord (or the agent) may be ordered to compensate you for your loss. A sensible landlord or agent should try to minimise this risk by showing the premises to bona fide prospective purchasers only, without a risky open house.

We hope this short series of posts helps you survive the spring sales season. As we said at the beginning, many of the provisions in relation to sales and access are new to the 2010 Act – so landlords and agents may not be completely up to speed on them. If you encounter any problems (at least, any problems that threats of nudity can't fix), please contact your local Tenants Advice and Advocacy Service – and if you want to share your experience of the new provisions, let us at the Tenants' Union know too.

When landlords sell: part 2

2011-08-04T15:30:00.003+10:00

So your landlord wants to sell and you've decided to stay put. Good for you – it's your home, after all.

But now, unfortunately, you will have to share it occasionally with your landlord, their agent, and prospective purchasers who want to have a look at the place. Let's consider your position, legally and practically.

As a starting point, the Residential Tenancies Act 2010 says that you and the landlord (or their agent) should negotiate and try to come up with a mutually acceptable schedule of access for the purpose of showing the property. Section 53 inserts the following terms into every tenancy agreement:

(2) A landlord or the agent of the landlord for the sale of the residential premises must make all reasonable efforts to agree with the tenant as to the days and times when the residential premises are to be periodically available for inspection by prospective purchasers.

(3) A tenant must not unreasonably refuse to agree to days and times when the residential premises are to be periodically available for inspection by prospective purchasers.

(4) A tenant is not required to agree to the residential premises being available for inspection by prospective purchasers more than twice a week.

If you and the landlord cannot come to an agreement about access, the Act also provides a fallback position. Section 55(2)(f) provides that in the absence of agreement, the landlord can have access to show the premises no more than twice a week, and they must give you 48 hours' notice each time. Note that if you have no agreed schedule of access and you are given a valid notice of this kind, the landlord or agent can access without your consent, and regardless of whether you will be there at the premises or not. You can also apply to the Tribunal for an order specifying or limiting the days and times when the landlord may access to show the premises.

In our view, access twice a week probably isn't too bad: from our experience, most tenants can tolerate this level of intrusion, and agents can work with it too.

It is a bit of a pity, however, that the Act provides for it as the fallback position, because it may let landlords and agents off the hook in relation to their obligation to negotiate about a schedule of access. Had the Act instead provided for a bare minimum amount of access (say, once a week, or once a fortnight) as the fallback – or indeed, no guaranteed access at all – that really would have gotten landlords and agents negotiating, and possibly bringing rent reductions to the table as well.

Nonetheless, you shouldn't give the game away in your negotiations. When they show premises to prospective purchasers, landlords and agents don't rely just on their legal right of access; they also rely – more than they realise – on the good will and co-operation of tenants. You should make them aware of this.

And if your landlord misses the point when you're negotiating, they may need to be shown how much they rely on your good will when they actually start showing prospective purchasers around. We'd never counsel you to do anything that's a breach of your tenancy agreement, but you might consider, for example, the following entirely legitimate actions:

(1) Taking a photo of every person who attends the premises (for security purposes, of course);

(2) Throwing a party for a dozen or two of your closest friends;

Or (3) Going nude.

Or, indeed, (4) All of the above.

Next: 'for sale' signs, auctions and the dreaded 'open house'.

When landlords sell: part 1

2011-08-02T12:54:00.005+10:00

It's only just August, but the thoughts of many a speculator-landlord now turn towards spring – the traditional peak season for selling properties. Their tenants, however, might find themselves in for a long winter of discontent.

(Selling agents. Grr.)

In a short series of posts, the Brown Couch will look at what you can do if your landlord decides to sell – particularly with reference to new provisions of the Residential Tenancies Act 2010 that have changed the law in significant ways.

First: what you're entitled to know about your landlord's plans for selling the place.

Disclosure prior to entering into a tenancy agreement.
Since the new Act commenced on 31 January this year, landlords and agents are required to disclose, before entering into a tenancy agreement with you, if they intend to sell the premises (s 26). 'Intend' in this context means that the landlord has gone as far as preparing a contract for the sale of the premises (so they don't have to disclose if they are only vaguely entertaining the possibility of selling).

So what happens if nothing was disclosed, you signed a tenancy agreement, and now you find out that the landlord is putting the place on the market?

If the landlord or agent has breached the requirement at s 26 – that is, they really had prepared a sale contract, and did not disclose the fact – they can be prosecuted and fined: maximum penalty $2200. But if there was no sale contract before the tenancy started, there's no breach – and as a tenant, you probably won't be in a position to tell if your landlord has done the wrong thing or not. Best to get in touch with NSW Fair Trading and let it make some investigations.

And keep in mind, too, that the disclosure requirement has been effective since 31 January 2011 only. The new Act is not a time machine (that is to say, it is not retrospective legislation), so a landlord's failure to disclose prior to 31 January is not now an offence.

In any event, s 26 does not stop a landlord from putting the premises on the market. Nor does having a fixed term agreement stop a landlord from selling. (You might have thought that a fixed term agreement means that your landlord agrees to be your landlord for the duration of the term – but no.) We'll come back to some special provisions relating to fixed terms in a moment.

Notice that the landlord is selling.
Apart from the pre-agreement disclosure requirement, your landlord is required to give you written notice of their intention to sell (s 53). They have to do this at least 14 days before showing the premises to any prospective purchasers.

In this 14-day period, you'll probably ponder your options: should I stay or go? We'll consider the implications of staying put in a subsequent post; here, we'll look at going.

I want to go (and am in a fixed term agreement).
You can go – you just need to give 14 days' notice on the ground that you've been notified that the landlord intends to sell the premises. This is a new ground of termination, at s 100(1)(c) of the new Act, and, with one exception, it is available in relation to all fixed term agreements (that is to say, it's available regardless of whether the agreement started before or after commencement of the new Act and, as discussed previously by NC, regardless of whether the landlord formed their intention to sell before or after entering into the tenancy agreement). The sole proviso: you cannot use it if you knew the premises were for sale when you entered into the tenancy agreement.

All of which, really, is fair enough: the landlord can still choose to sell, but you don't have to live with all the consequences of their choice. (Mind you, we think it would be fairer if you could get compensated for your moving costs, but as it is, you just get to end your tenancy without further liability to the landlord.)

I want to go (and am in a periodic agreement).
You can go – but you cannot give a 14-day termination notice per s 100(1)(c), because these apply only to fixed agreements. You'll have to give a 21-day termination notice, per s 97. (This is the standard no-grounds termination notice.)

Next: so you've decided to stay put – you'll need to deal with access by the landlord and agent (possibly agents, plural) and prospective purchasers (possibly very plural).

Homeless at the Census

2011-08-02T09:31:00.004+10:00

Next Tuesday night (9 August 2011) is Census night. The Census is important for all sorts of reasons: one of the most important – and challenging – is getting a count of the number of people who are homeless.

Our colleagues from the homelessness sector have created this poster to let homeless persons know how to get counted as such.

As the posters says, write 'NONE' in the 'suburb/locality' box at question 10 ('Where does this person usually live').

This goes whether you are spending Census night in a refuge or crisis accommodation, or a boarding house, or if you're staying with family or friends and you've no home of your own.

Spread the word.

Tenancy culture studies field trip: the Australian Museum of Squatting

2011-08-01T10:12:00.004+10:00

It's a long time between classes at the Institute of Tenancy Culture Studies – sorry, students.

In the meantime, why not take a field trip to an allied institution: the Australian Museum of Squatting. It's great!

Well done to the curators, and hat-tip to Brown Couch reader Warren Wheeler.

The Henry Review review: part 4

2011-07-19T09:36:00.008+10:00

Now we draw to a close our review of the Henry Review and, in particular, what it had to say about housing.

We'll do so with a summary of what it had to say about (1) the taxation of owner-occupied housing, (2) the taxation of rental housing, and (3) the provision of housing assistance in the forms of Rent Assistance and social housing.

In relation to each, we'll also note the response of the Government, and add a few words of our own.

1. Taxation of owner-occupied housing.

Henry says: let's keep the preferential tax treatment of owner-occupied housing. In particular, let's keep exemption of owner-occupied housing from capital gains tax. (And let's not even consider the taxation of imputed rents – that is to say, the value of the housing services that owner-occupied housing produces and that is consumed directly by the owner.)

But, let's include owner-occupied housing in a reformed land tax regime.

And let's think about a bequest tax.

The Government said: we 'will not... at any stage... introduce land tax on the family home – this is a state tax and thus an issue for the States.' (And it goes without saying that we agree with Henry on keeping the exemption from capital gains tax.)

And we will not introduce a bequest tax at any stage, either.

The Brown Couch says: first of all, a general note: this was, literally, the Government's response to so much of the Henry Review's recommendations. Its press release of 2 May reads: 'In the interests of business and community certainty, the Government advises that it will not implement the following policies at any stage.' Thereafter follows nineteen dot points, of which land tax and the bequest tax are just two. We'll encounter a few more of these 'not at any stage' dot points.

As for the substance of the recommendations and the response: the preferential tax treatment of owner-occupied housing is a core component in the Australian house price bubble-making machine.

Now, this machine runs on a volatile blend of animal spirits and debt. It seems that at the moment, supplies of this fuel amongst Australian households may have been tapped dry: housing credit growth has stopped, and prices are flat and falling. We've heard from respectable commentators – that is to say, commentators who have long argued for reform of the taxation of housing to improve affordability – that including owner-occupied housing in the capital gains tax regime at this stage may be revenue-negative, because the gains aren't there at the moment and, as a necessary corollary, you'd also have to allow deductions for owner-occupiers' interest payments. And the latter aspect could well give a fillip to borrowing – at this stage. But, at some stage, there must come a time to start dismantling the house price bubble-making machine, including the tax-preferencing of owner-occupied housing.

Land tax reform, however, is something we could proceed on now – and the fact that it is a tax levied by the States does not mean that the Commonwealth cannot act on it. In particular, the Commonwealth should look at how it distributes, through the Grants Commission, its tax revenues to the States, and calculate the distribution on the basis that each States' own tax base will include a reformed land tax.

And the bequest tax – or unearned wealth tax, as we like to call it – let's do it!

2. Taxation of rental housing.

Henry says: investing in rental housing, shares, putting money in the bank – it's all saving, isn't it, so let's tax these different ways of saving more consistently. Let's tax the income from savings (whether it's rent, dividends, interest or capital gain) at a 40 per cent discount. In relation to rental housing, this means slightly more tax on capital gains, reduced tax for landlords who have a positive net rental income, and reduced losses deducted against other forms of income for landlords who have a negative net rental income – thus watering down the encouragement that Australia's unique negative gearing provisions give to big-borrowing landlords.

The Government said: we will not reduce the capital gains discount, or apply a discount to negative gearing deductions.

The Brown Couch says: negative gearing is financial alchemy, and when it's conducted in the crucible of the housing market, which is already subject to the tax preferencing of owner-occupation, you get a very volatile, bubbly brew. The reforms Henry recommends are mild; for a stronger reform, try quarantining rental losses from being deducted against other forms of income at all.

3. Housing assistance.

Henry says: as a form of housing assistance, Rent Assistance ticks a lot of an economist's boxes. We just need to lift the thresholds at which Rent Assistance maxes out.

Social housing, on the other hand, presents problems – but many of them are fixable, if you extend market rents and Rent Assistance to social housing tenants. For tenants with very high needs, there should also be a new additional payment, that goes to their landlord.

The Government said: we will not ask the States to charge market rents [subject to Rent Assistance] to social housing tenants.

The Brown Couch says: Like Henry says, lift the caps on Rent Assistance. And Henry makes some strong arguments about the problems with social housing's income-related rents. There's a number of forces converging on social housing rent policy that will change its shape – what do tenants and their advocates want to make of this?

Thus ends our review of the Review. We look forward to the National Tax Forum on 4-5 October this year, and recommend you keep an eye on TaxWatch in preparation.

A final couple of observations: all those 'not at any stage' dot points happened not just one year ago now, but one prime minister ago, one hung parliament ago. And, having retired from the Treasury, Dr Ken Henry has recently taken up a part time job in the office of the Prime Minister. He won't be doing the photocopying and making the coffee.

Licensed residential centres - confined to the back room

2011-07-17T15:04:00.010+10:00

Licensed residential centres for people with disability, or LRCs, or licensed boarding houses, comprise a small, dark corner of the New South Wales housing system. This weekend a report by the Sydney Morning Herald's Adele Horin sheds a little light on it.

Licensed residential centres are privately owned, for-profit operations that provide accommodation and, at least in theory, care, for people with disability. An historical hangover from the early phases of deinstitutionalisation, licensed residential centres were established in the 1970s and 1980s to house persons previously accommodated in asylums and hospitals – often by people previously employed at those same institutions. There used to be scores of these places; now there are just 31, housing less than 700 persons.

The decline of the LRCs is not to be regretted. All too often they are isolating, exploitative and downright abusive places.

It is not uncommon for LRC operators to collect 80 per cent or more of a resident's pension for rent and services – sometimes residents are left with $5 per week as 'comfort money'. For this many residents get only a shared room, sometimes with three or even five other residents. They are also supposed to get access to activities away from the boarding house, and independent advocacy – but our colleagues at People With Disability report that their attempts to get in touch with residents are frustrated and, behind the closed doors, punitive cultures flourish.

So, for example, in Horin's report, one LRC resident, elderly and mentally ill, describes being punished for swearing by confinement (except to take meals and go to bed) to the back room of the boarding house for a year.

It's not going too far to say that all LRC residents have been stuck in the back room of government policy for many years now. Over the last decade, the NSW Ombudsman has three times investigated NSW Ageing, Disability and Home Care, the department responsible for regulating LRCs, and found its licensing and monitoring practices wanting. ADHC has taken action in relation to the LRC in Horin's article: an investigation last year found 37 high-level breaches of licence conditions that placed residents at risk; and now an application to the Guardianship Tribunal for an independent guardian, rather than the LRC operator, to manage the affairs of residents. In the course of the present proceedings, three residents have been relocated for their own safety. The Chair of the Tribunal asks why action wasn't taken sooner.

Like other marginal renters, LRC residents have common law contracts with their landlords and lack really effective contractual rights or dispute resolution. Law reform for occupancy agreements that reflect some basic occupancy principles, as well as some standard terms devised particularly for LRCs, is one of the actions needed from the State Government to better protect these very vulnerable persons. Another, as recommended by PWD, is stronger monitoring and enforcement action by an independent quality assurance agency.

But the third and final action must be the eventual closure of all remaining LRCs. Privately owned, for-profit services should not have a place in the future provision of accommodation and support for people with disability. People with disability in need of support or care should receive it as of right – and this is compromised where it is paid for out of the pensions of low-income people with disability and delivered by a for-profit operator. Let's instead get these people housed appropriately with social housing providers, with support from funded not-for-profit disability service providers.

The TU supports the right of people with disability to live where they choose – including in boarding houses – and believes that the wider boarding sector needs some additional measures of government support to ensure its viability, but the LRCs – that small dark segregated corner of the sector that houses only people with disability – should be consigned to history.

Update: further reports and comment by Horin on LRCs (hat-tip to Anonymous for the links):

Housing NSW Youth Scholarships - applications are open

2011-07-14T14:33:00.009+10:00

Do you live in social housing or are on the waiting list? Will you be studying for the HSC at high school or TAFE next year?

If you answered yes to both those questions, you should consider applying for a Housing NSW Youth Scholarship, which pays a very handy $2 000 to help with your education.

(A scholarship means less time working at after-school jobs. Buster Keaton in College.)

Applications close 5 pm Friday 29 July 2011. Get on it, students!

(And good on Housing NSW.)

Residential parks to be registered

2011-07-13T14:31:00.005+10:00

In the news this week: the NSW State Government has announced that it will establish a register of all residential parks in the State.

This keeps a promise made by the Coalition before the election, and is intended as a preparatory step to making good on other election commitments, such as a licensing regime for park operators, and a review of the Residential Parks Act 1998.

Very good! Registration presents only the very lightest of regulatory burdens and has the potential to improve policy-makers' information about, and liaison with, the residential parks sector – a good thing.

We could apply this idea to a related area of housing policy too. A register would be a good thing for the marginal rental sector - particularly boarding houses. In this case, not only would it improve information and liaison, it could also help prospective residents tell the legitimate operators from the shonks and, in the long term, be worked up into an accreditation or licensing system that gets operators better skilled and residents better served.

All part of the plan for reforming marginal renting!

NAIDOC Week 2011

2011-07-06T09:35:00.005+10:00

It's NAIDOC Week!

Originally named for the National Aborigines and Islanders Day Observance Committee, it was found that there was too much in our indigenous cultures worth celebrating to fit into a single day – hence NAIDOC Week.

We've noted previously how most Aboriginal households rent. Many of these households will find little about their housing to celebrate – but here's something worth celebrating: the excellent work of the NSW Aboriginal Tenants Advice and Advocacy Services.

Between them, these four services cover all of New South Wales, so each of them serves a large number of people, over large – in some cases, huge – geographic areas. The good workers at these services sometimes drive for a day to attend a Tribunal hearing for a client. And when they're not in the car, they're on the phone giving information and advice to Aboriginal tenants, or they're out in their communities, educating tenants about their rights, and practicing a quiet, insistent diplomacy with Aboriginal Housing providers to get them to lift their game.

Koori tenants advocates: good on you, and happy NAIDOC Week.

Vale Roddy Meagher

2011-07-05T08:10:00.009+10:00

The former NSW Court of Appeal judge Rodderick Pitt 'Roddy' Meagher has died.

We're sure that Justice Meagher's legendary wit will be extolled in obituaries by his brothers in the law. We use 'brothers' deliberately, because the sisters, whom he once described as 'bearded lesbians', may not remember him so fondly.

We also use 'legendary wit' deliberately, because the actual evidence is a bit iffy. Consider the following passage from his judgment in the case of NSW v Coffey [2002] NSWCA 361 (7 November 2002), in which the plaintiff, a public housing client service officer, sought compensation from his employer for psychiatric injuries suffered on the job:

He worked as a caretaker/manager/concierge of blocks of Housing Commission flats, first at "The Pottery" Belvoir Street, Surry Hills, Sydney; and then, from July 1988 to December 1996, at the "John Northcott Flats" in the same street.
The inhabitants of these flats were a motley crew. Many of them had psychiatric disorders. Some of them had been patients at institutions. Some were addicted to drugs or alcohol, or both. Most of them were foreigners, and many of them were female.
Mr Coffey's duties were wide and varied. He was responsible for the signing of leases, maintenance of the properties, control of rent arrears (which were always considerable), the investigation of nuisances, the prevention of unauthorised persons living in the buildings, supervising contractors, arranging for the transfers of tenants and liaising with fire brigades, social workers and the police.
He worked in an office which had an open counter. Tenants would come to the counter, and abuse and threaten him. One tenant used to yell at him, flourish a knife and threaten to kill him. Equally unpleasant was the experience of being bombarded with letters from Mrs Clover Moore MLA, falsely accusing him of manifold irregularities. On an occasion he received a summons accusing him of assault.
He asked for security screens to be erected on the counter, but they were not. He asked for legal support, but got none.
But that is only the lesser side of his tribulations.
What was far worse was the number of murders or suicides the results of which Mr Coffey had to deal with. He gave a list of about 13 such cases, and said in evidence he could add extensively to that list. Many of the details are disgusting: identifying five half-faceless bodies, identifying a corpse who had been hanging for about 5 weeks in his room, cleaning up the footpath after a large lady had jumped 4 storeys to her doom. Worst of all was cleaning up the mess after the corpse had been removed.

Wit, or the privileged having a go at the poor? (In any case, you can restore some balance to your perspective on the above-named estates by following up the excellent work done there by public housing tenants with arts NGO Big hArt.)

Justice Meagher did, however, make an important contribution to the development of residential tenancy law in New South Wales, through his judgment in the landmark case of Roads and Traffic Authority v Swain (1997) 41 NSWLR 452. This case was concerned with the Tribunal's power to order termination – and whether it could decline to make such an order – where a landlord had given a termination notice without grounds.

Prior to the Swain litigation, the Tribunal (and and the Supreme Court) took the view that if a landlord gave a valid termination notice, and there was no question of it being retaliatory, the Tribunal must terminate, no further questions asked. Meagher JA led the NSW Court of Appeal to uphold the decision of the Supreme Court (in Swain v Residential Tenancies Tribunal (unreported, NSW Supreme Court, 22 March 1995, Rolfe J)) that the Tribunal could decline to terminate.

This, it held, was the proper construction of the relevant words of s 64(2) of the 1987 Act:

The Tribunal shall, on application by a landlord under this section, make an order terminating the agreement if it is satisfied... (c) that, having considered the circumstances of the case, it is appropriate to do so.'

In other words, the words 'having considered the circumstances of the case' would mean that that. In subsequent decisions, the Tribunal would consider a range of circumstances, including the tenant's age, state of health, length of tenancy and the difficulty they would encounter in finding alternative accommodation; Meagher JA himself noted that 'circumstances' would also include any hardship that would be done to the landlord if termination were declined.

This was, with respect, the most natural and reasonable construction of the old Act's provisions regarding terminations without grounds. It was not an assault on landlords' property rights, and in fact the Tribunal rarely declined to make termination orders. Probably the greatest effect of the Swain case was that it gave tenants and their advocates a little ground on which to negotiate with landlords about terminations – to explore alternative solutions, or at least to get a little more time to move out. It also probably helped to discourage landlords from taking termination proceedings for rubbishy reasons: retaliation, discrimination, spite and simple 'personality clashes.'

Unfortunately, this admirably straightforward and fair construction is no more, having been done away with in the passage of the Residential Tenancies Act 2010. See the provisions for 'without grounds' terminations by landlords at ss 84 and 85:

84 End of residential tenancy agreement at end of fixed term tenancy
...
(3) The Tribunal must, on application by a landlord, make a termination order if it is satisfied that a termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice.

85 Termination of periodic agreement
...

(3) The Tribunal must, on application by a landlord, make a termination order if it is satisfied that a termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice.

Now a consideration of the circumstances of the case is limited to the Tribunal's decision as to when possession must be returned to the landlord, not whether the tenancy should be terminated at all (with one, slender exception: termination of those (very few) tenancies that have been on foot for 20 years still attract a consideration of the circumstances of the case). And so 'no-grounds' termination notices become trump cards.

The 'circumstances of the case' provision contributed, according to Meagher JA, to the 'balance' between the positions of landlords and tenants that the 1987 Act struck. The new Act is better in many respects, but not this one.

'Underoccupancy' in public housing

2011-07-04T08:49:00.008+10:00

There's an interesting article in today's Daily Telegraph about the 'underoccupancy' of public housing – though the article is rather let down by the insulting heading 'What a waste of space'. (Insulting, and ironic, considering how much of the Tele's cybernetic real estate is devoted to photos of the Duchess of Cambridge's sister and losing contestants on Dancing with the Stars.)

Reports the Tele:

NEARLY 50,000 NSW Housing dwellings are under-occupied, with almost 11,000 people living on their own in houses with more than three bedrooms.
An investigation by The Daily Telegraph can reveal that while 43,335 people are stuck on waiting lists, thousands of NSW Housing tenants are living in homes too big for them.

Of all tenants living on their own, 25 per cent have a house with more than one bedroom, with 20,215 the sole occupant in a house with more than two bedrooms, 10,881 with more than three bedrooms and 914 with more than four bedrooms.

Making the top five suburbs of empty bedrooms are the Sydney CBD as well as Waterloo, Redfern, Maroubra and Glebe.

'Luxury'! Actually, it's interesting because it helps us consider a couple of perspectives on current housing policy issues – quite apart from the Tele's perspective of faux-outrage.

An historian of public housing might say: well, yes, this reflects the remarkable changes in public housing eligibility and, hence, demographics, over the last two or three decades. This is the point made in the article by the Housing NSW spokesperson:

"Housing NSW does not currently have enough one and two bedroom properties (into which) to move tenants who are under-occupying," she said.

"In the early 1970s, over 70 per cent of housing applicants were couples with children, and only 12 per cent elderly singles. Today, 40 per cent of applicants are single, another 30 per cent are single parents and only 8 per cent are couples with children."

In fact, in the early 1970s single persons (other than Age Pensioners) weren't even eligible for public housing! (They've been eligible only since the early 1980s.) The population housed in public housing has changed a great deal since then – faster than the stock of houses in which they are housed has changed.

An economist might say of these figures: well, yes, these tenants are evincing economically rational behaviour. Because of public housing's income-related rents, tenants maximise their utility by staying as long as they can in the roomiest properties in the most desirable locations. If there was some utility in taking less roomy or less desirably located properties – in particular, cheaper rent – more tenants might available themselves of that benefit, rather than rooms or location.

And a student of inter-tenurial comparisons might say: well, so what? When you look at all households in Australia, the large majority of lone-person households live in properties with two or more bedrooms – in fact, 86 per cent do, compared to public housing's 25 per cent. Most of these underoccupiers would be owner-occupiers – are they wasting space too, or are they instead kindly, family-minded folk who like to have spare room for when the kids and grandkids come round?

Want to stay housed? Stay poor.

2011-06-28T14:59:00.016+10:00

In the 1930s, when the conservative NSW State Government of Premier B S B 'Bertie' Stevens was considering what to do about housing policy, it looked to Britain. Premier Bertie dispatched himself on a study tour of 'Housing, Slum Clearance and Abatement of Overcrowding in England' (1937), and returned to establish the shortlived Housing Improvement Board, which built the happily much longer-lived Erskineville public housing estate.

Now, a conservative British Government is considering making reforms to social housing tenancies there, including allowing British social landlords to adopt a policy familiar to public housing tenants here in New South Wales: fixed term tenancies, with reviews as to the tenant's continuing eligibility.

And the TU has appeared in the thinking Briton's newspaper, the Guardian, to warn why this is a terrible idea.

Fixed terms subject to reviews as to eligibility have been part of New South Wales public housing policy since 2005, when they were introduced along with increased rent rates for so-called moderate income earners. Both discourage public housing tenants from working.

We've discussed the work disincentive effect of public housing rent policies a couple of times previously (and see the TU's paper, too). This effect is particularly acute in the 'moderate income' band (the dollar amounts that define the band vary according to household type), because over the band the rent rate slides up from 25 per cent of household income to 30 per cent – and, in marginal terms, that means about 50 cents in every additional dollar earned in the band goes to Housing NSW in rent. And then there's income tax, reduced Centrelink benefits, and so on.

The reviews as to eligibility also refer to the moderate income band. If at the end of the fixed term of your tenancy (two years, five years or 10 years, depending on your circumstances) your household income is above the higher end of the moderate income band, you are ineligible to continue in public housing, and you can expect to receive a termination notice on that ground. You don't just lose so much of your earnings – you lose your house altogether.

The work disincentive effect of losing eligibility cannot be measured so readily as that of the rent rates in terms of effective marginal tax rates. But we can measure it in terms of actual results – and the actual result is that just about no-one in public housing in New South Wales earns so much as to lose eligibility. In the first 10 months of conducting reviews in 2007-08 (these are the only figures available), Housing NSW reviewed 3 514 tenancies – and just 28 were found to be ineligible. That's less than one per cent.

The whole point of this policy was to move moderate income earners out of public housing, so as to move people in from the waiting list. But in fact there's barely been any movement, and negligible benefit to the people on the waiting list. One might speculate whether more people might have moved out under their own steam, and more from the waiting list moved in, if tenants were not discouraged from working by high effective marginal tax rates and the prospect of losing their home at a time not of their choosing .

And tenants' decisions about work aren't the only decisions affected by this policy: it also bears on decisions about whether one's young adult children stay at home or must move out, or whether one's girlfriend or boyfriend takes the next step and moves in as a partner (because if your grown up kids or partner earns too much money, you'll lose your home). This is an odious interference in what should be personal decisions.

It should be said that there is another explanation for the failure of the policy to generate any movement of tenants and applicants: that is, that just about everyone comes in the higher end of the moderate income band because it has been set too high. But this explanation does not stack up. Housing NSW's 'moderate incomes' are quite modest. You can get a sense of this from the following tables, which show for various household types on incomes just above the respective moderate income band whether median rents for appropriately-sized private rental premises across Sydney of appropriate are affordable (ie less than 30 per cent of income), unaffordable (ie more than 30 per cent – the benchmark for 'housing stress') or very unaffordable (more than 50 per cent – 'housing crisis').

These tables update the tables in the TU's paper, linked above, with median rents data for the March 2011 quarter, and Housing NSW's current moderate income thresholds. ('Andy', 'Beth' and 'Cass' appear in the paper as typical households.)

(Inner ring Sydney LGAs)

(Middle ring Sydney LGAs)

(Outer ring Sydney LGAs)

As well as indicating the modesty of a 'moderate income', these tables also give a sense of how the policy bears on decisions about work. You can see how a public housing tenant who is giving thought to working and earning more might take a look at what they'd pay in the private market if they became ineligible... and in the inner and middle rings, just about nowhere are median rents affordable, and even median rents in most outer ring LGAs are unaffordable too. And you can see why they might take pains to stay right where they are.

We understand that British social housing landlords are to be given a choice as to whether they adopt this policy. Let's hope they choose not to, and instead try to ensure that social housing is a place where people are not afraid of enjoying the stability it gives them to get educated, and get employed. And let's hope the NSW State Government does the same for public housing tenants and applicants here.

Miscellaneous Provisions Bill misses provision

2011-06-27T13:23:00.005+10:00

The Statute Law (Miscellaneous Provisions) Bill 2011, to which we referred briefly the other day, was passed by the NSW State Parliament without amendment to those bits of it which deal with residential tenancies.

We identified one problem with the Bill: tenants who have fixed term agreements of exactly two years will now be exposed to the prospect of a rent increase during the fixed term. This is because the provisions for rent increases during fixed terms in s 42 of the Residential Tenancies Act 2010, which originally applied to agreements for a term of 'more than two years', now apply to agreements for a term of 'two years or more'.

Now a Brown Couch reader alerts us to another problem.

(Esprit de l'escalier)

While it changes 'more than two years' to 'two years or more' in s 42, the Bill makes no change to a related provision in s 99 of the Act. This provision gives tenants under fixed term agreements a remedy if their rent is increased: they can terminate the agreement. This remedy is available if the agreement is for a fixed term of 'more than two years'.

So, if you've got an agreement for a fixed term of two years exactly, the Bill exposes you to rent increases - but doesn't extend to you the remedy of getting out of the agreement. You're stuck!

The Bill, though it has passed through the Parliament, has yet to commence. Hopefully this problem can be sorted out before it does.

But it's another reason why consultation before a Bill appears in Parliament would be useful.

Vale Agnes Borsody

2011-06-25T07:43:00.005+10:00

We were sad to hear this week that Agnes Borsody, a long-time Member of the Consumer, Trader and Tenancy Tribunal, has died. The sadness is shared by all at the Tenants' Union, and throughout the network of Tenants Advice and Advocacy Services.

Member Borsody was not particularly 'pro-tenant'; better than that, she was fair. Tenants advocates appearing before her couldn't always be sure of getting the orders their clients wanted, but they could be sure of getting a well-reasoned result.

We often hear the complaint – usually by persons who have not set foot in the Tribunal, or by landlords who have failed to get what they wanted – that the Tribunal is 'pro-tenant'. Hardly. It's true that the Tribunal is better for tenants than the previous alternative – the NSW Local Court – in that tenants never asserted their legal rights in the Local Court, but they do sometimes go to the relatively accessible and inexpensive Tribunal. But landlords enjoy the Tribunal's benefits even more: their applications outnumber those by tenants by a factor of six.

The Tribunal is not 'pro-tenant': if anything, it is pro-expedition. It likes to wrap things up. In our judicial system, no court or tribunal except the NSW Local Court receives more applications, and the Tribunal gets the majority of applications listed for hearing within three weeks of lodgement, and finalises most applications at or before the first hearing. We sometimes hear of Members and conciliators who advocates say have applied undue pressure to parties – particularly tenants – to settle proceedings on terms that aren't really appropriate. We also sometimes hear of worse behaviour: Members who, faced with a seemingly uncontrollable torrent of applications, try to regain a sense of control and power by bullying the weakest persons who appear before them – again, the tenants.

Member Borsody was a terror to those who wasted the Tribunal's time with misconceived applications or foolish formality – but she directed her blasts particularly at the repeat players in the Tribunal, especially the real estate agents, the housing officers, and the tenants advocates. But even those who suffered a blast knew that she had a sense of humour. She'll be missed.

Statute Law (Miscellaneous Provisions) Bill 2011

2011-06-22T11:14:00.004+10:00

There is a Statute Law (Miscellaneous Provisions) Bill currently before the NSW State Parliament, and it relates in part to residential tenancies legislation.

The Tenants' Union has made the following comment on the Bill, on its own behalf and that of the network of Tenants Advice and Advocacy Services.

The TU has no concerns about the proposed amendments, with the exception of those to s 41(1) and (2) of the Residential Tenancies Act 2010 (NSW). The proposed amendments go mostly to clarifying the operation of, and fixing potential problems in, existing provisions of that Act.

We note that the proposed amendments to s 41(1) and (2) would expose tenants under existing agreements for a term of exactly two years to the prospect of a rent increase, where otherwise their rent could not be increased. We submit that the Bill should be amended to include a transitional provision in relation to existing agreements to prevent this happening.

We note that proposed new s 89(6) does not fix technical problems identified in the operation of s 89(5), but it does not create any additional problems.

We have identified a number of other technical problems in the Residential Tenancies Act 2010 (NSW); had we been consulted prior to the introduction of the Bill we are confident that they might have been fixed too.

Don't bank on real estate agents

2011-06-20T10:29:00.007+10:00

Further to the dodgy advice from agents discussed in our previous post, we've had our attention drawn to the following shocker. A Canberra agent is quoted in a Toowoomba paper (making us suspect that the piece may have appeared in other papers too) as advising money-conscious tenants:

They should increase the amount they pay in rent to their agent... by as much as they can afford until it hurts....

[The agent] puts the extra away in a bank account – say an extra $200 per week – and after two years they will have over $20 000 which is a big step in the right direction.

Here's the article, with the dodgy advice indicated.

Now, there is a time-honoured practice amongst some tenants of paying a couple of dollars extra each week so they don't have to worry about paying the rent over Christmas, but I don't think anyone does what this agent is recommending. And for good reason. Let us count the ways in which this advice stinks.

1. First, and probably least, it is a bit rich for real estate agents, as inveterate debt-pushers and spruikers (check the headline: 'Now is the time to buy'!) to presume to give tenants advice on establishing a savings culture.

2. Secondly, if you're handing over extra money as rent to an agent, it will go to the rent account, not into any other sort of account. It will not earn interest for you. Under section 47 of the new Residential Tenancies Act 2010, you are, happily, entitled to get overpaid rent paid back to you within 14 days of requesting repayment (but note: this is the New South Wales Act, and it does not apply, of course, to renter-savers in Canberra and Toowoomba).

3. Thirdly, if you're handing over extra money not as rent or some other legitimate charge under your tenancy agreement – don't. Put it in a savings account at the bank yourself – and if you don't trust yourself to keep in the habit, set up a scheduled transfer. Don't trust a real estate agent to do it for you. Quite apart from the risk of a rogue agent making off with the money themselves (and we note that in 2009-10, Fair Trading issued penalty notices to 83 agents, for a total of 99 offences, under the Property, Stock and Business Agents Act), you have to keep in mind: even an honest agent works for your landlord, not for you. You're not paying them to be your banker; don't expect them to act as one.

4. And handing over an extra $200 a week to your real estate agent? Why not just go ahead and ask for a rent increase?

We dips our lid to Delusional Economics at Macrobusiness for bringing this one to our attention.

Agents behaving badly - rent arrears and CTTT costs...

2011-06-09T13:57:00.018+10:00

Tenants beware - real estate agents don't always get it right!

(Real Estate Agent School - not as easy as you might think.)

We've recently heard of some tenants receiving notices of termination for rent arrears that include threats of obtaining costs for eviction proceedings in the Consumer, Trader & Tenancy Tribunal (CTTT).

That this would happen once is alarming enough, but numerous instances occuring simultaneously across different parts of NSW smacks of an emerging industry practice. A dodgy one, at that. Let's hope not, but just to be sure, let's all be on the look-out for it...

The letters read something like this:

... You are in breach of your lease and we hereby give you notice of termination under section 88 of the Residential Tenancies Act.

We have lodged an application for termination with the CTTT. Costs for the application are $36 and we will hold you responsible for this cost regardless of whether or not we have to proceed with this application.

Should a hearing become necessary, we will seek further costs in the CTTT - including our preparation costs and our attendance fees of $xx.xx per hour.

You can only avoid termination by paying the rent or entering into an agreed payment plan within 7 days.

There are a few implications here that ought to be promptly addressed.

Implication 1 - real estate agents can easily obtain costs orders in the CTTT...

Implication 2 - tenants can be held responsible for real estate agents' CTTT application fees - even where the matter is resolved without having to attend a hearing...

Implication 3 - tenants cannot avoid termination for arrears unless they do exactly as the real estate agent tells them...

The view from the Brown Couch is, as you would expect, somewhat different. Let's look at each of these implications in turn:

1. Under the Consumer, Trader and Tenancy Tribunal Act 2001, parties to any proceedings are required to cover their own costs. The Tribunal does have the power to order one party to pay the others' costs, but only in matters where there are "exceptional circumstances" that would warrant it. In general terms, costs are difficult to obtain, and it is usually not even worth asking for them...

2. The Residential Tenancies Act 2010 stipulates that tenants can only be required to make certain types of payment to the landlord under their residential tenancy agreement. These are bond and rent, and in many instances charges for water consumption. Requiring a tenant to pay a CTTT application fee, absent a difficult-to-obtain CTTT costs order, would be in breach of the law, and could leave a landlord liable for a $2,200 fine.

3. Tenants should not rely on the advice of a real estate agent. Agents are, after all, there to work for the landlord, not the tenant. Don't be fooled or intimidated into leaving the property without a CTTT hearing - particularly if you disagree with the arrears claimed, or if you've made an offer to pay by installments that the landlord wont agree to. It's always a good idea to get advice from a Tenants' Advocate before deciding what to do.

Taking all of this into account - real estate agents who hand out this kind of notice of termination are perhaps putting themselves in harm's way. The information included with the notice may be seen as misleading or even unconscionable, and a complaint to Fair Trading could be made on this basis. Contact your local Tenants' Advice service for more information about making such a complaint.

The Henry Review reviewed: part 3

2011-06-02T16:04:00.001+10:00

The Henry Review was more than a review about Australia's tax system: it was a review about Australia's tax and transfer system, so as well as looking at the money the Government takes in, it also looked at the payments, subsidies and other forms of financial assistance that the Government pays out to individuals.

We'll consider what Henry says about housing transfers – in particular, Rent Assistance and public housing – below.

(Ken Henry contemplates the effective marginal tax rates associated with public housing rent rebate policies)

But first, a final word on what Henry says about tax.

We've noted in the previous two parts of our review that the taxation of income from savings (which, on Henry's definitions, includes property speculation) is a focus of the Henry Review, and in his recommendations Henry develops the theme of treating different means of savings more consistently, particularly by taxing most forms of savings income at a 40 per cent discount to the saver's other income.

As always, the question arises: if you tax savings incomes less heavily than labour incomes, who benefits? Virtually by definition, the wealthy benefit.

Henry gives an indication of just how skewed is this benefit in the preliminary discussion paper to the Review, which shows just how skewed is the distribution of wealth – and hence, the distribution of labour incomes and capital incomes (ie what we've been calling savings incomes: interest, net capital gains, net rent, dividends and trust incomes).

In 2005-06, the bottom 50 per cent of Australian taxpayers received 17.6 per cent of total labour incomes, and 15.8 per cent of total capital incomes. On the other hand, the top 10 percent (keep in mind, this is a much smaller group) received 28 per cent of labour incomes, and 53 per cent of capital incomes.

To really make the point, an even smaller group – the top one per cent of tax payers – received 5.3 per cent of labour incomes, and 28.5 per cent of capital incomes.

In other words, the better off you are, the stronger the mix in your income of capital income to labour income. And Henry would generally tax capital incomes lightly, and labour incomes relatively heavily.

Henry doesn't give a strong justification of of this basic bias in the tax regime he proposes. He does, however, make a suggestion that would go a little way towards mitigating it: a bequest tax. The tax Henry has in mind would apply only to inheritances above a 'substantial threshold', so as to fall on the wealthiest 10 per cent of households, and then apply simply as a low flat rate.

'You mean "death duties"!' gasp the decadent bourgeoisie. That appellation is fine by us here at the Brown Couch, though a bequest tax could probably be even more accurately called an 'unearned wealth tax'.

It should be noted that the Henry Review does not go so far as to positively recommend a bequest tax – it just spells out the benefits of when, then invites a community discussion of the issue. Good luck with that.

On to housing transfers.

First up, Henry gives a strong statement – albeit in the peculiar language of economists – of support for housing assistance:

A key function of national government is the prevention of capability deprivation — that is, the absence of fundamental capabilities that enable people to participate fully in society. Income support is a major mechanism for achieving this end. It provides people with resources to maintain an adequate standard of living and supports their participation in the community, including the workforce.... There is a further need for specific housing assistance in recognition of the special role it plays in supporting wellbeing.

And in similar terms, Henry states his general principle for the provision of housing assistance:

Housing assistance should be provided in a way that is equitable, does minimum harm to participation incentives and gives recipients choice in the housing they occupy.

Now we turn to the actual lie of the land. In Australia, Henry observes, 'there are two major forms of housing assistance available to low-income earners: Rent Assistance and public housing. A person can access only one or the other.'

The implication is that there is a great divide in Australian housing assistance policy. There is, but with respect, Henry doesn't quite define the divide exactly right. Rather than 'public housing' he really ought to have referred to 'social housing', which is a larger category that also includes community housing organisations. True, it's only a slightly larger category: in 2008, there were about 30 000 community housing tenancies, compared with 330 000 public housing tenancies (and, for the record, about 940 000 Rent Assistance recipients). Still, I don't think this is nit-picking, and we'll return to the complicating factor of the community housing organisations further below. Henry notes their existence, but otherwise he refers to public housing.

So how does that general principle of housing assistance go, either side of the great divide?

Rent Assistance

Rent Assistance is paid by Centrelink to recipients of other Centrelink payments (eg Age Pension, Disability Support Pension, Newstart), and recipients of Family Tax Benefit Part A (where paid at more than the base rate), where the recipient pays more than a certain threshold amount of rent. These thresholds vary according to the recipient's household type (ie single or couple, and number of kids). The amount of Rent Assistance paid is 75 cents for every dollar of rent above the threshold, subject to a maximum amount, or cap. These caps also vary according to household type.

Generally speaking, Henry likes Rent Assistance. For Henry, it's equitable, in that it is well-targeted to need (the thresholds rule out about 40 per cent of Centrelink recipients, who pay no or low rents). It's okay in terms of work participation, because the amount paid is independent of the amount of the recipient's other Centrelink payment. This means, for example, that the recipient who does some work and earns a bit of money might have their Newstart payment reduced, but not their Rent Assistance – which is less of a discouragement to working than if both the Newstart and the Rent Assistance were hit at once. It also means that the rate at which income support is withdrawn is the same for renters and owner-occupiers – which is important in terms of equity.

And, in terms of choice, Rent Assistance recipients can choose which houses to apply for, and when to move. Henry also observes that because Rent Assistance works as a 'co-payment' - that is, you and the Government go 25/75 in paying the rent above the threshold amount – there is an incentive for receipients to economise and choose lower cost rental housing (about 30 per cent of Rent Assistance recipients receive less than the maximum amount).

For Henry, the main problem with Rent Assistance is one we've discussed before on the Brown Couch: the amounts at which it's capped are too low. Henry's solution is the same as we discussed: lift the caps. In particular, Henry would set the cap for each of the various household types at the 25th percentile rent for a dwelling of suitable size. (In other words, take all rental dwellings of the same size, rank them according to the amount of rent: the 25th percentile is more expensive than 25 per cent of dwellings, and cheaper than 75 per cent.) And looking ahead, Henry recommends that the caps should rise in line with rents, rather than the CPI, as is currently the case.

As we discussed previously, one possible objection to increasing the maximum amounts of Rent Assistance is that this may cause rents to rise – that is, landlords will simply eat up the increase. Henry doubts this would be a problem, noting that Rent Assistance recipients comprise a minority of the market... and anyway, would it be such a bad thing if the rents paid by Rent Assistance recipients increased? This would be (in economist-speak), 'a market signal to suppliers of rental housing to shift toward provision of the type of housing demanded by Rent Assistance recipients. Suppressing price signals is not conducive to promoting increasing supply over the long term.'

That's how much Henry likes Rent Assistance. What about public housing?

Public housing

Says Henry:

Public housing is a significant mechanism for providing housing to disadvantaged groups. It has become the primary source of housing for people who cannot access appropriate or adequate housing in the private market such as people with a mental illness and Indigenous Australians who still too often face discrimination in the housing market. Social housing (public housing and community housing) provides a valuable stock of houses in the context of Australia's housing supply difficulties, and in some areas such as remote Indigenous communities is the only viable source of housing.

(You can feel a 'however' coming, can't you?)

However, there are a number of areas where social housing is not adequately supporting the Australian households that rely upon it for adequate housing.

Thereinafter, Henry conducts a thorough demolition of the way public housing delivers housing assistance – particularly the way it delivers rebated rents (in most cases, rebated to 25 per cent of household income) to tenants of certain publicly-owned dwellings.

This is, Henry says, inequitable. Public housing rent rebates deliver a much greater level of assistance to public housing tenants than Rent Assistance delivers to tenants of like means in private rental. And within the public housing system, the level of assistance is inequitable because it is the same, regardless of the relative amenity of the particular dwelling with which it comes (that is, person pays the same rent, whether they're in a roomy house by the beach, or a pokey bedsit in the sticks), and regardless of any other costs (transport, etc) that go with that. It is also inequitable because it is the same for those in greatest need (eg those who were previously homeless, those whose health is at risk) as for those who are not but who are on a low income. Rather, public housing differentiates between these levels of need by giving preferential placement to those in greatest need on its waiting list.

Which leads us to work disincentives. The waiting list is the site of a major discouragement to work, because to stay on the list you've got to stay poor. Henry refers to research that reports that rates of unemployment are 11 per cent higher for men, and 5 per cent higher for women, when they are on the public housing waiting list, compared to when they are in public housing.

But when in public housing, these persons face another round of work disincentives. As Henry points out, public housing's income-related rents mean that if you do some work and earn a little money, your rent goes up, while your Centrelink payment goes down. In terms of effective marginal tax rates, public housing's 25-per-cent-of-income-rents straightforwardly add 25 per centage points on top of the effective marginal tax rates ordinarily associated with increasing work and incomes.

This too is something we've discussed on the Brown Couch before, and illustrated in the following charts. Each gives the effective marginal tax rates faced by one of three typical public housing households, based on their Centrelink payments and Family Tax Benefits being withdrawn, and their rent, income tax and Medicare levy being increased, as their income from employment increases. (The data is from 2008, but the general shape of things will be similar today).

(Click on each for a better view)

Our focus then was on the effect of a variation on income-related rents that's peculiar to New South Wales: the moderate income rates, which slide your rent up to 30 per cent of household income and stack on even higher effective marginal tax rates. Henry doesn't mention this particular policy: for him the underlying policy of 25 per cent income-related rents is bad enough.

As for choice: public housing tenants don't really get a choice about their housing. Receipt of a public housing rent rebate is tied to occupation of a public housing dwelling, and they get the dwelling that's offered to them – and they better take it lest they spend even longer on the waiting list or, worse, get kicked off the list. Once in public housing, a person can move around and take their assistance with them, but here too public housing's systems make a mess of persons' choices.

For one thing, public housing authorities place restrictions on moving around (eg you have to be eligible, as if you're on the waiting list). Another thing: because the rent is the same regardless of amenity and location, tenants have, as Henry puts it, 'an incentive to maximise their "in-kind subsidy" — that is, they try to stay in larger and better houses than they would normally occupy if they had to pay directly for their housing.' And public housing landlords lose the benefit of receiving 'effective price signals' about what sort of housing stock tenants would really prefer to occupy, and so labour with a public housing stock that is poorly matched to public housing households.

It is, as I said, a demolition job. There are a couple of points at which Henry probably overdoes it. The fact that unemployment is higher on the waiting list than in public housing may be attributed, as Henry does, to the work disincentive effect of having to maintain eligibility, but you could also make the case that unemployment is lower in public housing because the relative stability and security of the tenure helps get people work-ready and back into employment. (The authors of the research cited by Henry suggest both factors are at work).

Henry also suggests that income-related rents may contribute to 'intergenerational poverty' in public housing, because they assume a contribution from children's incomes. He does not, however, consider that the children of tenants in private rental housing might also make such contributions, and in larger amounts, considering the generally lower level of assistance that Rent Assistance provides. If there's a problem of intergenerational poverty in public housing, it is not so directly the result of including children's incomes in the calculation of income-related rents.

Still, even if you're a committed defender of public housing and income-related rents, Henry's is a critique that you'll have to come to grips with.

So how would Henry cure the ills of public housing? Firstly, with the benefits of Rent Assistance. Henry proposes that public housing tenants should receive Rent Assistance and pay market rents to their public housing landlords:

As recipients of social housing would receive Rent Assistance, the amount they pay to their landlord should reflect the market rent of a dwelling. A dwelling's rent reflects the range of benefits it provides, such as the building's size and quality and the location's proximity to employment, services or nearby amenities. Charging market rents would allow recipients to make trade-offs between these aspects of housing and other elements of their consumption. It would also provide signals to social housing providers about the housing that is valued by their clients. In combination, Rent Assistance based on market rents should encourage the provision of social housing that is of value to tenants.

Henry allows a couple of qualifications on this. First, there would have to be 'carefully targeted transition arrangements, to prevent households from being forced into housing stress or pulling up roots and moving away from support networks. Secondly, there are some locations – particularly remote Indigenous communities – where there really is no housing 'market' and hence no 'market rents', and yet other locations – particularly mining towns – where even a reformed Rent Assistance (ie with higher caps) won't get low-income households anywhere near an affordable rent. In these locations, some limiting of public housing rents with reference to tenant incomes would be okay.

Secondly, in respect of 'high needs' clients, Henry recommends that there should be a new additional payment, made by the Commonwealth Government, reflecting the higher costs of housing such persons, which would go to their public housing landlord – or indeed, if they were to move, to another social housing landlord. (Henry specifies 'social housing', because that's where so many of the 'high needs' tenants are, but expressly leaves open the prospect of the additional payment being made available to private landlords.)

You'll notice that the term 'social housing', as distinct from 'public housing', has crept into the account; it does so in the Henry Review's recommendations, too. Let's turn briefly now to those other social housing landlords, the community housing organisations, and the way they complicate the picture of housing assistance in Australia.

Community housing

Let's be clear: the way it currently works places community housing, in very large part, on the same side as public housing in the great housing assistance divide. Most community housing tenants pay income-related rents, at a rate of 25 per cent of their household income, on very similar terms to public housing tenants, with all the implications for inequity, work disincentives and interference with choice that go with that.

However, by a peculiar dispensation of the Government, community housing tenants do receive Rent Assistance. They do so, however, on terms that avail them of none of the benefits that Henry identifies in Rent Assistance.

Here's how Rent Assistance works in community housing. The community housing organisation effectively says to a tenant: we do income-related rents, so give us 25 per cent of your income, not including Rent Assistance. Now, if that was your rent, you'd get so much Rent Assistance (according to Centrelink's usual thresholds). Let's count that Rent Assistance as income for our income-related rent purposes. This additional income means the rent will go up (by a small amount), and as your rent has gone up, so has your entitlement to Rent Assistance (by an even smaller amount). Repeat until the increasingly tiny increases approach their mathematical limit. Now give us all of the Rent Assistance.'*

So, the community housing organisation maximises and captures all of the tenant's Rent Assistance. The tenant has no incentive (or opportunity) to economise on their housing costs, and the community housing landlord receives no 'market signals' about their housing stock. Rent Assistance is becomes just another an operating subsidy to community housing orgainsation, albeit one that is directed through the bank ccounts of individual tenants, who bears all the risks associated with making sure Centrelink pays it in the amount expected by their landlord.

That's not the only potential problem with this odd arrangement. Community housing is the only growing part of the social housing sector, and this growth is increasingly being achieved through private financing – particularly debt financing. Community housing organisations are relying on those Rent Assistance payments to pay mortgages.

And they're involved in other financial innovations, too, such as the National Rental Affordability Scheme, which has created partnerships between community housing organisations and private investors that are supposed to turn a profit, within the strictures of a requirement that tenants pay not more than 80 per cent of the market rent. This too, raises questions about revenues, rent setting and housing assistance.

All of this is to say that housing assistance policy as we know it is under challenge on a number of fronts. The Henry Review indicates a number of them:

efficacy – in particular, Rent Assistance as it is currently capped is often not effective in producing affordability;
equity – in particular, income-related rents in social housing deliver to similar persons a higher level of assistance than Rent Assistance, and without regard to differences in need or the amenity of the dwelling also provided;
work participation – in particular, the waiting list for social housing creates a work disincentive, and so do income-related rents and the high effective marginal tax rates to which they contribute.

And we've identified another: the financing of social housing – in particular, the new private debt and equity arrangements into which community housing organisations are getting, and the implications of these for reveues, rent setting and housing assistance.

These four fronts of pressure will change the shape of housing assistance policy. Henry's own vision of the new shape is an enhanced Rent Assistance, extended to social housing tenants, and supplemented by a new housing payment for persons with high needs. What do tenants and their advocates in the community sector think?

Next: a summing up of the Henry Review, and the Government's response.

____________________________________________________

* For the mathematically inclined, this iterative process can be reduced to a fairly simple formula.

RC = 4TC-3LT

where:
RC is rent charged to the tenant - that is, what they are actually expected to pay;
TC is the 'tenant's contribution' - that is, 25 per cent of the tenant's household income, excluding Rent Assistance;
LT is the lower Rent Assistance threshold.

Landlord selling? Looks like you're free to go *

2011-05-31T15:00:00.006+10:00

The new Residential Tenancies Act 2010 has now been in operation for five months. Regular visitors will recall that this Act marks the first comprehensive rewrite of renting laws in more than 20 years - fixing many flaws in the old 1987 Act, and bringing a few new measures in to reflect the changing of the times.

As with any new piece of legislation, what's written down by Parliament can mean different things to different people. It's only when disputes under a law are taken into the judicial system for arbitration that we can start to properly understand that law's meaning - because the courts generally get the last word on how to interpret a law. In the case of the Residential Tenancies Act, the first port of call for arbitration is the Consumer, Trader & Tenancy Tribunal (CTTT). Although decisions made by the CTTT do not set legal precedents (in fact it is not even bound by its own decisions), for the purposes of understanding how fiddly bits of our new renting laws work, we need look no further than decisions made in the CTTT.

Not all CTTT decisions make it into print, and there's often a lag as most juicy decisions take time to write up and publish. But luckily for us, we've got access to the collected works of the Tenants Advice and Advocacy Services, so we can spot 'em as they happen.

Recently, the CTTT decided a case that helps to clarify part of the new law*. At section 100(1)(c) the Act allows tenants to give notice to end a tenancy during a fixed-term (without having to compensate the landlord) - if the landlord tells the tenant that they're going to start selling the property. But there's a catch... the landlord must not have already told the tenant about the proposed sale before the tenancy began.

And, maybe, there's another catch. Another section of the Act - s26(2)(a) - requires a landlord to tell the tenant about a proposed sale before entering into a residential tenancy agreement (specifically, if a contract for sale has been prepared).

Until now, it has been unclear whether this would mean that tenants could not make use of the s100(1)(c) option, unless the landlord had failed to disclose an already existing intention to sell before entering into the agreement. In other words, if a landlord had no intention to sell at the beginning of the tenancy (and therefore had nothing to tell the tenant), could they later change their minds, and would this prevent the tenant from giving notice under section 100(1)(c)?

Tenants' advocates have formed a view on this - that the two sections of the Act can be read independently of one another - and this has now been successfully argued in the CTTT. In the case of Kutzner v Kamp (NSWCTTT unreported) the Tribunal stated:

The issue for determination is whether in these circumstances the tenants were entitled to give notice of termination under section 100(1)(c) of the Residential Tenancies Act 2010. I am satisfied that it is not a requirement of this provision that the landlord must have an intention to sell the property at the time of entering into the residential tenancy agreement which was not disclosed. It is only necessary for the landlord to have notified the tenant of such an intention during the fixed term without notice prior to commencement of the tenancy. "Disclosure" in the sense used in s100(1)(c) does not mean disclosing what was known to the landlord but rather whether prior notice had in fact been given of the landlord's subsequent decision.

The question arising upon the Tenant being told of the intention to sell, is whether the Tenant had been told at the commencement of the tenancy that this would happen. It is not an answer to say that the landlord did not know then that this would occur.

This is a good outcome for tenants, but we'll be keeping an eye on how landlords respond to it. Will we start to see blanket disclosure under section 26(2)(a)? Presumably, not all prospective tenants will be keen to enter into agreements on properties that are listed for sale, so even if landlords do start to try this on, we don't think it will take off. Most landlords wouldn't want to limit their pool of potential tenants in this way. Even so, if you're sitting down to sign a new lease and the agent says "oh, by the way, we need to tell you the landlord is going to sell, but it's nothing to worry about because they haven't listed it yet", it would be a good idea to press them for more information. If they can't give you any indication of when a listing for sale is likely to proceed, there's a good chance you'll be able to distinguish - when it matters - between what was known to the landlord then, and any subsequent decision to sell.

* This information is not to be construed as legal advice and should not be relied on in the making of any rash decisions about moving house. If in doubt, contact your local TAAS.

NSW State Govt dumps affordable housing policy

2011-05-20T07:56:00.005+10:00

Reported in today's Herald:

THE Planning Minister, Brad Hazzard, has called an immediate halt to new development applications made under a controversial policy designed to boost affordable housing for low- and middle-income-earners, and announced amendments to the scheme while a new policy is developed.

We understand the 'controversial' policy to be the Affordable Rental Housing State Environmental Planning Policy (ARHSEPP) - or, at least, those aspects of the ARHSEPP that deal with 'infill affordable rental housing'.

(There's no word in the report or, as yet, on Planning NSW's website as to whether other aspects of the ARHSEPP, such as those dealing with boarding houses, supportive accommodation, or developer contributions to compensate for the loss of affordable housing, have been changed.)

The Herald quotes Minister Hazzard as saying the infill affordable rental housing provision gave ''an avenue for small-time developers to rip into local communities and change [their] entire face''.

We submit that unaffordable housing also rips into local communities, by forcing essential workers like nurses, police officers and teachers to live far away from their places of work, and by forcing out residents who might have deep roots in a community, but not deep pockets.

The Tenants' Union supports the ARHSEPP, but with some pretty heavy reservations. It doesn't - and to be fair, couldn't - address the primary causes of unaffordable housing, which lie in the tax system, rather than the planning system. (It's not as if housing is unaffordable because low-income renters have been too greedy as to the standards required of their bedsits).

But even on its own terms, the ARHSEPP is a policy instrument of marginal usefulness. This is because its approach is basically permissive: it allows certain things to be done that, under the usual rules applied to developments, wouldn't otherwise be allowed to be done, provided they're done to provide affordable rental housing. It doesn't require or mandate that anyone do anything about affordable housing.

If the State Government will not pursue the provision of affordable housing outside the usual rules for developments, it's going to have to do so within the rules. That means mandating substantial quotas of affordable housing for major developments, and requiring all local councils to plan for affordable housing.

The Henry Review reviewed: part 2

2011-05-11T16:41:00.009+10:00

In part 1 of our review of the Henry Review, we looked at tax and owner-occupied housing. This time we're looking at tax and rental housing – but before we do, a bit of news.

You'll recall the Federal Government's promise to convene a tax summit, at which the Henry Review may get a second lease on life. Now a date has been set – 4-5 October 2011 – for what's to be called the National Tax Forum. Pencil it in, readers! You can get up to speed and keep up to date by checking out the excellent TaxWatch website – and, of course, the Brown Couch's own continuing review of the Henry Review.

(Ken Henry (at right), with Treasury officials in sportive mood.)

*

In a universe parallel to our own, the story of rental housing and tax might be a simple one: rental properties are valued as assets that produce a valuable service – housing – and owned by persons with the necessary skills to make a viable business out of providing this service; the revenue of the business covers its costs and provides an income for the owner, which is taxed, and if the assets increase in value, the gain is taxed too.

For a picture of how differently things go in our own universe, consider the following charts. The first shows the number of persons who have become landlords (or more precisely, persons who declare rental income in their tax returns) – which grew strongly over the last decade-and-a-half. It also shows the proportion of them declaring a rental loss – and this grew strongly too.

(Source: ATO Tax Stats Chapter 2 – Personal Tax, various years)

And let's look at their losses, in dollar terms. In 2008-09, the most recent year for which we have figures, Australia's landlords took in rent revenues of more than $26 billion – but after their costs, ended up losing $6.5 billion. Since the turn of the century – the last time they actually made money from rents – the nation's landlords have lost more than $36 billion.

(Source: ATO Tax Stats Chapter 2 – Personal Tax, various years)

And these were rental property's boom years (that uptick in 2008-09 is the result of some landlords bailing out in the GFC). What's going on?

Negative gearing, that's what's going on. Negative gearing is financial alchemy, turning losses into gains – or rather, at an elemental level, turning income into capital.

More prosaically, negative gearing is the name given to the situation where an investor borrows to buy an asset and the interest they pay is greater than the revenue generated by the asset. They get into this situation with the hope or expectation that for all the losses they have to wear along the way there will be a greater payoff at the end – that is, through an increase in the value of the asset.

Other names can be given to this strategy: 'speculation', or 'gambling.' The Henry Review calls it another form of savings, like putting money in the bank is savings, and putting money into owner-occupied housing is savings. This is, in our view, an undeserved compliment to negatively geared rental property speculation, but it does give us some common points of reference with the 'bank saver' and 'owner-occupied housing saver' from part 1 of our review and a way of thinking about how negative gearing works, so once again we'll work with Henry on this.

Here's how the alchemy works. Start with the negatively geared landlord's gross income: rental income from the property, and income from other sources – namely work. All the rental income goes on interest and other deductible costs, and a far bit of their other income – in total, $6.5 billion of it – goes on those costs too. There's no tax payable on the rental income (because in net terms, it is wiped out by costs) and – under a provision of Australian tax law that is almost unique internationally – there's no tax payable on that other bit of the landlord's income too.

By contrast, our bank saver only puts their money away after the tax office has run its eye over all the saver's income and taxed it accordingly; likewise our owner-occupied housing saver puts their money into the house after it has been taxed. With the negatively geared rental property saver, the money is put towards the cost of the loan before it is taxed, thus reducing taxable income and possibly even the rate of tax. It is as if the income they spend on interest etc melts into air, before the taxman's very eyes.

Or so it seems. It reappears as the value of the property it has bought increases, transmuted into capital. And when the property is sold and the capital gain is realised, it does get taxed (contrast the income from the owner-occupied saver's capital gain, which is not taxed at all) – but it gets taxed at half the rate applicable to income from work.

Now, there's a golden rule to be observed here: the negatively geared rental property saver makes a profit only the after-tax capital gain pay-off at the end of their speculative adventure is more than the total income lost to interest etc along the way. Satisfaction of this rule is helped a lot, of course, by only half-taxing the capital gain, and by the fact that the landlord paid no tax on the income that was spent on interest, and may have paid a lower rate of tax on the rest of their income.

And it has also been helped a lot by the fact that they are using, as the crucible of their alchemy, the housing market. A person can (and quite a few people do) negatively gear other assets, such as shares, but when it's housing, they're trading in a market alongside owner-occupiers who, as we've seen, don't pay tax on capital gains and so are encouraged to put any money they have to spare into housing. Thus the tax-preferencing of owner-occupation is also an encouragement to speculation by landlords, and encouragement to speculation is encouragement to further speculation, even to the extent that the speculators begin squeezing out the owner-occupiers – which, prior to the GFC at least, is precisely what was happening in the Australian housing market, as evinced by declining rates of home ownership.

Henry presents a neat graph showing the results of the different tax treatment for each of the savings strategies we've discussed (it also includes superannuation, domestic shares and foreign shares). The results are presented in terms of effective marginal tax rates – in other words, how much each additional dollar of income from these savings actually gets taxed, with reference to the various marginal tax rates that apply to incomes generally.

(Click on the image for a better view. Graph based on Treasury assumptions of 6 per cent nominal return; 2.5 per cent inflation; for rental property, 50 per cent of the return is attributable to capital gain and 50 per cent to rental income and the rental property is held for 7 years then sold; shares are held for 7 years then sold; superannuation is held for 25 years and the individual is eligible for a tax-free payout at the end of the period.)

On these assumptions, pity the tenant diligently putting their spare dollars away into a bank account, rather than borrowing and spending on a house.

In a second graph of effective marginal tax rates, Henry zeroes in on the rental property saver category and shows how crucial negative gearing is to the success of their strategy. More than that – it shows how crucial is the level of gearing (that is, the proportion of borrowed money in the landlord's purchase of the property).

(Click on the image for a better view. Graph based on Treasury assumptions of 6 per cent nominal return; 2.5 per cent inflation; for rental property, 50 per cent of the return is attributable to capital gain and 50 per cent to rental income and the rental property is held for seven years then sold; tax on debt provider disregarded.)

The more debt, the more income melts into air, the more tax is reduced – all subject, though, to the golden rule above. 'This creates', Henry says, with some understatement, 'significant distortions in how rental properties, in particular, are financed and for the rental property market.'

And how! Just look at the huge growth in the debts of landlords (and, for good measure, owner-occupiers):

(Click on the image for a better view. Source: RBA Table D2)

All that money, pumped into higher prices.

(Australian capital city house prices, index. ABS cat no 641601 and 641603)

And look, too, at how landlords spend their borrowed money: pursuing gains in tried and tested housing markets, on established houses and flats. These speculators barely build any new stock.

(Click on the image for a better view. Source: RBA Table D6 - note lending commitments are not aggregated, unlike debts in Table D2).

So how to address the sources of these distortions in tax system? One way would be to put an end to the Australian oddity and allow interest etc to be tax deductible only against rental income. This way no more of a landlord's income from work and other sources would disappear before it is taxed, and the golden rule of profiting from rental property would apply a sterner test of value. This is TaxWatch's preferred reform, and as we saw in the articles referred to here, Saul Eslake advocates it too.

The Henry Review proposes something different. In keeping with his theme of making the tax treatment of the various forms of saving more consistent, Henry would reduce the favourable treatment of capital gains by lowering the capital gains tax discount from 50 per cent to 40 per cent. He'd also even up the treatment of rental income, by applying a 40 per cent discount to it (net of interest etc), too (as he would to interest income from bank savings, as we saw in part one). Negatively geared landlords could still deduct interest costs from their non-rent income, but the effect of applying the discount on a net rental income basis would reduce the extent to which interest costs reach into non-rental income and reduce taxable income.

Henry indicates the results in a chart contrasting the current approach to his proposed one, again in terms of effective marginal tax rates and using the same assumptions as before.

(Click for a better view.)

This is, so to speak, a proposal for watering down the alchemy of negative gearing. It is, to use Henrian understatement, a mild reform.

Next: housing transfers – that is, rent rebates in social housing, and rent assistance in private rental.

Kids Still Can't Fly

2011-04-28T14:52:00.006+10:00

We posted recently about children falling from windows. It's happened again – this time, fortunately, the four-year old girl who fell is recovering in hospital.

The Daily Telegraph reports that the State Government is considering what actions it might take to address this problem. It need look no further than the report of the Children's Hospital at Westmead.

Now, if you follow the link to the Tele's article (here it is again) you'll see some reader comments at the bottom – many of them from landlords who don't at all mind giving their industry a very bad look. Tidied up a bit, they disclose two main objections – both readily answered.

Objection 1: how about parents exercising some personal responsibility?

Parental care and responsibility will always be the best assurance of a child's safety. Surely the goal is making parents' exercise of responsibility work to best effect. What the Children's Hospital's proposed reforms would do is put window-limiting devices into the hands of parents and tell them 'now, exercise your responsibility and use them – make them work to keep your children safe.'

Objection 2: but what if there's a fire?

The Children's Hospital anticipated this one in their report, and asked Fire and Rescue NSW (formerly NSW Fire Brigades) for its view. It had no conclusive data as to how many people escape fires by exiting through a window – whereas the Hospital's data shows that kids falling from windows is a clear and present hazard. Fire and Rescue NSW's own recommendation is that people should plan to have multiple escape routes in the event of fire, and that window-limiting devices should be able to be unlatched, unlocked or removed by adults.

The Tele editorialises on the issue:

Shut legal window
IT isn't the biggest state project of all time, but it is deeply urgent. A simple change in state housing laws will possibly save many children from serious injury or death resulting from second-floor (and above) window falls.
As things stand, there are relatively few regulations mandating safety for windows in NSW houses. As we've lately seen, these sort of conditions can easily result in terrifying falls for young children.
A basic legal requirement to limit the amount that a window can open, therefore preventing any falls, is all that is needed.
In the meantime, there are extremely simple steps that parents of little children can take in order to make their houses secure.
Any person who is competent with basic tools should be able to stop windows being opened dangerously.
Why wait for the Government to act?

Well said.

Negative gearing - turning off the third rail?

2011-04-21T13:07:00.004+10:00

An eyebrow-raising report in the Herald today:

THE Gillard government has sounded out unions over steps to cool Australia's housing market, with measures that range from a new sales tax for investors sitting on large property portfolios, to curbing the popular strategy of using negative gearing for multiple properties.

The proposals to do something about negative gearing, in particular, catch the eye. Is the Labor Government finally daring to touch what has long been regarded as the third rail of Australian politics, in order to slow the debt-laden housing loco as it barrels down the line?

(Labor ministers and union representatives gingerly prod the third rail.)

The report is short on details, but gives an outline of the strategy:

[T]o reduce political risk, the changes have been designed to target only the wealthiest property owners, leaving those with one investment property untouched.
...

[The negative gearing] proposal is to scale back the negative gearing tax benefit from its 100 per cent benefit as the number of investment properties rise.

...

About 1.7 million property owners used negative gearing in the 2009 financial year, claiming rental losses as a tax offset. This generated a net rental loss of $6.5 billion for the financial year, Tax Office figures show.

They show about 1.19 million Australians own one investment property. About 294,000 have two investment properties, while those with three number 88,300.

Meanwhile, about 14,100 Australians have six or more investment properties, the figures show.

Our housing system sorely needs negative gearing to be reformed, but does it need this sort of reform?

Do we need further preference given to small-holding amateur landlords, who all-too-often get into the market without a second thought to tenancy, instead of multiple-property holders who might take a more professional approach to their business?

Do we need to further encourage the dedicated negative-gearists out there to borrow up big and spend up big on a single property ('aw yeah, it's a premium property!'), instead of building a portfolio of lower price - and hence lower rent - properties, which is what we really need?

There's other ways of reforming negative gearing. There's the short-lived 1985 reforms – recently reprised by Saul Eslake – which allowed landlords to set their losses (ie the amount their rental income fell short of their interest payments) only against future rental income or capital gains, rather than against all their income from work and other sources.

Or there's restricting negative gearing to newly constructed properties only, and for a certain number of years post construction.

Or there's the Henry Review's proposal to reduce the tax preferencing of capital gains by discounting tax on rental income... more on that as our review of the Henry Review continues.

Kids Can't Fly

2011-04-14T11:15:00.011+10:00

A couple of years ago Dr Danny Cass, head of Emergency and Trauma at the Children's Hospital, Westmead, noticed something: an increasing number of his tiny patients had sustained their injuries from falls from residential windows and balconies.

Looking over his records, Dr Cass found that over the ten years to 2008, 169 children had been admitted for this reason – and that's just at the Children's Hospital at Westmead.

Last month the Children's Hospital at Westmead released the report of its Working Party for the Prevention of Children Falling from Residential Buildings. Its recommendations include making amendments to residential tenancies and strata legislation to require landlords and owners corporations to provide safety devices (window guards, durable and sturdy mesh screens, locks, winow opening limiters) or other permanently affixed devices on openable windows more than three metres above an external surface, such that occupants could limit the window opening to 100 millimetres.

The same month yet another child, a boy two years old, fell from a window at home and died.

The issue of window safety was not specifically considered in the review of residential tenancies law that led to the recently commenced Residential Tenancies Act 2010. The relevant provisions of the Act – that premises must be provided and mainatained in a state of reasonable repair, and must comply with health and safety legislation – do not go so far as to specifically require the window safety devices described by the Children's Hosital's report. This means that tenants who ask their landlords to install such devices might be told 'no, the windows in reasonable repair/safe enough as is'. And of course there are many more tenants and landlords who, in the absence of a specific requirement for window safety devices, may not turn their minds to the issue at all – until it's too late.

The Tenants' Union strongly supports the Children's Hospital's proposals. They can and should be implemented now – and there could be no more worthwhile first item of business for a new Fair Trading Minister.