Running repairs? The cost of longer term tenancies: part 3

We have written a number of blog posts now on longer fixed term tenancies, and the problems we anticipate if tenants were asked to take on repairs during a tenancy. One example worth considering when talking about longer term tenancies and the possibility of shifting responsibility for repairs is 'protected tenancies'.

Not that many people are familiar with protected tenancies (though we've written about them a number of times on the blog - most recently here and here). Protected tenants are those covered under the provisions of the Landlord and Tenant (Amendment) Act 1948, but there are very limited circumstances under which someone can be recognised as having a protected tenancy. Generally protected tenancies are found in older suburbs where many residents rented until gentrification gobbled up their suburb, or in country towns where no-one worried about paperwork in the good old days. And in practice, protected tenants are older tenants.

There are two key advantages of being a protected tenant. The first is rent control - rents are usually limited to 'fair rents', and will be considerably less than the market rent. The second benefit is stronger protections against terminations. Protected tenants can only be evicted on certain proscribed grounds (and they can't be kicked out for no reason, i.e. a 'no grounds' eviction). This gives them much greater security of tenure than other tenants. They certainly offer benefits far more compelling than anything being put on the table in current discussions around longer fixed term tenancies.

A succession of landlords all flatly refused to do repairs on this protected premises. Water had been pouring through the ceiling just inside the front door for months.

However the significant drawback of protected tenancies is repairs. The Landlord and Tenant (Amendment) Act 1948 is silent on the need for landlords to do repairs or maintenance. What this means is that many protected tenants are older tenants who, on the one hand have been able to age-in-place, but on the other hand live in homes crumbling around them, because their landlord refuses to do any repairs – sometimes in an attempt to force them out.

Recently we spoke with John, a protected tenant who has been living in his home in Randwick since 1978. We asked him about his experience in a protected tenancy and the ongoing issues he has faced around repairs ...

John moved into his unit in Randwick 39 years ago. It was an old Victorian place with rococo ceilings, a spacious feel - it had one large bedroom and a small room at the back - and a nice view over the racecourse.

But it was falling to pieces: “when I moved in the place was dreadful, everything was faulty”. There was no paint on the walls, the floorboards were loose and squeaked as you moved across them, and the lino had holes in it. The kitchen was a wreck. For $40 a week though, John thought he could live with it.

When he moved in John painted the apartment after confirming that the landlord at the time would reimburse him. The landlord never reimbursed him. Thanks to his handiwork over the years the unit is in good condition, but he has had to do a lot of work. He installed a new kitchen and a new heater, has put in carpets, and paid for significant additional repairs to the bathroom: “I’ve invested a bit into this place. The work I’ve done has made it into a nice place, a home for me”.

One of the few ways a protected tenant can get repairs done is to complain to their local council about the disrepair a building is in. Randwick Council under the Environmental Planning and Assessment Act 1979 has ordered John’s landlord to undertake repairs at least a couple of times. Once when the balconies for the unit block were crumbling and had to have work done to ensure the safety of occupants and passers-by. On another occasion they were required to bring in an electrician to attend to electrical faults that were posing significant safety risks for the entire building. John reports that in this instance his then landlord did call in an electrician, but failed to pay them. As a result the electrician refused to finish the work. In general his original landlord refused to do any work on the unit, including structural repairs.

The landlord's failure to undertake repairs has been a significant and ongoing problem for John:

I don’t see why I should be responsible for structural defects and electrical problems as a protected tenant. I don’t mind doing the things I can do, but the structural issues ... [should be done by the landlord].

Recently the original landlord who John had entered into his tenancy with sold the building (John reports they bought it originally for 7000 pounds, and when it sold 18 months ago it went for $4.2 million). The new owner tried unsuccessfully to evict John. John attributes his success in fighting the eviction in large part to the excellent support he received from a local tenant advocate from the Eastern Area Tenants Advice Service. The new landlord has subsequently undertaken significant renovations and repairs to all of the other units in the building, but - like John's original landlord - has left John's unit untouched.

When asked if he thought tenants should give up their established rights around repairs to secure a longer fixed term lease in the current private rental market, John was clear:

No, it’s not worth it. Not even if you’re going to rent one of the newer places. I know lots of people in Randwick in these new apartments who have lots of problems. Repairs come up often. The rent that tenants are expected to pay now, the landlord should bloody well look after the place.

Proposed repeal of the Landlord and Tenant Act 1899

Last week the Minister for Innovation and Better Regulation, the Hon. Victor Dominello, introduced the Fair Trading Legislation (Repeal and Amendment) Bill 2015 into the New South Wales Legislative Assembly. Among other things, this bill will repeal the Landlord and Tenant Act 1899.

In his second reading speech, the Minister said that the 1899 Act is surplus to the State's statutory requirements. This is not right, because it plays a critical role in determining the way a property can be recovered if it is subject to a protected tenancy. It has a few other functions, too, like providing a bit of a backstop for some tenants who are excluded from the Residential Tenancies Act 2010 - such as those in the case of the lost public housing heritage tenancies.

True, the Landlord and Tenant Act 1899 is not very frequently put to work - at least not directly. And it is also true that much of the work it does is unlikely to be seen in the harsh light of day... but that doesn't make it superfluous. Getting rid of it would be like taking the headlights out of your car because you only ever drive to lunch. One day you might need to stay out a little later than usual, and it's only then that you will understand the true nature of your problem.

The Tenants' Union's full comment on the proposed repeal of the Landlord and Tenant Act 1899 can be found on our webiste.

Happy New Year, Brown Couch readers

And we're back... well, almost. The Brown Couch will be running at holiday pace until the end of January.

The most intriguing news from the holiday period was the story of the tenants and their houses at Welfare Street, Homebush West.

 
The 12 properties were built in the inter-war years to house local abattoir workers and later passed into the hands of the Sydney Olympic Park Authority – along with some long-standing tenancies. Last year SOPA sold all the properties, by tender, to HBW No 1 Pty Ltd, part of the Centennial Property Group, which quickly arranged for each property to be on-sold individually – for almost double what it paid for them.

There were angry scenes at the auctions and some of the tenants are digging in – it appears that they may be protected tenants under the Landlord and Tenant (Amendment) Act 1948, which affords greater protection against evictions (and rent increases) for the relatively few tenancies to which the Act still applies. Proceedings to determine the legal status of the tenants is on foot: the tenants are assisted by our colleagues at the Inner West Tenants Advice and Advocacy at Marrickville Legal Centre, which has a strong record in protected tenancy matters – read more about their work here. The other party is represented by Sevag Chalabian of Lands Legal – read more about his recent work here.

John Birmingham has written a comment on the story so far, and has captured nicely the disparity of the forces involved; he also ties in the other big news of the holiday period, which was the Federal Government's decision to defund the peak housing NGOs National Shelter, Homelessness Australia and the Community Housing Federation of Australia. Read the joint statement of those organisations here.

The decision to defund the housing NGOs comes as the Federal Government prepares White Papers both on the tax system and on the Australian Federation – with specific reference to government responsibilities for housing and homelessness services. The defunding is a rotten decision: bad for housing policy, bad for the millions of people who need housing policy to work better, and bad for our democracy.

Tenancy culture study: Hood's 'Eviction at Hurstville'

Sam Hood was an Australian photographer whose career spanned the late nineteenth century to the middle of the twentieth century, during which Hood did a bit of everything: news, sports, portraits, weddings, funerals. In 1935 he photographed an eviction, and created the subject of today's tenancy culture study.

(Sam Hood (1935) 'Eviction at Hurstville')

It is a subtly powerful image. Without histrionics or sentimentality, the image quietly commands the viewer's attention and directs it to meet the gaze of the evicted woman. You might, after a moment, look elsewhere about the image, and pick up some clues as to the woman's circumstances – the thin cotton dresses, the home-cut hair – but again your attention will be drawn to face her directly, separated by a gulf of decades from the woman, but also face-to-face with the indignity and injustice of eviction.

The woman's eviction was one of about 5 500 for which New South Wales courts made ejectment orders in 1935. As a matter of law and practice, renting then was, in many ways, quite different from renting today. Just under half the population rented (in Sydney, it was just over half). There was no Residential Tenancies Act. It was common at the time for tenancies to be for a period of one week, with the same period of notice for termination.

Over the preceding decades, there had been a number of attempts to reform tenancy law, with mixed results. In 1915, the NSW State Labor Government introduced the Fair Rents Act, which allowed tenants to apply to a magistrate to determine, according to the formula in the Act, the fair rent for their tenancies. In 1920, the Fair Rents Act was amended to prohibit discrimination against prospective tenants who had children; in 1926, it was amended again, to provide for termination on just causes only, such as non-payment of rent, use of the premises for 'an immoral or illegal purpose', or because the landlord required the premises for themselves or a family member.

These reforms didn't last; in 1928, a conservative NSW State Government amended the Act so that it would not apply to new buildings and, by midyear 1933, cease to have effect altogether. We can assume that the woman Hood photographed was evicted for not paying her rent, but as far as the law of the day was concerned, her tenancy could be terminated regardless of the reason.

Another short-lived reform: in 1931, as a response to the drastic deepening of unemployment, rent arrears and evictions in the Great Depression, the State Government (back to Labor again) introduced the Ejectments Postponement Act, which provided for the postponement of evictions where the tenant pleaded that they were impoverished through no fault of their own. It was not wholly effective: apart from the question of making the 'impoverished' argument, tenants could still be required, as a condition of the postponement, to pay compensation to the landlord and, until amendments were passed, the Supreme Court considered that it was not bound by the Act and could continue making ejectment orders. In 1932, the State Government (conservative again) legislated so that by the end of 1935 the postponement provisions would cease to have effect. In any event, they did not prevent the eviction of the woman in Hood's photograph, nor the thousands of others evicted from their homes the same year.

There was one enduring reform from this period: the abolition of landlords' old common law remedy of 'distress', whereby a landlord could enter a rented house and seize the tenant's belongings, to ransom or keep in satisfaction for unpaid rent. Distress had been legislatively chipped away at since the 1890s, and was finally abolished in 1930.

The woman in the photograph, therefore, might have been able to keep such belongings as she had; but she would have had few, bleak options for alternative accommodation. In 1935 there was scarcely any public housing in New South Wales. There was Daceyville, on which work had terminated prematurely in the 1920s, and Millers Point, and a few buildings constructed by the City of Sydney in Pyrmont (Ways Terrace) and Chippendale (Strickland Flats); but even these were for relatively well-paid workers, not poor and homeless persons. For the evicted, there was family, or charity.

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There is, of course, another person in Hood's photograph: the woman's daughter. Her attention is elsewhere, caught by something beyond the frame of the image. We might look beyond the circumstances of the eviction too, to what would lie ahead for her, in terms of her housing.

Soon, renting laws would be reformed again: in 1939, on the outbreak of the Second World War, the NSW State Government resurrected the Fair Rents Act (ironically, it was the conservative government that did it). First under this Act, then under Federal Government war-time price regulations, and then under the Landlord and Tenant (Amendment) Act 1948, tenants were protected by strong legal protections against unfair rents and terminations. By the 1950s, however, by which time the girl in the photograph would have been a young woman, the 1948 Act was being legislatively curtailed, with fewer and fewer premises subject to its controls.

She may have found secure rental housing in public housing. Following the establishment of the NSW Housing Commission in 1942, and the Commonwealth-State Housing Agreement in 1945, the previously meagre public housing sector grew rapidly: to 1956, about one in six dwellings built in New South Wales was built by the Commission.

It's more likely that she would have found secure housing in owner-occupation. The prospect must have seemed dim in 1935, but after 1945 the rate of home ownership leaped, and kept growing until it peaked above 70 per cent in the mid-1960s, as more people whose families had always rented got into home ownership.

They got there on one or more of a range of things: full-employment; war service home loans and other government subsidies to housing finance; a burst of owner-building, particularly directly after the war; sales of rental properties by landlords chaffing under the 1948 Act; and after 1956, a huge program of sales of public housing to tenants and applicants. By the end of the 1960s, when the girl in the photograph had probably settled down with a family of her own, the Housing Commission had sold one-third of all the dwellings it had ever built.

If she is still alive today, the girl would be in her 80s. If she's like most 80-year olds, she'd still be living at home (at the Census, about one in five persons aged 80 and over were in aged care facilities and other non-private dwellings) and if still at home, the chances are very strongly that its owned by her or her family: about 88 per cent of those aged 80 and over live in owner-occupied housing. About seven per cent of 80 year olds live in social housing; just 4.5 per cent rent privately (of whom a small handful – a few hundred – are still covered by the 1948 Act).

The more things change.... For some time now, particularly for young households, home ownership rates have been declining. Public housing is in a spiral of decline so severe that it is undermining the continuing viability of the system. Today, almost 26 per cent of the population rents privately, and the proportion is growing (it's up 30 per cent on the proportion of privately renting just 15 years ago). For 25 years we've had a Residential Tenancies Act, but landlords can still give tenants termination notices without grounds. In 2012-13, the Consumer, Trader and Tenancy Tribunal issued 3 703 warrants to evict tenants.      

Are social housing applicants getting blackballed?

Agents ask for an awful lot of personal information when you apply for a tenancy.

But this question – from the Real Estate Institute's standard application form – is the worst of the lot:

Have you made an application for accommodation in any social housing, as defined in the Residential Tenancies Act 2010 or aged care facility? [Tick YES or NO]

There can be only one purpose for this question: to vet applications with a view to refusing tenancies to people who are social housing applicants.

If you're a social housing applicant, you can expect to wait many years for a social housing tenancy, so you'll probably need to rent privately in the meantime. And because your income will be low, and there's probably other problems going on in your life, you will already have a hard time getting a tenancy. To be ruled out, out of hand, because you're a social housing applicant, is cruel and wrong.

But not unlawful.

This is a problem for governments, as administrators of social housing, as well as for social housing applicants, and there's a few things governments should consider doing about it.

Federal and State Governments should amend their anti-discrimination legislation to prohibit discrimination on the ground that a person has applied for or receives a social service. We note that the Federal Government has new draft anti-discrimination legislation out for public comment. It doesn't include this ground of discrimination; we'll be recommending that it should.

And the NSW State Government can amend the Residential Tenancies Act 2010 to provide for a prescribed standard tenancy application form, that asks for all the information that landlords reasonably need to know – and nothing they don't.

The Act could also be amended to specifically prohibit agents and landlords from asking about social housing applications. Interestingly, there's a lesson here from the Landlord and Tenant (Amendment) Act 1948, which is currently up for repeal for misconceived reasons. Long before there was anti-discrimination legislation on the statute books, section 38 of the 1948 Act prohibited landlords from refusing to let premises to persons with children – indeed, it prohibited landlords from inquiring as to whether a prospective tenant had any children (section 38(4)).

All of these are reasonable measures of protection for people who have a hard enough time in the rental market even without being blackballed by landlords and agents.

Hundreds to lose homes if Govt repeals 1948 Act

The NSW State Government proposes to repeal the Landlord and Tenant (Amendment) Act 1948 – known around here as the 1948 Act.

If it does, upwards of 600 persons – mostly aged pensioners – will lose their homes of many years.

(Rod Spearer, 1948 Act tenant, in his Newtown bedsit.)

The 1948 Act controls rent increases and evictions for so-called 'protected tenancies'. No new protected tenancies have been created for more than 25 years (and no more can be created). Between 600-1400 protected tenancies – all more than 25 years old, some much older – remain in existence, according to the estimate of the Older Persons Tenants Service.

Generally speaking, properties covered by the 1948 Act become 'decontrolled' only when the tenant moves out or dies. As a result, controlled properties trade at a discount. Repeal the 1948 Act, and the owners stand to gain a windfall.

Repeal the Act, and all of those tenancies will be terminated, and hundreds of elderly tenants, of limited means, will face homelessness. 

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A disturbing prospect. So is the process by which the proposed repeal is made.

The proposal is part of a review by NSW Fair Trading of 'red tape'. It's one of a miscellany of issues, including regulations on upfront gym fees and the Warehousemen's Liens Act 1935. In its discussion paper, NSW Fair Trading states of the 1948 Act:

It is unknown whether any protected tenancies still exist in NSW.

This is wrong – and Fair Trading should know it. We wrote to them about OPTS's 600-1400 estimate last October. OPTS dealt with 28 known protected tenancies in its casework in the year to June 2012. Your correspondent spoke to a tenant under the 1948 Act on the phone the other day. The Herald has too. Fair Trading's wrong statement misinforms and potentially misleads the public discussion of the proposed change.

And the 1948 Act isn't 'red tape'. Everyone affected by it – tenants and landlords – made their arrangements long ago. These arrangements shouldn't be changed by repeal of the Act now, when tenants are in their old age.

Furthermore...

Brown Couch reader and legendary tenants advocate, Robert Mowbray, has dropped me a line in response to last week's post about the Landlord and Tenant (Amendment) Act 1948. You'll recall that I mentioned that so-called protected tenants under that Act have great difficulty getting repairs done, and that landlords sometimes let their properties go to ruin in the hope of establishing one of the grounds for termination permitted by the Act (usually referred to as 'ground (m)'). Dr Mowbray and the Older Persons Tenants Service (OPTS) have recently been dealing with such a case. Here's a snap of the view from out of the tenant's ceiling.

(Used with permission of the tenant.)

In this case the tenant, 'Gladys', has occupied the premises for some 60 years, and lived on the same street for all of her 94 years. Because of its restrictions, premises subject to the 1948 Act ('controlled premises') are bought and sold at a significant discount, so Gladys has had a succession of landlords over the years, each, presumably, hoping that one way or another she'd shuffle off and thereby leave the owner with a handsome windfall. And, with the hole in the ceiling opening up and the need for reconstruction growing, 'ground (m)' looms.

I'll let Robert finish the story: he's written it up for the next article of 'Around the House', the newsletter of Shelter NSW. Do join up and get your copy. And if you or someone you know is a very long-standing private tenant (ie in the same place since before 1986), please consider getting in touch with OPTS to see if the 1948 Act might apply.

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And further to another recent post – our study of Friz Freleng's 1950 Room and Bird and its significance for landlord-tenant-pet relations – readers of the Brown Couch will be pleased to learn that agent-baiter par excellence David Thorne has recently corresponded with his landlord's strata manager about an alleged dog. Not to worry, writes Mr Thorne:

I am currently soundproofing my apartment with egg cartons as I realise my dogs can cause quite a bit of noise. Especially during feeding time when I release live rabbits.

Do follow the link and read the whole correspondence. He should write for the cartoons.

The Landlord and Tenant (Amendment) Act 1948

Submissions have just closed on the proposed Landlord and Tenant Regulation 2009. It sounds grand, but neither the Regulation nor its parent, the Landlord and Tenant (Amendment) Act 1948, will ever touch the very great majority of landlords or tenants in New South Wales.

The 1948 Act is the last remaining piece of rent control legislation in the State. Most people are aware of 'rent control' only through American TV shows, and over the past few years of painfully high rents I received numerous calls for journalists and others wondering if we too should implement such a system. In fact, New South Wales has had rent control, on and off, since 1912. The 1948 Act still stands, but over the years it has been amended to progressively limit its application, so that only a relative few long-standing 'protected tenancies' (no-one knows how many, maybe a couple of hundred) are still subject to its provisions. No new protected tenancies have been created since 1986.

The 1948 Act is based on national rent and price controls implemented in the Second World War, and for 'controlled premises' (strictly speaking, the Act applies to premises, not persons or tenancies), rents are limited to 'fair rents', as determined by a Fair Rents Board, which may be considerably less than the market rent. (It might be noted that this is much tougher on landlords than the rent increase reforms proposed by the Tenants' Union in relation to the Residential Tenancies Act 1987.)

The corollary of rent control is, so to speak, eviction control, which is another purpose of the Act (they go together: you can't keep rents down if landlords can readily replace a tenant with someone who'll pay more, and you can't keep tenants in place if landlords can increase the rent prohibitively). Protected tenants can be evicted only on certain prescribed grounds (again, this is generally much more restrictive on landlords than the reasonable grounds for termination proposed by the TU). The 1948 Act also provides additional protections for certain classes of protected tenants ('protected persons' – mostly persons with a connection to the armed forces, reflecting the wartime origins of the Act), who are even more difficult to dislodge than other protected tenants.

Landlords, of course, hate the 1948 Act. (In fact, the policy behind the Act is not so much pro-tenant as pro-owner-occupier: it was one factor – along with war service home loans, subsidies to building societies and public housing sales – for the strong increase in the rate of owner-occupation through the 1950s and 1960s.) And it's not entirely a picnic for tenants either. It's very difficult for protected tenants to get repairs done, and many landlords deliberately let their controlled properties go to ruin in order to establish one of the grounds for eviction (if the tenant has not moved out along the way). Protected tenants also often have to put up with landlords' attempts to oust them from the protection of the Act by trickery (eg getting the tenant to give possession back to the landlord on the pretext of having repairs done) or outright harassment (eg cutting off the power).

And anyone who cherishes clarity of legal drafting is going to have trouble with the 1948 Act too. Have a read of it, if you dare – it can permanently change you. The litigious landlord and outlaw lawyer Peter Clyne, having 'worked with it, sneered at it, ranted about it and begged a succession of governments to give it the coup de grace', confessed to having grown to like 'this exciting and damnable statute':

Like the dark lady of one's dreams, it is a stimulating statute, full of warm little corners of dark mystery where no amount of illumination will ever spread light – pulsating with mini-wars, an intellectual challenge to the confident, and a source of comfort to the underconfident. They can sharpen their teeth on the orgies of obscurity with which the courts, attempting to interpret my friend, occasionally enlighten us. After all, if you can understand the High Court's decision in Allen v Belmore Property Co Pty Ltd (114 CLR 454), you have passed your baptism of fire, and should be able to understand anything.

We don't hold it out as a model for contemporary tenancy law, but the TU likes having the 1948 Act on the books too, and for a proper reason. The persons to whom it applies made their housing arrangements on the basis of the Act long ago. They should not be disturbed now.

Anyway, back to the proposed Regulation. It's basically an update of the previous Regulation, so the TU supports it... except in one respect. The proposed Regulation omits a definition from the previous Regulations, and the effect of the omission is to remove from the status of 'protected persons' (ie those with additional protections against eviction) veterans of the Malayan Emergency of the 1950s, and their dependents. The TU, therefore, submitted that the definition should be retained, and any protected tenants who are veterans of the Malayan Emergency, or who are the dependents of Malayan Emergency veterans, should keep their status as 'protected persons' under the Act.

(As I said, the Act has a way of getting to you.)