More news from down the Hume

There's been massive news out of Victoria over the weekend, with the Andrews Government pledging to make renting fair!

The announcement refers to an "unprecedented package of tenancy reforms" that includes doing away with the Victorian equivalent of unfair evictions, preventing discrimination against tenants with pets, and cracking down on rental bidding. All of these sound pretty good to us here on the Brown Couch, and we look forward to seeing further details as these proposals are implemented by amendment to Victoria's Residential Tenancies Act 1997. Early details are available here.

Of course, not everyone was happy with this announcement. ABC online reports:

The Real Estate Institute of Victoria (REIV) said the changes would force up costs, which would be passed on to renters. 

"Rents will go up, people will leave the market, there'll be less supply and that's only going to push people out of the rental market and make it more difficult for those who are seeking to rent premises cheaply," chief executive Gil King said.

But our colleague from the Tenants' Union of Victoria, Mark O'Brien, wasn't having any of it:

"Every time there's reform of the residential tenancies law, the institute claims it's the end of the world as we know it and that's never what occurs," he said.

O'Brien's view is supported by a great deal of research, which suggests property investors tend to be motivated by financial considerations rather than tenancy laws.

Still, it's a line the investor lobby and landlord advocacy groups like to trot out at times like this and we expect a similar conversation will emerge in New South Wales when at last the results of our own review of renting laws make their way towards Parliament. We've been expecting this would occur before the year is out, but now that's looking unlikely. This means we've still got time to convince our own government they should be following Victoria's lead to make renting fair - you can lend your support to our claims here.

But it also means our own landlords' and real estate agents' groups will have more time to practice their lines about tenants' rights leading to all sorts of doom and gloom for renters. "Careful what you wish for," they might say. "The changes will force up costs, rents will go up, people will leave the market, there'll be less supply and that's only going to push people out of the rental market and make it more difficult for those who are seeking to rent premises cheaply".

The thing about all this is that there's not much stopping rents from going up as it is. For a quick refresher on why this is, have a look at our earlier post about why rental affordability continues to deteriorate.

But back to the specifics of the claim. The Real Estate Institute of Victoria seems to have skimmed over their suggestion that rents will go up to offset an increase in landlords' costs. Perhaps they've cottoned on that such claims are a furphy, because even though most landlords would go out backwards without them rents are a function of what tenants can pay rather than what landlords' choose to spend when buying and holding property. Or perhaps they just don't think the Victorian proposals will add significantly to their costs so they've steered clear of any further detail. Either way, they've put their emphasis on the slightly different argument of "people will leave the market, thereby reducing supply".

We should keep an ear out for this one in New South Wales, too. It's the idea perhaps that fair renting laws will take all the fun out of property investment, so landlords will take their money and spend it on other, much simpler things. Keep in mind the same argument was made when our current laws were drafted in 2009/10, and the private rental market was hands down the most likely place for a property in New South Wales to turn up in following sale or construction between the 2011 and 2016 Census events.

Still, given the prices property owners could expect at the moment it stands to reason some might be tempted to cash out. Some might even use the prospect of law reform as a cover for their decision. Rest assured they'll be factoring in capital gains before all else, and nobody likes to sell before hitting their targeted windfalls unless they really, really have to.

Those who do sell will be doing immediate damage to their sitting tenants - just as any landlord does when selling for any other purported reason. That is, unless they sell to another investor who is not so concerned about law reform (or other purported reason), and will keep the tenancy going. Given it's mostly an investors' market at the moment this scenario is becoming more and more likely. But, on the off chance an investor cashes out by selling to a first home buyer, the net impact on supply will be zero if the buyer is leaving the private rental market in order to take up home-ownership. And if a whole lot of investors suddenly decide to sell up all at the same time, prices might start to come down a little and first home buyer activity might find some renewed vigour.

It's the landlords who take their properties with them when exiting the market that are the real problem. These are likely to be in the very small minority, since most landlords run at a loss for tax purposes, and rely on any rental income to cover their main costs which includes the interest on their loans. Nevertheless, this risk could be easily countered with a vacant property tax, the likes of which the Victorian Government has also recently proposed. The revenue from such a tax could be used to fund new social housing dwellings.

Despite what we can expect to hear from the investor lobby in the coming months, the NSW Government would do well to start taking notes on Victoria's tenancy law reform proposals.

What's wrong with keeping a sneaky pet?

Kirsten Robb penned an interesting piece for Domain this week, outlining how real estate agents know when you're keeping a sneaky pet.

Thing is, we know you know, and we know you know we know. We also know that because you know, and because we know you know, you've probably given implied consent for us to keep the pet. It's now just a matter of evidence - and the system works!

Actually, no, it's broken, and Robb's article points us to two key problems that could do with a fix. While discussing how to easily evict a tenant for keeping a sneaky pet, by giving them a termination notice without grounds because keeping a pet is often not actually a breach of a tenancy agreement, Sam Nokes of the Real Estate Institute of Victoria's property management chapter says:

I can’t tell you how many times I’ve had owners that would have said yes to a pet, but because the tenants lied and hid it from them, they’ve said no — the dishonestly reflects a general dishonesty.

The first problem is easy enough to spot - landlords using "no grounds" eviction notices to end tenancies after forming a negative view of a tenant. Landlords should always be required to give a reason - one that they are prepared to stand by - when requiring a tenant to leave. The law should provide landlords with some additional grounds for termination, such as "the property is no longer available for rent." They should no longer be able to mask their bad reasons, such as "I have formed the view that the tenant is dishonest", by ending tenancies without grounds.

The idea that tenants have to ask the landlord for permission to keep a pet is the second problem. It encourages dishonesty, and facilitates mistrust, in situations where a landlord might otherwise take a reasonable approach to the matter. Renting laws would be better served by taking any requirement for consent to keep pets out of the equation, by prohibiting the use of "no pets" clauses in tenancy agreements. As we said not long ago, there are some good reasons why landlords should get behind this. Perhaps we can add "because honesty is important" to the list.

Regulated real estate agents

On the weekend, Fair Trading NSW released a list of recommendations to reform the real estate and property services industry. The Minister for Innovation and Better Regulation, Victor Dominello, has called it "the most significant review in 20 years" and said "the profile of the property sector has changed considerably over that period."

"Because only one thing counts in this life: Get them to sign on the line which is dotted."
Alec Baldwin as "Blake", Glengarry Glen Ross (1992)

It certainly has. In fact, even in the last five years, the change to the sector has been pronounced. More and more people are living in rented homes for longer, and - on current housing policy settings, at least - many of us can expect to rent for life.

So we might assume an Industry Reform Paper will have a strong focus on the relationship between real estate agents and tenants, right?

Well, no, actually.

The primary role for a real estate agent is to act in the interests of their client, and that's not you. It's your landlord. But agents do play a role in shaping landlords' expectations and experience of your housing, and this informs their instructions. This in turn affects your expectations, and how you experience your housing as a tenant. So the rules that apply to real estate agents do have an impact on you, in a round-about sort of a way.

And just as there's a growing number of tenants in New South Wales, there's also an increase in landlords and the services that cater to them. So let's take a quick look at the proposed reforms to see what use they might be...

There's a strong focus on licensing and qualifications, and continuing professional development for real estate agents. This would impact agents at all levels, regardless of the work they are engaged in. From the outset, a certificate of registration would require more training than is currently the case - from 4 "units of competency" to 7. Holders of such a certificate would not be able to enter into contracts or authorise trust account transactions, so would not be able to manage tenancies without the assistance of a more qualified supervisor. At the other end of the scale a new "licensee in charge" category would be established, under which all other agents within a real estate business would need to be supervised.

On this, the Reform Paper says:

[A] training review found that, although the Property, Stock and Business Agents Act clearly requires licensees in charge to properly supervise staff, in practise such supervision is often non-existent, and certificate holders frequently work with little or no supervision or support. The review found that the unsupervised activities of certificate holders pose a risk to consumers, and recommended that the education requirements for certificate holders be increased from 4 to 7 units. The review recommended that the extra units should focus on minimising risks to consumers and improving knowledge of and compliance with relevant laws.

Thus, there is potential for real estate agents to become better equipped with knowledge and understanding of tenants' rights. But the downside of that is that tenants' rights could, in many respects, be a whole lot better... so - it's good news, really, but we won't be getting too carried away about it. We'll use it to fuel our advocacy for stronger renting laws.

There's also some focus on greater accountability for real estate agents. This would include requirements to publish and update agency fee structures - good for landlords and home-buyers - as well as improved provisions about disclosing "material facts". This means telling potential buyers about quirks and quibbles with properties they have on their sales lists - such as whether there are any known health and safety risks, whether a property has been the scene of a violent crime within the last five years, or ravaged by fire or flood.

This would make it harder for the landlord of a newly acquired property to breach their obligation to a prospective tenant under the Residential Tenancies Act, not to "knowingly conceal a material fact" of a similar kind - although currently that obligation is not enforceable. We've been given some hope on this after the review of the Residential Tenancies Act recommended a sensible change to fix this, but we're yet to see it introduced... (we've got our fingers crossed that this and some other changes will be introduced sometime in the first half of next year).

Under the rubric of "conduct and accountability" is an interesting suggestion that developers who engage in property sales off-the-plan, but who are not required to be licensed real estate agents, could be regulated by reference to the number of properties they sell in a year. Such an approach could also be applied to self-managing landlords who could be exempt from consumer claims on the basis that, as housing investors, they are not "engaged in business or commerce" and are therefore not subject to consumer claims law beyond the Residential Tenancies Act.

Finally, the proposed reforms would allow Fair Trading to temporarily suspend a real estate agent's license or certificate of registration while an investigation against their conduct is underway. If this one gets through - and we hope it does - it would give each and every real estate agent in New South Wales pause to stop and think about their behaviour before doing something very silly. That's assuming Fair Trading makes full use of their powers, of course.

All in all, the proposed reforms look sensible and sound - as far as this sort of thing goes. We're happy to give them a polite nod on their way through, and we'll keep an eye on what comes of them.

Bond Insurance - a gamble not worth making.

We've recently found out about BondSure, a new company offering bond insurance, as well as bond loans and contents insurance. We do not think bond insurance is worth it for most tenants, unless you are exceptionally accident prone.

This guy. This guy needs insurance.

Let's consider the kind of insurance being offered. Your rental bond is already a form of insurance - the tenant pays a lump sum up front to ensure that if there is compensation due to the landlord at the end of the tenancy, the money is already there.

For most people insurance is about peace of mind – a protection against large, unexpected costs. This is exactly what your rental bond is!

It's not too different from paying insurance on a car, except that it is refunded at the end of the tenancy if you do not need to rely on it. And during the tenancy, it's held by the Rental Bond Board and there's the opportunity for your bond to be used for good.

So would you consider paying insurance on your insurance? It may sound a little odd, but that's the logic being offered by BondSure. Perhaps this reflects a view among landlords and agents that the bond is the tenants money in name only, and really it’s just waiting to go to its rightful home with the landlord. Is it a coincidence that BondSure is managed by former real estate agents?

So, how does this insurance on your insurance work?

Let's look at the insurance on a $2000 bond. The fees are $31.58 per month on a 12 month agreement, for a total of $378.96 for the year. You pay your fees, and if you need to make a claim, you pay your excess of $300 (Excess is 15% of bond or $200, whichever is higher). Coverage extends only to the bond amount, so the maximum claim you can make is your bond amount of $2000.

Now, because you have already paid the $378.96 in premiums, and $300 in excess, your insured $2000 bond effectively only gives you a benefit of $1321.04. The insurance does not cover anything above the bond, and it only covers "accidental damage". It does not cover many of the things that bonds often pay for, like rent arrears, utilities bills, or even most cleaning bills.

We know from the Rental Bond Board that the actual numbers of people losing their bonds are very low. Once you take out the stuff that BondSure's bond insurance doesn't cover, these numbers will be even lower.

Click for full size!

In the 2014-15 financial year, there were 266,856 bonds refunded. 53% of tenants received their bond back in full. If those tenants had held bond insurance, they'd have made a $378.96 bet and lost. This is where BondSure makes its money.

Another 38% received part of their bond back. Because of the excess of $300, the claim by the landlord has to be above $678.96 before it even makes sense to claim anything. If your landlord comes to you with a bill for damage of $150 dollars, you wouldn't spend $300 dollars to fight it, would you? So a large chunk of those tenants won't make the claim on the insurance, they'll just pay the landlord directly. So they'll have made a $378.96 bet and lost, on top of whatever "small" amount the landlord has claimed. This group end up paying both BondSure as well as their landlord, without actually obtaining any benefit.

If the claim on the bond is higher than $678.96, and only for accidental damage, then it becomes worth it for the tenant to have held their BondSure policy. They will start getting a payout that puts them ahead of where they would have been if they'd just saved their money. But that's assuming they've only been paying their premium for one year.

For those playing along, that leaves just 9% of tenants who lost their bond entirely in 2014-15. We know that many claims for the whole bond occur following breaches, such as rent arrears and the like, so only some would get the benefit of bond insurance. Those tenants often also owe more than the bond to the landlord, so they will still have costs above the payout.

If you are lucky(?) enough to be one of the small percent who had accidental damage that cost you exactly what your bond would cover (and nothing more!) then you get the full benefit of the insurance, and get your bond back. Happy days!

In considering all of this we haven’t included the cost of attending the Tribunal, which a bond insurance system discourages tenants from using. If your landlord's claim is high enough the "rational" thing to do would be to accept it and take the BondSure payout, even if you know the claim is false or an overreach. Without bond insurance it is usually worth it for a tenant to dispute a bond claim because the Tribunal forces agents and landlords to provide evidence for their claim.

As with all insurance, this is basically a gamble. Only around 1 in 4 tenants will get some benefit from a BondSure bond insurance policy. Most won't, and this is why when you gamble the house always wins. The house here is BondSure, who get paid either way, and if they do pay out make a relatively small loss. Using the proportions above, if everyone had a $2000 bond covered by BondSure they would make an average of $131 per client. Tenants, on the other hand, would spend an average of $319 by taking out insurance on their insurance.

Save your money, don't use bond insurance. If you really want to cover yourself for the unexpected loss of a rental bond, you'd be better off sticking $30 a month in an old jam jar.

Tell us what you really think, Belle

Thanks, Belle Property. This charming little reminder of how some real estate agents really view us tenants was dropped in our inbox this morning.

Clearly it’s supposed to be funny. Can you imagine your landlord finding it in their letter box and having a little chortle? How hilarious that it is so easy to remove someone from their home, like changing clothes. Perhaps they even hoped for some controversy! There’s no such thing as bad publicity, right?

Hey landlords, don’t like your tenants anymore? Did they ask for repairs, or question a rent increase? Maybe you just don’t like they way they look. No worries, just get your agent to give ‘em the flick. As non-property owners they’re vermin, barely human, certainly not worthy of a home. Its rare that such a dismissive attitude is so clearly drawn out.

What’s most frustrating about these kinds of attitudes prevailing in real estate agencies is that avoiding them is easier said than done. When you’re looking down another 30 applications, eviction day is coming up fast and at least this place doesn’t have obvious mould problems, knowing your property manager thinks your vermin doesn’t rate as highly.

The thing is though property managers need tenants. Sales agents don’t, except to use our furniture to make a place look homely. But a property manager without tenants is like a mouse without cheese, scrounging around looking for some other way to make a living. We might be vermin to you, but we pay your wages.

UPDATE 20/11/2016. Belle Property has responded to this post with the following message.

"We apologise if any offense was taken as a result of these Property Management flyers, it was never the intention. We in no way believe tenants are comparable to vermin and we apologise that it has been interpreted in this way. It was intended as a fun light-hearted message, which evidently wasn’t achieved. We are happy to discuss this further offline if there are any further queries. We will cease to use this marketing material effective immediately."

Also posted as a Facebook note here on our Facebook page. Like us for all the latest from the TU!

21st Century Bonds - part 2

Back in April we noted the introduction of a new Online Rental Bonds scheme, which allows tenants to pay their rental bond directly to the Rental Bond Board instead of handing it over for lodgement by a landlord or real estate agent.

We can see the benefits of such a scheme. Rental bonds are tenants' money, and it makes sense for them to have some agency over its payment into the Rental Bond Board. For that matter, real estate agents should appreciate some relief from the administrative burden of collecting and lodging all those piles of other people's money. That time could be spent lining up contractors to undertake repairs and maintenance, after all!

But tenants can only use the Rental Bonds Online system if their landlord or agent has registered to use it, and informs the tenant that the option is available. In reviewing the Residential Tenancies Act earlier this year, NSW Fair Trading explored this a little. Here's what their report says:

Rental Bonds Online The new Rental Bonds Online system has been very well received by all stakeholders. It has allowed tenants to pay their bond directly to the Rental Bond Board, thereby reducing the incidence of landlords and agents failing to lodge bonds – an offence under the Act. However, tenants can only lodge a bond electronically if the real estate agent or the landlord has an account with Rental Bonds Online. 

In order to drive uptake by tenants and facilitate the transition of bond payments from a paper based system to an online system, the review concluded that the Act should require landlords or their agents to register with Rental Bonds Online and provide new tenants with an invitation to use Rental Bonds Online prior to lodgement of the bond. 

Importantly, tenants without online access would not be disadvantaged. If they preferred, they could still give the bond directly to the landlord.

It then went on to make the following recommendation:

Recommendation 8: That the Act require all landlords and agents to register with Rental Bonds Online and provide tenants with an invitation to use Rental Bonds Online prior to bond lodgement.

Given this is a relatively new service, we wonder how many tenants have been offered the use of Rental Bonds Online by a new landlord or real estate agent? How many have taken up the offer? How many have declined?

Most importantly, what do tenants who have made use of it think of the service? What are the concerns that might have lead some tenants to expressly decline to use it?

We'd love to hear from you if you've had any encounters with the Online Rental Bonds system. Drop us a line on Facebook, Twitter, or here on the Brown Couch.

Cheers.

21st Century Bonds

A great many Australians increasingly prefer to administer their lives online.  The NSW Government has willingly moved to shift services into the digital space - a snug fit with its overarching narrative of an 'innovative' Administration that is 'leaner and more efficient'. 

Housing is no exception. In December 2015, NSW Fair Trading introduced Rental Bonds Online, an alternative system for the payment of rental bonds. The system allows tenants to send their deposit to the rental bond board directly using Fair Trading's website, instead of through their landlord or real estate agent. Both tenants and landlords can also make a claim for repayment of the bond online. A modest but perfectly sensible innovation for the digitally-inclined. 

Moreover, given tenants' bonds must be given to the Rental Bond Board (and the interest pays for many services benefiting both landlords and tenants) it is appropriate that they may make payments directly. The system effectively eliminates the risk of misappropriation by an agent or landlord, or a refusal to release the bond in a timely manner after termination of the agreement. 

Minister for Innovation and Better Regulation Victor Dominello would seem to agree. The Minister recently told Fairfax Media : "Misuse of rental bond money is a very serious issue but it can be prevented...Fair Trading's Rental Bonds Online system is a far more secure and efficient way of depositing bond money into trust". He continued, "I strongly encourage tenants and landlords to register to use the new system. It is an example of using digital innovation to provide greater peace of mind and transparency for consumers."

Tenants can only make use of rental bonds online if their landlord or agent has registered to use the system. Many agents were already using this system's predecessor (which was not open to tenants) and are already registered. So though there is some indication the system could become widely adopted, there will always be traders who opt out for reasons of retaining control, Luddism, or simple apathy. 

If tenants want to use Rental Bonds Online and their landlord/agent hasn't registered, NSW Fair Trading encourages tenants to request that they opt in. We also encourage tenants to let Fair Trading know how the system is working for them (and get advice if problems arise). 

This is intended to be an optional system - so if you prefer cash or cheques, don't fret. A landlord or agent who requires you to use Rental Bonds Online when you do not want to may be fined up to $2200.

And don't forget that you can claim your bond as soon as you hand your keys back, and can still make a claim if you disagree about the amount of the bond to be returned to you. Fill in the form with the amount that you want paid (you do not need the landlord or agent's signature). Then return the form to Fair Trading, or complete the claim using Rental Bonds Online.

You can find out more about Rental Bonds Online here 

And check out all things Bond at our factsheet here

Fair Trading lights damp squib for tenants

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

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

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

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

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

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

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

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

Agents and their commitments

Now seems as good a time as any to remind tenants that the real estate agent you deal with may not be the person you think they are.

Talking with tenants, we find many who think of the agent either as 'their' agent, or as an impartial intermediary between themselves and the landlord.

But neither is true. The agent is always your landlord's agent. The agent may be helpful to you, kind, with a GSOH... but always remember, they act for the landlord, and look out for your landlord's interests – not for you or yours. The agent promises faithful service to the landlord – in return for money, paid by the landlord.

Where a person, for reward, carries on business as an agent for a real estate transaction, rent collection, or other property management services, they are required to be licensed under the Property Stock and Business Agents Act 2002 (NSW) (section 8). That Act imposes numerous obligations on agents, including rules of conduct in relation to anyone with whom the agent deals: for example, an agent must act 'honestly, fairly and professionally with all parties in a transaction' and  'not mislead or deceive any parties' (PSBA Reg 2014, Schedule 1, clause 3(a) and (b)). They must also 'not engage in high pressure tactics, harassment or harsh or unconscionable conduct' (Schedule 1, clause 5). They must also not ask a person to sign a document unless all material particulars have been inserted (Schedule 1, clause 16) and must provide a copy of the document to the person who signed (Schedule 1, clause 17).

But those rules also make clear that the agent must act in the client's best interests and in accordance with the client's instructions, except where doing so would be unlawful (Schedule 1, clauses 6 and 9). And in the case of a tenancy, the agent's client is always the landlord. 

There are also rules of conduct that relate specifically to rental property management. An agent must accompany a prospective tenant on any inspection of a property, and must not give the keys to the prospective tenant even for a short time (Schedule 2, clause 11). They must promptly respond to and 'subject to the instructions of the owner, attend to' your requests for repairs (Schedule 2, clause 13(a)) – and if the landlord's refusal to do a repair would be a breach of your agreement, the agent has to tell them so (clause 13(b)). And if you are in breach of the tenancy agreement, the agent must immediately tell the landlord (Schedule 2, clause 14). If the agent becomes aware that the property is for sale, they must immediately notify you in writing (Schedule 2, clause 15). Finally, the agent must not ask you to sign a claim form for the bond before the end of your tenancy, unless all the bond is being paid to you (Schedule 2, clause 17), and when your tenancy does end, they must take all reasonable steps to ensure that the final inspection is done in your presence.

All these things are useful to know, and if you ever need to you can remind the agent of their obligations under the PSBA Act. And if the agent breaches these obligations, you could make a complaint to NSW Fair Trading about it. But that's not going to get you a remedy. In most cases, you would be better off considering whether the agent's misconduct is a breach of the tenancy agreement between you and the landlord, and dealing with it that way. After all, because the agent is your landlord's agent, your landlord is ultimately responsible for the things the agent does, and doesn't do, on their behalf.

So, for example, if the agent is not responding to your emails about a repair that needs doing, don't worry too much about whether it is a breach of the agent's obligation under Schedule 2, clause 13(a) of the PSBA Reg – treat it as a breach of your landlord's obligation under your tenancy agreement to provide and maintain the premises in a reasonable state of repair, and proceed accordingly.


And if, on the other hand, the agent gives you advice on how to deal with a tenancy issue, or promises to do something for you, that's all well and good, but keep your wits about you, and don't rely on what the agent says. Speak with a TAAS instead – they look out for tenants' interests.

TIS the way to get on the same page

The Settlement Council of Australia reminded us recently of the availability of interpreting services for free for real estate agents.

Many government and community agencies (including the TU!) use the Translating and Interpreting Service (TIS National) to provide free interpreting services to people who don't speak English to access services. Generally the agency pays for the service and need to be registered with TIS National.

In order to help non-english speakers, and particularly humanitarian entrants to Australia, find and maintain housing for themselves, TIS is conducting a pilot program in which real estate agencies are given free access to the service. After a successful initial period, TIS has opened up access until July 2015 for all real estate agencies in selected areas. It covers large parts of Sydney as well as many regional areas.

So far 104 real estate agencies across NSW have signed up, Good on them! You can see the full list here. We hope that it is utilised on a day to day basis, and avoids disputes that can arise from two people misunderstanding each other.

TIS National provided these tips to using an interpreter:

How should I use an interpreter most effectively?
You can use a TIS National interpreter most effectively by:

 preparing all information that you need for the session before calling TIS National
 being patient and waiting for the interpreter to finish interpreting before speaking again
 using short sentences
 avoiding using slang or jargon that the may be difficult to translate
 understanding the role of the interpreter
 not asking the interpreter for advice or to advocate for you
 notifying the interpreter, organisation or TIS National immediately if you are having difficulty understanding the interpreter.

As you'd expect, TIS also have this and many of their resources in a range of community languages.

These are our landlords, and they're doing okay...

Earlier in the week the Institute of Tenancy Culture Studies took a look at what makes a good tenant, from a landlord's point of view. Someone who can pay the rent, and keep the place standing, is usually all that they're after. Just don't get landlords started on the question of rights, because things can get a little heated.

There are some good examples of landlord indignation over on the 'Hack on Triple J' facebook page (we've referred to this once before). But you probably know the sort of thing we mean - especially if you've ever found yourself in conversation with a landlord who has had 'trouble' with a tenant.

No doubt it's tricky. Imagine borrowing a large swathe of money and parking it in real estate, hoping that over time it will grow into blooming great fields of gold. Deep down you know that the greatest risk to success will be whether or not you can find a tenant. If you can't find one, the bank will send you out backwards, and you'll probably lose the deposit. But if you can find one, they'll have to... *gulp* ... live in your lovely house. What if they scuff up all the carpets? It could end up costing you a fortune!!!

No doubt this particular anxiety is made all the more nerve wracking by the prospect of having to go to the Tribunal if the tenant doesn't just cough up the bond... (good grief, that could take up an entire morning!)

Not to worry - the Real Estate Institute of New South Wales has got your back. In their Real Tenancy Policy, which we discussed on the Brown Couch back in 2010, the REI suggested we'd be better off without all this needlessly complex and prescriptive regulation in the Residential Tenancies Act. By way of explanation, they said:

A would be landlord confronted with a choice between owning a property where recovery of water consumption depended, on the one hand, on agreement between the landlord and tenant, and on the other hand on numerous factors including not exceeding a prescribed rate of water flow from the taps, may think twice about becoming a residential landlord.

The implication was that property investors would turn their backs on New South Wales, and park their investment funds in South Australia or the Australian Capital Territory instead (where the laws are much 'smaller', after all...) This is in keeping with earlier comments, made in their formal submissions to the NSW government while our current renting laws were still in draft (we wrote about this at the time, too):

The NSW property market (upon which the Government is heavily reliant for revenue) must be attractive for both NSW and external investors. 

An investor selects an investment for return, and is not driven by a desire to provide housing.

Interesting observations.

Fast forward to the beginning of 2014. As we noted a little over a month ago, there has never before been so much borrowed money parked in real estate in New South Wales:

... and demand for housing transfers in Sydney, in particular, is being driven by our landlords.

This is not because the regulatory burden has been reduced - we're still operating under the same Residential Tenancies Act that the Real Estate Institute said was needlessly complex and prescriptive, way back in 2010. The same piece of legislation that was supposed to scare all our landlords away, because making properties more water efficient was just too much to ask.

No. It's because of cheap debt and rapidly rising house prices. Prices that rose by almost 15% over the course of 2013, if you're prepared to believe the data. And as we know, an investor selects an investment based on a return...

Perhaps this is something to keep in mind, the next time you're discussing the burdensome world of over-regulation with your poor, poor landlord.

Bright sparks and smoke alarms

I was talking recently with a fellow from the Real Estate Institute about smoke alarms, which since 2005 have been required in all homes in New South Wales.

The fellow from the REI recounted that soon after the requirement came in, agents began to get a bit suss that tenants were removing the batteries to put in their TV remotes. So the agents started installing alarms that took nine volt batteries – won't fit in remotes. Problem fixed. Ha ha!

My only thought in response to this was... that's pretty clever, actually.

It's a foolish tenant who leaves a smoke alarm without a battery. If the battery's dead, change it – and if you can't change it (eg you can't reach the alarm), get the landlord to change it. If it's giving false alarms, get the landlord to fix it.

A quiet word on the budget

It would be remiss of us to let the week pass without a quiet word on the NSW State Budget for 2013-14.

... And a quiet word is really all that's required.

It's not a particularly exciting budget for tenants - it's pretty much business as usual.

There'll be no significant change in the supply of housing and tenancy management services from the NSW Government.

There will be no increase in funding for Tenants Advice & Advocacy Services, even though it is sorely needed. (The Consumer, Trader & Tenancy Tribunal gets an increase of half-a-million bucks, though...)

Tenants who are also potential home buyers might have been on the look-out for changes to the First Home Owner Grants scheme. This controversial scheme was restricted to new builds in New South Wales in last year's budget (and similar restrictions apply in other states as well). Well, there was no change, but the planned reduction in the grant from $15k to $10k, which was scheduled to occur in Jan 2014, was put on hold until Jan 2016.

We'll leave it to others to comment on that.

Paying rent at Christmas

If the Commonwealth Bank sent their customers a seasonal greeting that read 'Please remember that your mortgage doesn't stop for Christmas' (let alone a note to the effect that if you're thinking of having a Christmas party, keep in mind that they've got the police on speed-dial), each and every Member of Parliament, and member of the press, would take up a pitchfork and torch and charge pell-mell down Martin Place to give the bank its just deserts.

Alas, sending rude letters to tenants is something of a Christmas tradition (though this year's effort by Housing NSW is a new low).

Many private tenants will have by now received a letter from their landlords' real estate agents advising that the agents will be off on holidays for a few weeks, and the office will be shut, so make sure your rent is paid up well in advance.

In one case of which we're aware, a tenant has been instructed to keep additional money in their bank account because the agent (under their direct debit arrangement with the tenant) will be dipping in early.

Here's what the Residential Tenancies Act 2010 says.

You must pay your rent on or before the day set out in the agreement (s 33(1)).

However, you are not required to pay more than two weeks' rent in advance, or to pay rent for a period of the tenancy before the end of the previous period for which rent has been paid (s 33(2)).

The law doesn't stop for Christmas. If because of their holiday plans an agent won't be around to take payment of your rent on the due day, that's their problem. They can take payment when they get back from holiday.

Because you probably possess a superior sense of Christmas cheer, you might not be inclined to advise in reply that requiring more than two weeks' rent in advance is an offence under the Act, punishable by a penalty of $1100 (s 33(2)). But you should at least cancel the direct debit arrangement, if you have one, and arrange a safer way to pay rent.

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.

Sick of over-regulation (part 2): restrictions against additional kids and other occupants

We've always said that the prohibition on keeping a pet without the landlord's consent is the most bothersome term commonly seen in tenancy agreements (even more so than the term requiring you to inform your landlord of any infectious disease you might contract).

But there's another contender: the term that sets the maximum number of persons who may live at the premises. 

Fair enough that landlords don't want their premises being let in lodgings to sundry others and becoming overcrowded. But the term for a maximum number of residents is misused, and unreasonably restricts tenants when they're making personal decisions about their households.

First, most landlords and agents set the maximum at the same number of persons in your application for the tenancy – without regard to the size of the premises, and without regard to whether a household might reasonably grow. There's nothing in the Residential Tenancies Act 2010 that says the maximum number must be reasonable, and nothing that allows a tenant to get an unreasonable restrictive maximum varied.

If a tenant wants it varied – say, to accommodate an additional child – they must ask the landlord's consent.

We're aware of a case where a couple wanted to foster two kids. They asked the landlord – because they were two persons in a five-bedroom house, and the maximum number of occupants allowed was – yes you guessed it – two. The landlord refused consent.

And if a tenant goes forth and multiplies without their landlord's consent, the landlord can serve a termination notice, and go to the Tribunal for a termination order, on the grounds that the tenant is in breach.

We're aware of a case where a tenant (initially with two kids, in a three-bedroom house: maximum three occupants allowed) came to an arrangement with her ex-partner for shared care of her third child, a kid with a disability – both stayed a few nights each week. During an inspection the landlord was disconcerted to discover the third child, and a bed made up in the lounge room (the tenant asks: 'do you expect me to share a bed with my ex-partner?'). The landlord gave a termination notice and applied to the Tribunal, where the tenant – humiliated – was questioned as to who she has to visit her and for how long.

In the end the Tribunal declined to terminate the tenancy, and said it was okay for the ex-partner and the additional child to be at the premises – provided it was temporary. It then made a specific performance order that the tenant not allow persons in excess of the maximum to live at the premises.

Most landlords aren't interested in interposing in tenants' private, personal household arrangements – but where it happens, it is grossly offensive. Our position is:

• let landlords have their term for a maximum number of residents – provided the number is reasonable, considering the size of the premises and number of bedrooms; and
• let tenants go to the Tribunal for an order varying the maximum number if it is unreasonable, or if it restricts a child from joining the tenant's household.

Sick of over-regulation (part 1)

Do you rent? Ever had a cold, flu or other bug?

If yes, did you notify your landlord? Because it's probably a term of your tenancy agreement that you do.

Up the back of the standard form of residential tenancy agreement published by the Real Estate Institute of NSW – and used widely by agents and landlords throughout the State – there's an additional term under which you're obliged

47.8... To notify the landlord promptly of any infectious disease....

We're yet to hear of any actual cases of landlords asserting their contractual right to know about tenants' lurgies or other ailments. But the infectious diseases term is a symptom of the bothersome, burdensome overegulation of tenants, by their landlords.

In our view, probably the most bothersome common additional term is one we've discussed previously: the term against pets (and you can see our recent submission of this point to the NSW Companion Animals Taskforce, here). We object to this additional term because it bars many tenants from one of life's simple pleasures and from making decisions that responsible adults should be free to make for themselves. And in terms of legal liability, it is entirely unnecessary: under the prescribed terms of every tenancy agreement, the tenant is liable for any damage they intentionally or negligently cause or permit – whether that's damage done by an occupant with two legs or four.

It should be said: the additional term about pets comes courtesy of NSW Fair Trading, which included it in the standard form of agreement under the Residential Tenancies Regulation 2010. Otherwise, most additional terms come from the version of the standard form published by the REI, or are cooked up by individual agents and landlords.

We've seen some shockers. We've seen additional terms that purport to prohibit tenants from having sex at the premises, from drinking alcohol, and from even possessing (never mind playing!) a musical instrument. We've seen additional terms that purport to reserve for the landlord the right to inspect the tenant's furniture and refuse to allow it inside if it doesn't suit.

And then, less extreme, there's the dreary lists of everyday proscriptions: no blu tack, no posters, picture hooks, no nails, no screws, no smoking, no clothes drying on balconies, no clothes drying inside, etc, etc.

Our practical advice about bothersome additional terms is this. First, there are some additional terms that the Act expressly prohibits (section 19). The prohibited terms are:

(a)  that the tenant must have the carpet professionally cleaned, or pay the cost of such cleaning, at the end of the tenancy,

(b)  that the tenant must take out a specified, or any, form of insurance,

(c)  exempting the landlord from liability for any act or omission by the landlord, the landlord’s agent or any person acting on behalf of the landlord or landlord’s agent,

(d)  that, if the tenant breaches the agreement, the tenant is liable to pay all or any part of the remaining rent under the agreement, increased rent, a penalty or liquidated damages,

(e)  that, if the tenant does not breach the agreement, the rent is or may be reduced or the tenant is to be or may be paid a rebate of rent or other benefit.

And clause 5 of the Residential Tenancies Regulation 2010 adds another prohibited term to the list:

A residential tenancy agreement must not contain a term having the effect that the tenant must use the services of a specified person or business to carry out any of the tenant’s obligations under the agreement.

Note that there's a big qualification on the prohibition of the 'carpet cleaning term' at section 19(a). Section 19(3) provides that such a term is allowed 'if the landlord permits the tenant to keep an animal on the residential premises.'

Apart from that, prohibited additional terms are void and unenforceable, and it's an offence for your landlord or their agent to put them in (maximum penalty: $2200).

Second, even if an additional term is not on the prohibited list, there will be a question about its validity. The Act allows additional terms, but only if they are consistent with the prescribed terms, and inconsistent terms are void to the extent of their inconsistency (section 21). (To be precise, the Act does allow contracting out of certain prescribed terms in the case of tenancy agreements for a fixed term of 20 years or more – and we have never seen such a long fixed term.)

Easily offended prescribed terms include the term protecting your reasonable peace, comfort and privacy (section 50(2) – so we wonder if the infectious diseases term might be void, at least to some extent) and the term obliging you to keep the premises reasonably clean (section 51(2)(a) – so no additional terms are allowed that impose a heavier obligation than keeping the place 'reasonably clean').

That's the practical advice, but at a deeper level, there's the question of why so many landlords and agents – who would no doubt otherwise call themselves as the sworn-enemies of 'over-regulation' and 'red-tape' – would engage in such bothersome, burdensome, boring over-regulation of tenants.

Speaking generally, our impression is that the longer the list of additional terms, the less the landlord or agent actually knows what they're doing, and the less well they're actually managing the property and the tenancy. They micro-manage, instead of effectively manage.

Where the ineffective, micro-managing landlord freaks out about blu tack and picture hooks, the effective landlord plans and budgets to repaint the premises after so many years – and is more likely to have longer tenancies, and shorter vacancies.

Where the ineffective, micro-managing landlord presumes, by virtue of their status – and not any actual  expertise – to know more than their tenant about how to run the tenant's household, the effective landlord knows that a good tenant is like quicksilver, or even love: clutch it and it darts away, but open your hand and it will stay.

Private rental housing is a $28 billion per year industry run mostly by amateurs. Most engage agents to manage tenancies on their behalf. Agents could do landlords and tenants alike a power of good by ruling out bothersome, burdensome over-regulation in tenancy agreements.  

[UPDATE: thinking of having your partner move in? Having a baby? Better check with your landlord about that too – see part 2.]

Paying to pay the rent

You might think that collecting rents and keeping rent accounts are a core part of the service offered by real estate agents, and a core part of what landlords pay for when they pay agents to manage a property.

But not all agents see it that way. Over the years an increasing number of agents have given the job of collecting rents and keeping rent accounts to rent collection companies... which charge tenants a fee for collecting the rent. Less work for the agent, and the tenant pays!

The fee is typically about $10 per quarter, but you can be hit up for more: an extra dollar or so for payments by BPay or POSTbillpay, an extra 1.32 per cent for payments by credit card, $3.30 for a statement, $5.50 for a cancelled payment, $22 for a declined payment....

Tenants are still getting stung by these arrangements – and you shouldn't have to. If you're in one of these arrangements, or if your landlord's agent proposes that you enter into one, consider telling the agent that you'd rather pay some other way, that doesn't incur a fee. Point to section 35 of the Residential Tenancies Act 2010:

35   Manner of payment of rent

...

(2)  A landlord or landlord’s agent must permit a tenant to pay the rent by at least one means for which the tenant does not incur a cost (other than bank fees or other account fees usually payable for the tenant’s transactions) and that is reasonably available to the tenant.

If they're stubborn about it, you might also point out the sting in the section for landlords and agents.

Maximum penalty: 10 penalty units.

A couple of other things to look out for. We're aware of some agent asking tenants to enter into direct debit arrangements with them – that is, authorising the agent to take money directly from the tenant's account. Please – don't do this. It's too risky.

There's the risk of the agent trying to withdraw money before the rent is due and before the tenant's pay goes in – the result is an overdrawn fee for the tenant. There's the risk of the agent nipping into the account for other charges, such as water bills, and leaving the account overdrawn or cleared out. And there's the risk of the agent nipping into the account for their own enrichment, and clearing off.

So if you've got one of these arrangements, or the agent proposes that you enter into one, consider instead setting up a scheduled transfer from your account to the agent. This keeps control of your account – and your money – in your hands, and is no less convenient.

Finally, whatever your arrangement – scheduled transfer, direct debit, rent collection company – make sure you cancel it when you end your tenancy. If you don't, the money will keep going out. You'll probably notice pretty quickly if your old rent keeps going out, but those rent collection company fees can fly under the radar for months... and there's no straightforward way of getting those fees back. (The rent collection company will say that you have been paying for the availability of their so-called 'service' to you.)

Patronising the patrons

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?

Know your residential tenancy agreement

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.