What you need to know about renting reform in NSW: Part 1

This week saw the introduction of the Residential Tenancies Amendment law reform. Overall it attempts some very positive things, with only a few parts we quibble with. Unfortunately it's effectiveness will be let down as it does not address the fundamental imbalance in our renting laws caused by unfair 'no grounds' evictions. We support the bill being passed, but with amendments to ensure the reforms can do their job. The Make Renting Fair campaign is asking supporters to email key members of the Legislative Council to ensure the reform is effective and fair.

But let's take a closer look at the bill and what it will mean for renters in NSW. Here's five of the biggest changes. We'll return with the remainder of the proposals in Part 2 and Part 3.

Domestic Violence provisions

We will leave this to our phenomenal colleagues at Women's Legal Service who have led the way on these reforms. They said in their media release the following.

These are the ways the Bill will make a significant difference in the lives of domestic violence  victims-survivors:

Victims-survivors of domestic violence will be able to terminate their tenancy immediately without penalty when they provide a domestic violence termination notice to the landlord and each other co-tenant.

The notice must also include evidence of domestic violence which includes:

a domestic violence order, or
a personal protection injunction under the Family Law Act, or
a copy of a certificate of conviction in proceedings against the relevant domestic violence offender for the domestic violence offence, or
a declaration by a ‘competent person’ as prescribed by the regulations. A ‘competent person’ includes only medical practitioners.

Perpetrators of damage to property will be liable for that damage. A victim of violence or another tenant who is not the relevant domestic violence offender will not be liable for damage to residential property caused during the commission of a domestic violence offence.
A victim-survivor of domestic violence who terminates their tenancy by providing a domestic violence termination notice cannot be listed on a residential tenancy data[base] list.

While we would have liked the reforms to have gone even further with an expanded list of ‘competent persons’ beyond just medical practitioners being able to provide evidence of domestic violence through a declaration, the reforms included in the Bill are a major step forward and we believe will make a significant difference in the lives of domestic violence victims-survivors and their children.

We at TUNSW agree with the Women's Legal Service.

Minimum standards

Currently landlords are required to provide premises in a state that is 'fit for habitation'. However, what constitutes 'fit for habitation' is not defined and it can be quite hard to work out what it does mean.

The proposal before government is a start on clearly defining what fit for habitation might mean. The government's proposal is a good first step and includes some features which moves to reflect a modern understanding of fit for habitation.

Premises must be structurally sound, which means if the floors, ceilings, walls, supporting structures (including foundations), doors, windows, roof, stairs, balconies, balustrades and railings:

(a) are in a reasonable state of repair, and
(b) with respect to the floors, ceilings, walls and supporting structures—are not subject to significant dampness, and
(c) with respect to the roof, ceilings and windows—do not allow water penetration into the premises, and
(d) are not liable to collapse because they are rotted or otherwise defective.

Other requirements are to ensure premises:
- have adequate natural light or artificial lighting in what we might call living spaces, such as bedrooms, living rooms and kitchens.
- have adequate ventilation, and
- are supplied with electricity or gas and have an adequate number of electricity outlet sockets or gas outlet sockets for the supply of lighting and heating to, and use of appliances in, the premises, and
- have adequate plumbing and drainage, and
- are connected to a water supply service or infrastructure that supplies water (including, but not limited to, a water bore or water tank) that is able to supply to the premises hot and cold water for drinking and ablution and cleaning activities, and
- contain bathroom facilities, including toilet and washing facilities, that allow privacy for the user.

Our recommendation
In order to really create homes which are fit for habitation we also recommend including requirements to ensure there are:
- adequate cooking or food preparation facilities,
- adequate laundry facilities,
- adequate waterproofing in bathroom, kitchens, laundry areas,
- free from infestation by vermin, mould or other biotoxins,
- adequate insulation and weatherproofing.

Many people are also often surprised that there is no obligation to ensure premises are safe apart from things which are legislated elsewhere like smoke alarms. This could be fixed up in a number of ways, but one of the simplest is simply to insert safe into the current obligation (section 52) so that it become: “A landlord must provide the residential premises in a reasonable state of cleanliness, safe, and fit for habitation by the tenant”.

As a first step, parliament should pass this current proposal but we would support amendments to the bill to make it even stronger and more effective.

Fairer 'break fees' for leaving tenancies early

Occasionally tenants find that for work, personal or other reasons they can't maintain the contract until the end of the fixed term. When they leave, there is compensation payable for breaking the contract early - known as 'abandonment'. The current system is a confusing, two-tiered one which often has no relationship with the actual costs to the landlord of the tenant leaving early.

Currently landlords choose one of two compensation systems. They can choose a 'break fee' of either 6 weeks or 4 weeks (depending whether abandonment occurs in the first or second half of the agreement) as a fixed compensation.  Alternatively they can rely on a compensation scheme which comprises of rent until new tenant moves in, advertising, any relevant agents re-letting fee. This method involves adjusting the fees depending on how far through the contract the tenant is, as well as 'mitigation of loss' for landlords not attempting to raise the rent or being overly picky about choosing new tenants knowing that the outgoing tenant is picking up the tab while they choose.

Ensuring the proper amount is charged requires a lot of time and effort by the outgoing tenant.  At the moment, landlords choose whichever one they think will get them the most money.

The proposed change is to require the tenant to pay a fee more closely related to how far through the contract they are. Either, 4, 3, 2 or 1 weeks rent as a penalty depending on which quarter of the agreement (up to 3 years) they are in.  This is much closer to the real costs experienced by landlords once costs are considered in Tribunals.

Our recommendation

We think this much better reflects the average costs payable in 'abandonment'. It does have downsides for tenants who are in high demand areas - they may well pay more in break fees than under the 'compensation' scheme. However we think this is a fair trade for the certainty in not having to keep a close eye on the property once you've left and fighting unfair compensation claims in the Tribunal. A tenant's time and energy should be respected!

This proposal should be passed without change.

Changes to rent increases

Currently in NSW the rent can be increased at any time outside a fixed term, and can seek any amount. It is up to the tenant then to dispute whether the increase is excessive. Often this is very difficult as most of the information required to dispute an increase is in the hands of the real estate industry who may well charge for access. Not only is the landlord or agent more likely to have the funds to pay for the information, but this is an expense that can be written off as a tax deduction by the landlord or agent. Tenants on the other hand, are simply out of pocket.

The government is proposing two changes - one representing a little step forward, and one representing a step back.

Rent increases in periodic agreements will only be able to be increased once every 12 months. This is a good step on its own terms as it provides much more certainty about when increases will come. However, there are two issues - first, that it does not address the information asymmetry, and second that it does not apply to fixed term agreements. A landlord wanting to use rolling 6 months agreements will be able to increase the rent every 6 months.

Indeed the second change makes this issue even worse. In some contracts, landlords or agent write a future rent increase into a fixed term contract of less than 2 years. So long as the date and amount of increase is included, the government's proposal is that the landlord will not have to then issue another rent increase later on. Currently, very few landlords offer leases of more than 12 months (other than the state's biggest landlord - FACS - which generally offers 5 or 10 year leases, without break fees).

A landlord who wants to avoid the 12 month restriction on rent increases in periodic will now be incentivised to move to rolling short fixed term leases, which allows more frequent rent increases. The Minister, Matt Kean, claims one reason they have not acted on no grounds evictions is that retaliatory rent increases are the bigger issue for tenants. We might disagree about which has a bigger impact, but if it is true, these two proposals taken together mean tenants are still very much vulnerable to retaliatory rent increases.

Our recommendation 

Rent increases should be more balanced in two key ways. A time restriction on rent increases should apply regardless of the contract term and be restricted to 12 months since the beginning of the tenancy or the last increase.

There also should be a sharing of the onus of proof around excessive increases. Where the landlord wants to increase the rent above a fair marker, like the Consumer Price Index, we think it's reasonable that they should provide the evidence to support the claim. If the increase comes in at or below CPI, then the tenant can choose whether or not they agree with the claim and demonstrate the evidence for why the property doesn't meet that level. This is a far more equitable approach. 

As a first step, Parliament should pass this current proposal but we would support amendments to the bill to make it even stronger.  

Repairs inspectors assess the need for repairs and make rectification orders

This change would see Fair Trading take a much more active role in repairs processes. At either the tenants or landlords request, an investigator will attend the premises to assess the repairs and make rectification orders. If the rectification order is not followed the Tribunal can make further orders and penalties may apply.

While this idea has potential, its success will mostly rely on whether it is adequately funded - especially for tenants in regional areas where wait times could potentially render it unusable. Where the funding comes from will also be crucial - it would be unacceptable for it to come from the Rental Bond Board whilst Tenants' Advice and Advocacy Services remain grossly underfunded and have been told for many years there is simply not enough money (despite there being a $60million surplus!).

Our recommendation 

We really need to see a more concrete details around how this plan will be implemented - it has capacity to be a game-changer or a dead rubber. It is certainly worth giving a chance.

Subletting: how the draft Bill would work

The REI has been banging on about the subletting provisions of the draft Residential Tenancies Bill again. They just don't get it. As a service to confused agents, here's how the subletting provisions would work.

For the purposes of the exercise, I'll need to employ a couple of educational aids. Meet Tina Tenant and Sally Subtenant:

(Tina Tenant (left) and Sally Subtenant (right))

Now meet Lenny Landlord:

(Lenny Landlord)

Let's begin.

Scenario 1: Tina is thinking of subletting to Sally without Lenny's consent.
The draft Bill says: she better not. If she did, Tina would be in breach of her tenancy agreement. Lenny could, if he so chose, give a notice of termination on this ground. (This is the same as the current law.)

Scenario 2: Tina is going overseas for six months. She asks Lenny if she can sublet the entire premises to Sally while she is gone.
The draft Bill says: Lenny can refuse consent – no ifs or buts. He can refuse even if it is unreasonable to so. (This is the same as the current law.)

Scenario 3: Tina wants Sally to move in with her. She asks Lenny if she can sublet the spare room to Sally.
The draft Bill says: Lenny can refuse consent, but not unreasonably. (This is a change from the current law – and a pretty minor change at that.)

Let's look more closely at what the draft Bill says about 'reasonable refusal'.

Scenario 3a: Tina asks Lenny's consent to sublet the spare room to Sally. Lenny knows about Sally – and he would never give a tenancy to her if she applied for one.
The draft Bill says: Lenny can refuse consent. The draft Bill expressly provides that a landlord may refuse consent to a subtenant if the landlord would not have approved that subtenant for a tenancy.

Scenario 3b: Tina asks Lenny's consent to sublet the spare room to Sally. Lenny says 'no no, I don't care who it is, I'm not even going to consider it.'
The draft Bill says: Tina may not go ahead and sublet the spare room – that would be a breach. However, she may, if she so chooses, apply to the Tribunal for an order allowing her to sublet the spare room. The Tribunal will decide whether Lenny's refusal was unreasonable.

This is what the agents have been making so much noise about. Not that big a deal, is it?

More praise for the draft Bill - the view from over there --->

After much sleuthing and snooping around, we’ve finally stumbled across our very own copy of the Real Estate Institute’s “preliminary submission” on the draft Residential Tenancies Bill 2009. (Hint: It’s now on their website!)

Given what’s been bandied about in the press over the last couple of months, we could have guessed what’s in it. But, in case you missed the earlier dispatches, here’s what’s getting their goat:

- The Institute is concerned that the “break-fee” concept will so unsettle existing power dynamics that tenants will use them as a threat, to badger landlords into silly things they shouldn’t have to worry about – like fixing things, and not putting the rent up too often…

- The Institute is concerned that having to have a reason when refusing to allow tenants to sublet – and not having complete control over their tenants’ choice of flatmate anymore – will take all the fun out of being a landlord…

- The Institute is concerned that being unable to refuse, without a reason, the planting of a shrub, the painting of the back fence, or the hanging of a picture in the living room, will suddenly result in the construction of a new billiards room out the back, and a second toilet downstairs – all without council approval!

- The Institute is concerned that a minor adjustment to the law about challenging rent increases is nothing short of rent control.


We have to admit, these concerns seem rather baseless to us here at the Brown Couch, and we have our suspicions that the Institute is simply trying to push some political buttons. Aforesaid issues aside, they have actually covered very little ground considering the nature and number of reforms currently under consideration. Instead of offering valuable insight into whether or not the proposed changes might work, they’ve treated us to a rather gruff lecture on why new laws will make life miserable for us all – and it’s not without its share of vitriol and blame.

According to the Institute, “ the NSW property market (upon which the Government is heavily reliant for revenue) must be attractive for both NSW and external investors”. Fair enough… But research consistently shows that the rights of tenants and landlords are pretty far down the list when it comes to decisions to invest (or disinvest) in property. For that matter, there are plenty of other, more appropriate ways to make the NSW property market an attractive place to park your money. The Residential Tenancies Act is not the place to try and meet this objective.

Linked to this idea that investment is discouraged by regulation is the idea that landlords should not have to bear the risks of their investments. In 2007, and again in 2009, the Institute said, “Investors select an investment for return, and is (sic) not driven by a desire to provide housing.” It’s fair to assume, then, that landlords are in it for the capital gains… Tenants, on the other hand, are far less likely to be entering into rental agreements on their accountant’s advice – they’re just looking for somewhere to call home. Landlords do not become landlords in order to give tenants what they need. Landlords become landlords in order to make a profit. How unfortunate, then, that houses are so fiendishly expensive, and that their only real value is in their capacity to house…

The Institute would have us believe that proposed changes to the law will increase landlords’ risks. With increased risks come increased costs. With increased costs come increased rents… What the Institute fails to point out, though, is that each anticipated “new” risk already exists for landlords. Tenants live in houses, and living in houses causes wear and tear. Sometimes tenants don’t live in houses, but landlords still have to pay their mortgages. Sometimes tenants move away unexpectedly…

The simple fact is that investing in real estate is a risky, and costly, business. Between buying and selling, most landlords are going to be out of pocket, and will quickly go broke if they don't have the cash-flow to cover their expenses. Tenants assume their own risk, too - that of making a home out of a property they have no real control over. Landlords can convert their risk into huge wads of cash, if they manage it well. Tenants can't.

Devising new and innovative ways of reducing the cost of being a landlord is of course a worthwhile pursuit. But really... Insisting the Residential Tenancies Act be used to pass foreseeable but unwanted costs onto tenants is hardly the way to go.

Finally, the Institute seems to think that repeating the mantra "it's not fair" over and over again will somehow make it so. Apparently, "landlords and property managers are sick and tired of a tenancy system which is heavily biased in favour of tenants". But this critique of existing tenancy law doesn't stand up to scrutiny. Generally speaking, the most sought after Tribunal order for landlords is to recover possession of premises. This can be enforced by the Sheriff (using reasonable force, if necessary). For tenants, the most sought after Tribunal orders are for repairs and maintenance, or for observance of peace, comfort and privacy. Neither of these can be enforced, and remedies such as compensation can be hard to obtain if the landlord won't play by the rules.

NSW State Opposition comments on draft Bill

After consulting with various stakeholders (including the Tenants' Union), the Shadow Minister for Fair Trading, Greg Aplin, has commented on the draft Residential Tenancies Bill.

The comment is interesting not because of what it says about the draft Bill, nor because of what it says about the Opposition's position on tenancy law reform, but rather for what it says about the position of landlords and agents in New South Wales.

Mr Aplin says:

What I am hearing is this:

1. Tenants could be offered short-term, probationary leases of 3 months duration.
2. At the end of a fixed term tenancy the tenant might have to sign up immediately for a new fixed term rather than simply hold over under the previous agreement.
3. In order to secure income to pay their mortgages, landlords might take out insurance for the new risks proposed in the draft bill, and then effectively pass the premium cost onto the tenant.
4. New clauses will appear in tenancy agreements giving blanket ‘disclosures’ which negate the real purpose of a timely and helpful disclosure.
5. Greater reliance will be placed on tenancy databases and more detailed inquiries about a prospective tenant’s renting history and commitment to honouring agreements for housing, at the workplace and more.
6. Leases might only have a single tenant’s name on them.
7. More tenants will find themselves in the Tribunal more often, facing unnecessary stress and uncertainty over their home. The draft bill has over 60 sections which send the parties to the Tribunal for a decision.

The important thing is that none of these things is mandated by the draft Bill. Not a single one. Every one of them is a hypothetical reaction by agents and landlords.

And by 'hypothetical reaction', I mean 'threat'.

What Mr Aplin is hearing is the sound of the agents and landlords throwing their weight around. The REI has been at this for months, with wild talk about landlords fleeing the State and those staying put jacking up rents by 20 per cent.

The further threats reported by Mr Aplin are just more proof of the asymmetry of the landlord-tenant relationship – as if more proof were needed. We all know this: before a tenancy begins, it is always the prospective tenant who has to prove their credentials (provide references, hand over payslips, get run through a database, etc) to the landlord, never the other way round. And during a tenancy, a tenant who is unhappy with the quality of service they are receiving cannot take their business elsewhere without incurring considerable financial and emotional costs; landlords, on the other hand, feel little difficulty in getting satisfaction by enforcing the tenancy contract, including through termination proceedings.

If it were not for tenancy legislation, landlords and agents would dictate terms to tenants. The threats disclosed by the Shadow Minister show that tenants' interests need to be protected in strong tenancy legislation, and that if the draft Bill is to be changed, it should be to improve its protections of tenants against the abuses of power being threatened by agents and landlords.

UPDATE: Our take on the draft Bill, in brief

The Good

Residential tenancy databases. Finally: the draft Bill proposes legislated rules about residential tenant databases that will apply to landlords, agents and database operators. It will oversee how listings occur and how to find out about a listing, and provides for the resolution of disputes. Given the importance of this reform, it is vital that the legislation gets it right.

Co-tenants. Under current laws, a departing co-tenant cannot end their liability for rent and other costs, while other co-tenants remain. The draft Bill would allow the termination of a co-tenancy, and the severance of liabilities, by giving notice to the landlord and remaining co-tenants.

Domestic violence. Where a final Apprehended Violence Order excludes a violent co-tenant from their premises, the draft Bill would automatically terminate their tenancy. The tenancies of other co-tenants would remain on foot. This proposal will enable the rental liabilities of victims and perpetrators of domestic violence to be severed.

Rent arrears. While landlords would be able to commence termination proceedings more quickly, tenants would be assured that if they pay their arrears, their tenancy will be saved – even if the Tribunal has already ordered termination. Tenants facing eviction for arrears would not be tempted to keep their money for a new bond, and landlords would be better equipped to recover arrears.

Break fees. Tenants who move out during the fixed term of a tenancy would be liable to compensate the landlord with a pre-determined ‘break fee’. This is much less complicated than the current “breach/loss/mitigation” model. The proposal is controversial – the draft Bill seems to create a statutory right for tenants to unilaterally end a fixed term tenancy. It should simply seek to codify the manner in which appropriate compensation is calculated. It would be unfortunate if this reform is abandoned on account of this controversy.

Terminations by tenants. Tenants would be able to end a tenancy with no penalty if they are offered a social housing tenancy, or take up residence in an aged-care facility, during their fixed term.

The Bad

Access to premises for sale. The Bill envisages landlords and tenants making agreements about days and times to show a property to prospective purchasers. But any negotiations would be undermined, by giving landlords access on 24 hours’ notice without limiting the number of visits, as well as fines of up $2 200 for tenants who refuse to give ‘reasonable’ access. Agreements will only happen when landlords’ rights of access are restricted and they have a reason to negotiate for more. These proposals are a step backwards, and will lead to more disputes between landlords and tenants.

Uncollected goods. The time allowed for collecting goods at the end of a tenancy would be decreased to just 14 days, before a landlord can dispose of them. The draft Bill would give a former-tenant a right to compensation if the landlord disposes of goods unlawfully – but given the options for a landlord to dispose of goods may include giving them away, this could well be meaningless.

Unfinished Business

Terminations ‘without grounds’. Renting in NSW will remain unnecessarily insecure, as landlords would retain their current ability to end tenancies ‘without grounds’. Notice periods would be increased, but the Tribunal would lose its discretion to take ‘circumstances of the case’ into account during termination proceedings. Under these proposals, termination notices without grounds will always end a tenancy. The law should be trying to discourage landlords from using notices without grounds, not making them more attractive.

Exclusions. Those renters who are kept out of the current Act – particularly boarders and lodgers – will continue to be excluded by the draft Bill. These exclusions highlight the urgent need for occupancy legislation that covers all marginal rental housing in NSW.

Real estate agents stuck in the Age of Unreason

...and we're back. Happy new year, Brown Couch readers.

In the news today: how changes proposed in the draft Residential Tenancies Bill are 'the key to chaos', because they will require agents and landlords to act not unreasonably if tenants ask their consent to subletting or making minor alterations to the premises.

All manner of doom and woe is predicted by the Real Estate Institute should such a measure come to pass: landlords 'will not be able to afford the risk of renting and sell up, leaving Sydney's already tight market shorter still.' (What, they're going to knock the houses down when they go?) The viability of the rental property sector, the REI seems to be saying, depends on the ability of landlords and agents to act unreasonably; that is to say, without recourse to rational thought.

(Rene Descartes. 'I think therefore I am not a real estate agent'.)

Actually, the changes proposed in the draft Bill are not terribly revolutionary - in fact, they are really quite modest and in some respects allow landlords and agents to continue acting unreasonably.

Here's what the draft Bill says in relation to tenants' requests to make alterations:

• if the alteration would be more than 'minor or cosmetic', the landlord may refuse consent, including unreasonably. In other words, in these cases landlords would retain their current right to refuse to give the request any thought and reject it out of hand, or to reject it for daft reasons (eg my astrologer says the proposed alteration is inauspicious; the tenant was wearing a green shirt when he asked, and that's an ill omen).
  
• if the alteration would be minor or cosmetic, the landlord may refuse consent, but not unreasonably. If the tenant disagrees with the landlord's decision, they can apply to the Tribunal to have the dispute resolved (which is better than the tenant simply going ahead and doing the disputed alteration).
  

Here's what the draft Bill says about tenants' requests for consent to transfer their tenancy or sublet the premises:

• if the transfer or sublet would be for the whole tenancy (ie all the original tenants would be moving out and an entirely new lot of persons would be moving in), landlords may refuse consent, including unreasonably.
• if the transfer or sublet is only partial (ie one or more of the original tenants would be staying on with the new person moving in), landlords may refuse consent, but not unreasonably. The draft Bill goes on to expressly provide that it is reasonable to refuse consent where the landlord would not have accepted the proposed new person for a tenancy in the first place. As with minor or cosmetic alterations, disputes about refused consent may be resolved by the Tribunal.
  

All in all, this amounts to a pretty gentle introduction to the Age of Reason for landlords and agents.

The draft Bill: a preliminary view from the Brown Couch

As promised, here’s the TU’s preliminary guide to what’s proposed in the draft Bill. (Please note: these are the TU's preliminary views only, and they might change as we continue to cogitate on the draft Bill... and as we hear the feedback from our colleagues and constituents – in other words, you).

Access to premises. The provisions for landlords accessing premises to show them to prospective purchasers are, in our view, probably the most disappointing and troublesome of the draft Bill. It envisages landlords and tenants making agreements as to the days and times for access, which is fine, but then undermines any negotiations by giving landlords everything they could want: access on 24 hours’ notice, without limit as to the number of visits, plus a big stick – fines of up $2 200 for tenants who refuse to give reasonable access. We think agreements as to access will only happen when landlords’ rights of access are restricted and they have a reason to negotiate for more. There’s a couple of other access provisions that could do with tightening up too.

Alterations. Tenants would still have to get their landlords’ written consent to make alterations and install fixtures, but where the alteration is minor or cosmetic, the landlord may not unreasonably refuse. Tenants would have to make good any damage or loss of value when they leave, and they would also lose their current statutory right to compensation for fixtures they’ve had to leave behind… but clever landlords know how to avoid that liability anyway. All in all, the draft Bill’s provisions are probably a little better.

Break fees. Tenants who break a tenancy early by moving out in the fixed term would be liable to pay a ‘break fee’ of four or six weeks’ rent (depending on how early they’re breaking) instead of the rent lost until a new tenant moves in, plus the landlord’s readvertising costs, reletting fee, etc. The break fee has the potential to deliver a windfall to landlords – particularly the six-week fee, which is too high – but a flat four week fee would be more straightforward than the current situation and, on balance, good for tenants.

Co-tenants. Big improvements for persons who are on tenancy agreements with one or more other tenants. Under current laws, a co-tenant who moves out cannot end their liability for rent and other costs; the draft Bill would fix this absurdity by allowing a co-tenant to give a termination notice to the landlord and the remaining co-tenants. The draft Bill would also improve the process for transferring tenancies when a new person moves in to replace a departing co-tenant and allow, in special circumstances, a co-tenant to apply to the Tribunal to terminate the tenancy of another of their co-tenants.

Domestic violence. Where a final Apprehended Violence Order excludes a person from premises of which they are a co-tenant, the draft Bill would automatically terminate their tenancy while leaving the tenancies of other co-tenants on foot. A very sensible reform that helps victims of domestic violence get their tenancy arrangements sorted out.

Exclusions. Those renters who are kept out of the current Act – for example, boarders and lodgers – are out of the draft Bill too. There’s one exception to this: educational institutions are excluded from the current Act, but not the draft Bill – though we anticipate they will be excluded later by regulation. The draft Bill would exclude some additional groups of renters too, such as residents of refuges and crisis accommodation, serviced apartments and sharehouses. In the case of sharehouse residents, only those who have written agreements or who have become tenants by transfer or Tribunal order are covered, otherwise you’re a lodger. The exclusions make more urgent the need for occupancy legislation that covers all marginal rental housing.

Holding fees. The deposit many prospective tenants pay in an attempt to hold or reserve premises to let will actually mean something under the draft Bill: if a landlord accepts a holding fee from a prospective tenant, it will be up to the prospective tenant as to whether or not to go ahead with the agreement. Makes good sense.

Long-term tenancies. Tenancy agreements with a fixed term of 20 years or more would be allowed to leave out many of the usual terms, like those relating to repairs. An interesting development, but of little practical importance: virtually no one – landlord or tenant – is interested in a 20-year fixed term tenancy.

Rent arrears. Landlords would be able to commence termination proceedings more quickly, but tenants would be assured that if they pay the arrears, their tenancy is saved – even if the Tribunal has already ordered termination. On balance, this is an improvement for tenants, and landlords too – at the moment, if they get a termination order, many tenants won’t pay the arrears and will use the money instead to move and set up their next tenancy. The draft Bill would see more tenancies saved and more landlords paid. Win-win.

Rent control. No, just kidding. We've searched high and low and there's nothing in the draft Bill that can justifiably be called rent control.

Rent payments and receipts. Some useful reform here: tenants would be able to request a statement of rent payments from their landlords, and landlords would have to provide at least one method of rent payment that does not impose a cost on the tenant – so tenants can say goodbye to those rent card companies that charge tenants for the privilege of collecting their rent.

Residential tenancy databases. Finally: legislated rules about tenant databases (sometimes known as tenant blacklists) that apply to landlords, agents and operators of databases, that set out how a persons may be listed, and that provide for resolution of disputes about listings through the Tribunal. These are some of the draft Bill’s most welcome provisions – but we know at least one tenant database operator cannot see a regulatory loophole without diving through it, so we’ll be suggesting a number of measures to tighten these provisions up.

Social housing. All the current special provisions relating to social housing are incorporated, virtually without change, in the draft Bill… except the drafters have omitted the grandfather clause that prevented pre-July 2005 social housing tenants from being given termination notices on grounds that they were no longer eligible. We think it’s an oversight and will be asking that it goes back in.

Terminations by tenants. Some useful new grounds for termination by tenants during the fixed term of a tenancy: the tenant has been offered social housing; and the tenant is to go into aged care. The draft Bill provides another new ground – that the premises are for sale, and the landlord did not disclose the sale before entering into the tenancy agreement – but this is too narrow to be useful: we think tenants should be able, without qualification, to give a notice of termination if the premises are put up for sale.

Terminations ‘without grounds’. One of the more disappointing aspects of the draft Bill. Landlords would retain their current ability to give notices ‘without grounds’, which makes renting unnecessarily insecure. Notice periods would be increased from the current 60 days to 90 days (and from 14 days to 30 days in the case of notices at the end of a fixed term), which is good for tenants, but the Tribunal loses its little-used but important power to refuse to order termination – that is, termination notices without grounds will always end a tenancy (one exception: the Tribunal retains its discretion where the tenant has been in occupation for 20 years or more). The law should be trying to get landlords away from using notices without grounds, not making them more attractive.

Uncollected goods. If you’re evicted, the draft Bill does not give you long to get your goods out of the premises – just 14 days before the landlord can dispose of them as they see fit (including dumping them at op-shops). Fortunately, personal documents must be stored longer – 90 days – and the draft Bill does give a former-tenant a right to compensation if the landlord disposes of goods unlawfully. We think the draft Bill’s protections for tenants’ uncollected goods should be backed up with some penalties, but overall it would help restrain some of the abuses that currently go on when goods are left behind after termination.

Startling Steve and the draft Bill

While the Tenants' Union continues to pore over the details of the new draft Residential Tenancies Bill (I'll post some comments on it shortly), the president of the Real Estate Institute of NSW, Steve Martin, has today blitzed the media with his own analysis.

(Steve Martin. Yeah, a cheap shot, I know. As the namesake of another famous Martin, I'm allowed.)

Through this morning's Australian Financial Review, Steve startled the big end of town with his warning that the draft Bill was 'investment vandalism' that would 'deliver carnage to mum and dad investors and tenants across NSW.'

This is because, says Steve, the Bill would introduce 'rent controls.' Yes, RENT CONTROLS. I kid you not.

By the afternoon, Startling Steve was down the other end of town, accosting Sydney workers through the commuter organ mX with predictions that 'Sydney rents could jump 20 per cent in just one year' if the Bill is implemented.

This is because, says Steve, it would be so costly for landlords and agents to comply with the Bill's conditions. 'On an average rental of $500 per week, these new costs could be as high as $100, which is a 20 per cent increase', he said.

Perceptive readers may have spotted something of a contradiction in Steve's statements. Will the draft Bill punt rents through the roof, or freeze them where they stand?

It takes a special kind of analysis to come up with two contradictory propositions and get both wrong. Regarding the rent control nonsense – and it is nonsense – the draft Bill's provisions relating to rent increases are the same, almost to the letter, as those in the current Act. No rent controls there.

As for the rent increase nonsense – and it is nonsense, and they've tried it on before – Steve doesn't say how he came up with such extraordinary estimates of the costs of compliance. Unless he shows his workings (whether on the back of a napkin, or a coaster, or whatever), the rest of us are entitled to think that he's just making it up.

New draft Residential Tenancies Bill

At last, the long-awaited draft Residential Tenancies Bill has appeared.

The draft Bill is the product of the review of current New South Wales residential tenancies legislation that began in 2005 (though those with long memories will recall that our legislation first came under review way back in 1998)... as well as the efforts of the Tenants' Union, the Tenants Advice and Advocacy Services, other housing advocates and numerous individual tenants to draw attention to the deficiencies in the current law.

First impressions of the draft Bill: mostly good. It would make numerous sensible improvements on the current law. Some of these improvements would be very significant: in particular, the provisions about residential tenancy databases would finally set out an effective set of rules about how a person might get listed on a database, and how they can get off the wretched thing.

There are, however, some less happy provisions: in particular, changes to restrict the discretion of the Tribunal in dealing with no-grounds terminations.

In the coming weeks, the TU will pore over the draft Bill and keep Brown Couch readers posted as to what we make of it.

The status of the draft Bill is that it is an exposure draft: that is, it is not law yet, and it has not even been introduced into Parliament. Fair Trading is seeking comments on the draft Bill until 18 December, before it goes to Parliament next year. You can make comments to Fair Trading online, but please also let us know what you think, through comments here as we discuss the draft Bill, or by dropping us a line at the TU.