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?

NSW Fair Trading tenancy dispute resolution service

NSW Fair Trading is promoting a dispute resolution service for certain types of tenancy disputes. If you're a tenant (or a landlord, or an agent) and you've not been able to sort out a problem yourself, you can apply to NSW Fair Trading to conduct mediation between you and the other party.

The mediation might result in a non-binding settlement of the dispute, or it might not settle, in which case you'll have to consider applying to the Tribunal for an outcome (currently the Consumer, Trader and Tenancy Tribunal; from 1 January next year, the NSW Civil and Administrative Tribunal). You'll have to consider applying to the Tribunal if the other party doesn't keep to the settlement they've agreed to, too.

It's good to know that this service is there as an option – one option amongst several. You can also contact your local Tenants Advice and Advocacy Service, who are experienced hands in negotiating with landlords and agents. Even when they cannot negotiate on your behalf can usually give you some handy tips on how best to do it yourself.

And the Tribunal is an option. You should consider applying to the Tribunal, particularly if you've been given the run around by your landlord or their agent for some time. Keep in mind that there are time limits on applications: you've got to apply within three months of becoming aware of a breach; and for some other types of dispute, the time limit is less than that.

And note that the Fair Trading service is optional, not mandatory (a mandatory process, duplicating the Tribunal's dispute resolution role in an inferior way, and complicating access to justice, would not be a good idea).