Renting laws debated in parliament

Yesterday was a huge day for renting law in  NSW.

At lunch together with Everybody's Home, we organised an event today at Parliament bringing together renters, housing academics, campaign supporters, and MP decision makers.

We heard from Keith – a renter who has lived in seven homes over the last ten years.

"I am sick and tired of being forced to move. I’ve figured out that each time we move it has cost us around $3000. No grounds evictions have totally disrupted my family’s life."

Dr Emma Power spoke about her research on the experiences of older women renters and the hardships they face. Russell Rodrigo, a property investor, spoke about how the proposed reforms are actually in landlords' interests - because they will foster better relationships and improved stability.

Russell, Dr Emma Power, Dr Chris Martin and Keith Young.

Then at around 5pm the fun really started. The debate started for the Residential Tenancies Amendment. As expected, the Government spoke to their bill and emphasised the positive steps it is taking.

Labor spoke strongly for the need to end unfair no grounds evictions and made clear that while there other issues in our renting system, that getting the fundamental fix of ending no grounds evictions would be the focus of their work on this bill.

Jenny Leong for the Greens moved 20 amendments to the bill raising a number of issues that so many tenants raise. Her amendments ranged from big ticket items like pets and rent increases, to more focussed improvements to the current bill, like a number of additional minimum standards.

The three Legislative Assembly Greens were joined by Alex Greenwich of Sydney to vote and support these amendments. With independents Joe McGirr of Wagga Wagga and Greg Piper of Port Macquarie. joining them for some issues, like supporting an end to blanket bans for tenants to keep pets.

Labor did not support these various amendments in the current bill, but made several commitments throughout the night to return to many of these issues and we look forward to discussing those issues with them soon.

Once the Legislative Assembly completed their deliberations, the bill was immediately raced over to the Legislative Council. The parties made generally the same points again. But significantly, Paul Green speaking for the Christian Democratic Party stated:

We believe this bill, for the most part, strikes a good balance... However, I encourage the Government to acknowledge the challenges faced by tenants regarding no grounds termination and implore it to approach such terminations based only on reasonable grounds. I have contacted the Government about this matter but is chosen not to go that way. I give an early indication that we will listen very carefully to consideration of amendments moved by Labor and The Greens in Committee. We feel that we are compelled to do so, given the Government has fallen short of supporting some of the State's most vulnerable people.

We applaud the CDP for making this statement. It reminds us all that good law-making is the responsibility of all within Parliament. A commitment to that responsibility is not confined to any one party, or any one approach. 

But with that, the debate was adjourned - it will be back on October 16. This is a crucial time for renters rights in NSW. Get involved with the Make Renting Fair campaign to hear about how you can help bring this thing home.

Fair renting laws: An idea whose time has finally come?

In 1975 the Henderson Poverty Inquiry handed down its final report. One of the major recommendations in the Law and Poverty section, and the only major one which was not implemented, was ending the practice of landlords evicting tenants without a good reason.

Listen to Brendan Edgeworth, Professor of Law at UNSW speaking on ABC Radio National last year.

Is Australia finally, 43 years later, on the verge of accepting the need for change? In just the last few years we have seen a growing recognition of the issue. A number of campaigns have started - the "Make Renting Fair" campaigns in both NSW and Victoria collectively bringing together more than 160 organisations across the two states including NGOs, faith-based groups, unions, councils and tens of thousands of individual tenants and supporters.

Victoria

New South Wales

Late last year the social housing and homelessness sectors launched their national Everybody's Home campaign - and included in their platform is ending no grounds evictions. While some of the organisations involved in Everybody's Home have been campaigning on this issue for some time, it is significant that it showed for the first time the public support of community housing landlords for ending no grounds evictions.

The Sydney Alliance recently included renting questions in an opinion survey in Penrith and found that 82% of residents disagreed that landlords should be able to evict tenants without giving any good reason).

Now in the last few days, GetUp! has launched their Future to Fight For campaign, with 7 broad-reaching changes including a platform of very positive housing reforms. The platform includes implementing a broad based land tax, increasing public housing, and amongst a range of tenancy law proposals - an end to "no grounds" evictions.

With more tenants than ever before, and more attention to the issue of a fair renting system - are we finally seeing the voices of tenants and their supporters growing loud enough to create real change and bring Australia's tenancy laws, if not into the 21st century, at least in to the 1970s? 

Home Truths

We're very pleased to present this guest appearance from Jennifer Stone, a renter in the Snowy Monaro region, who has recently started a group for renters in the region to connect and discuss local renters issues. The original version of this article was published on their Facebook page.

The home of the silenced

Snowy Monaro renters welcomes you to come into our place and sit with us a while. There is something vital we need to tell you, something which concerns us all.  If you come to know who we are and our situation, you will understand.

We come from diverse backgrounds, interests, beliefs and aspirations, yet we are a family, united by common experience. Though we are significant in number, we are marginalised, distained, unheard and unknown. We have no real shelter, but pay a high price to dwell where the walls of greed’s injustice over shadow us - and block us from a home.

We know our nations’ harsher reality, our nation’s pain. We offer you home truths, and hope you will hear us. Until we are heard, our nation is in plight.

Towns prosper when we prosper and whither when we thirst

While a substantial amount of our income goes to supporting landlords and real estates, we spend much that is left in our community. In this way we provide vital support to the local economy and help it stay afloat.  Our numbers have brought extra medical centres, high schools and supermarkets to service the community.

We work in almost every sector of the region. Our children represent a significant number of the student population in the regions’ schools.  Amongst us are also pensioners and those struggling to find jobs in our community. For those on social security payments without community or state housing, average rental costs are prohibitive. 

The economy is much impacted by the increasing and excessive rents in our region. Renters face great hardship and are struggling to find money for even the most essential items. There is a shortage of permanent rental properties appropriate to our means and needs.  As rents are becoming unaffordable, Snowy Monaro renters are increasingly forced to pay for sub standard housing with inefficient heating, lacking proper insulation. High power bills cripple our financial capacity.

If we complain at our conditions or at breaches by the landlord and real estate, we face eviction in retaliation, and inter real estate black lists. Indeed there is a special provision so landlords may give termination notices for “no grounds” – this is so the tenant can not argue their eviction (even with much evidence of retaliation by landlord and real estate).

As we are forced to leave a place and go to another, we have to find bond money, we lose pay days while moving and sick days from intense rental stress. Children suffer from such destabilisation, as does the whole community. In general we are in an ever growing inescapable cycle of debt. Our plight impacts the community’s well being as a whole. We see our regions’ potential for prosperity much diminished as rents become unaffordable - yet the financially powerful minority, seem blind to this.

We suffer from divisive and prejudicial myths

It seems there is a myth amongst some landlords who own local businesses that they are the backbone of the community. They say that renters are lowly “lazy”, “dirty”, drug addicted, poor “dole bludgers” who are beneficiaries of their “hard work”. They speak of us as second class citizens, less important than themselves. Some real estates call the renter “scum” and we know for sure they treat us as such.

Derogatory myths can create a painful reality. The myth that the majority of renters are financially poor has now come to express fact. As houses have become unaffordable, rent has become unaffordable. Both renter and mortgaged landlord share the pain of immense financial pressure, often in debt and living beyond their means – an economic climate stirred by the greed and power lust of just an elite few. This pressure has lead to an economy where those who have more financial wealth, gain more each day and those who have less financial wealth, lose more each day.

The average wage hardly changes while rents go up exponentially. Renters are paying their landlords’ mortgage along with their own increasing debts. Landlords who have no mortgage are greedily extorting tenants, renting out sub standard houses at excessive market prices. Such landlords hold shelter to ransom. As landlords increase their ability to buy yet another house, renters become more likely to never have a home. The myth that renters are lazy while landlords worked hard for what they have, purveys a great falsehood. Indeed, renters work doubly hard for what their landlords have! We are the hand that feeds the landlord, are we not?

Wisdom heals the prejudice and division

Those who have become financially impoverished are not worth less. The financially rich are not worth more.  There is nothing which can diminish the worth of any being.   All people are  intrinsically valid, necessary to each other and vital in their unique contribution. No one is better than or less than another. In truth we are really one, there is no division.

Everyone creates the community and all are responsible for the conditions of that community. Prejudicial myths inevitably create the worst of conditions for all. A myth which divides people by declaring some of greater worth and others of lessor worth, by any measure, must inevitably lead to a conflict for power and recognition. This conflict develops a ravishing greed which devastates and seeks to devalue all contesting its path. This in turn gives rise to mass poverty, disenfranchisement, marginalisation, cruelty and suffering.

A harmonious and prosperous community would grow, if it was understood that we are all equal yet unique, individual yet one. If all are seen of vital worth, no one would seek to devalue another nor make a house of greater value than the people who dwell there. Divisive myths of prejudice blind the powerful minority to their own truth and the truth of their nation. 

The home truths which can heal us – please listen, please hear us

We are your kin, your sisters and brothers, parents and grandparents, children, and, generations to come. We are one. In truth, we are you. What happens to any one happens to all.  No one is at home when all about them are homeless, paying for insufficient shelter, exposed to greed, extortion, repression, and eviction at a landlord’s whim.  A house which comes by way of life long debt or subjugation of another can never be a home for anyone. The nation cannot be at peace, when so many are unsettled.  

When values of decency are worth less than values of commodity our nation is impoverished.  Happiness, not commodity, is the measure of a nation’s wealth. A nation is truly wealthy when its people enjoy a peaceful home without fear of eviction, where all may contribute to society through unique expression, welcome in the nations embrace. A nation is not wealthy if its people are homeless, enslaved and in perpetual debt. If on paper a house is worth a million dollars, it is worth nothing to those who cannot call it home - that paper value serves no one if its cost destroys life. Money on a graph is not food we can eat and property on a graph is not a place to shelter.

Houses are homes and not commodity. Economists devoid of moral compass, call out triumphant when run down cottages sell at palatial prices - while homelessness ravages the nation. Who gains when the majority have no claim to home, striving to survive, and backs bent to power thirsty property managers who lack empathy, and distain ethics? How is it that the financially powerful minority of this nation sanctify greed without question – do they not see the greater part of their nations’ family in despair.  Muted acquiescence to raging greed makes all of us complicit in the theft of happiness from generations to come.

What we do to another we do to ourselves - when did people abandon this eternal guidance? The ancient truths have never changed, we reap what we sow. Seeds of kindness bear fruits of happiness, fulfilling and empowering all. When the nurturing harvest of this wisdom is ravaged, hunger for power grows, casting seeds which bear injustice, cruelty, drought and despair. 

There are elderly pensioners eating from cans of pet food to pay the rent, suffering the pain of eviction when the landlord sells for their needed profit, did you know? This is our pain as a nation, this is our home truth.

Let’s meet again and find a better way.

 By Jennifer Stone of Snowy Monaro Renters

Victoria's rental revolution - how does New South Wales compare?

Yesterday we celebrated Victoria's proposed tenancy law reforms, and reflected on some tired old lines that turn up every time we give serious contemplation to improved rights for renters. Today let's take a closer look at just what the Victorian Government's "Rent Fair" package includes, and how it compares to our own laws in New South Wales.

Victorian landlords: ready to cross the border at the first sign of tenants' rights

Victoria's proposed reforms are many and varied. They've been categorised into six different groups: rental security, tenants' rights, faster payments and rental bonds, fair priced rent, pets are welcome, and modifications.

Let's dive in.

Rental security
This includes the big one: landlords must give a reason to end a tenancy. This should be rolled out in every Australian state and territory, except Tasmania where it already applies. Along with others from the community sector we've been actively campaigning on this issue here in NSW (find out more at Make Renting Fair NSW). Allowing landlords to end a tenancy without a stated reason actively undermines tenants' confidence in renting laws because they worry they'll be evicted unfairly if they make a fuss or stand up for their rights. By now this should be well established, but if you still need some convincing we recommend a quick look over the recent Unsettled report published by Choice, National Shelter and the National Association of Tenants Organisations. Three cheers for Victoria for announcing this change!

We should note that Victoria already has a long list of reasonable grounds available for landlords to use, and their "no grounds" notice comes with 120 days notice. In New South Wales we are missing some key grounds, such as where the landlord needs to recover the property for their own personal use; and our notice period is a full month shorter at 90 days. Any suggestions we can fix our own laws in New South Wales by expanding the list of grounds for termination and leaving the "no grounds" option intact just took a bit of a hit.

But here's where it starts to get flakey: the law will limit the use of the ‘end of fixed term’ notices to vacate. This will allow landlords to use what is effectively a "no grounds" notice of termination at the end of the first fixed-term period (usually six or twelve months), but not in any subsequent period if the fixed-term is renewed rather than proceeding on the basis of an open ended agreement. Make no mistake, this would be an improvement and we'd welcome a similar change in New South Wales. But in practice it will turn fixed-terms into a "probationary" period. Tenants who stick up for their rights during an initial fixed term would still have no protection against an unfair eviction, so might hold off reporting repairs and maintenance needs, or raising other concerns about their tenancy, until after the fixed term expires. It would be better to just ban the use of no-grounds notices altogether, perhaps with an exception for longer fixed-terms of say three years or more (in the spirit of compromise). This might be something the Victorian lawmakers will consider as they're working out how to encourage more long term leases, which is also included under this heading.

As for the rest of the reforms under this heading - prohibiting false, misleading or deceptive representations and requiring pre-contractual disclosure of the presence of asbestos or an intention to sell, Victoria is mostly just catching up with New South Wales, but taking a few steps further while they're at it. The need for New South Wales landlords to disclose material facts prior to entering into a tenancy agreement was introduced with our Residential Tenancies Act 2010, but it wasn't given any measures for enforcement. We're still hoping this will be fixed - along with adding the presence of asbestos in the property as a fact for disclosure - as per the recommendations of the recent review of our own renting laws.

Tenants' rights

There are two proposals under this heading. A commissioner for residential tenancies who will "champion the rights of Victorian renters in the private sector" strikes us as an interesting idea, but we'll wait and see how that plays out for awhile before we get too hung up on it. A landlord blacklist seems like an odd thing for a government to introduce, when they could just encourage greater compliance with the law by investigating complaints and issuing penalties, but we'll keep an eye on this one as well.

Faster payments and rental bonds

A move to allow a 14 day automatic bond repayment is more or less in keeping with what we've long since known and loved in New South Wales - if you can't get an agreement and both signatures on a bond claim form, then either party can make a unilateral claim that will be paid out after 14 days unless the non-claiming party raises a dispute and takes it to NCAT. Sensible, although we do think it would be better if only tenants were allowed to make a unilateral claim, allowing landlords to dispute the claim or apply to NCAT after a reasonable time if they felt they were entitled to it. Changes  to the way the early release of bond works in Victoria will be of little consequence to us in New South Wales - our law allows this at any time as long as all parties agree, or the requesting party is handing it all over to the other, whereas the Victorian proposal will extend the right to an early refund to be available in the last fourteen days of a tenancy, rather than the last seven days. The same goes for updated bond cap & up-front rent cap for most properties - these are already in place in New South Wales, where a bond may not exceed four weeks rent and no more than two weeks rent in advance can be required regardless of the type of property or amount of rent payable. The move for faster repairs reimbursement, where tenants can seek reimbursement for the cost of urgent repairs they have effected because they couldn't wait for the landlord, is a small step ahead - Victorians will be entitled to this within seven days of a request, while we could still be waiting up to fourteen days. That is, of course, assuming we've followed the process correctly - never effect an urgent repair without reading up on the law first, because failing to follow all the steps could see you permanently out of pocket.

Fair priced rent
Victoria has announced a very modest change here, that will leave us in their dust. Rent increases are already restricted in Victoria - they can't happen more than once every six months, and under the proposal this will change to once every twelve months. Meanwhile, in New South Wales, there is no limit or cap on the frequency of rent increases. In theory, your rent could go up daily and there ain't a damned thing you could do about it - provided you've been given the proper notice on each occasion - other than apply to the Tribunal and argue that a proposed increase is "excessive". Limiting rent increases to a maximum of once a year would be alright in New South Wales, but we'd also need to rework the way tenants can respond to them. It should be up to the landlord to show that a significant increase is reasonable, rather than the tenant to show that it is excessive.

This plan also proposes cracking down on rental bidding, which is something we can all get behind. The law in New South Wales is not really clear on whether it's lawful for landlords to solicit bids, but it seems okay to accept a higher rent if a tenant jumps in first. Just because you can pay more doesn't mean you should, and landlords shouldn't dangle properties in front of desperate tenants with a wink, a nudge, and a sign saying "pssst, make me an offer" hidden in the top drawer. Victoria says it will prohibit landlords from "inviting" bids, which is bad news for a couple of rent bidding apps that are sniffing around at the moment, but perhaps it could go a little further. We should be clear - in an era when governments are relying on the private sector to make up the shortfall created by chronic under-investment in social and affordable housing, allowing those with greater means to push up prices for the rest of us should be well and truly outlawed.

Pets are welcome

Pets in rental property will be allowed by right of every Victorian tenant! Or will they? The proposal says tenants will need the landlord's written permission first. It also says the landlord won't be able to unreasonably refuse, but that leaves a lot of grey area around just how rigid this new "right" will be. Further, this seems to be more of a right for people who rent and want a pet than people who have a pet and want a home to rent. Landlords will still be able to discriminate at the point of application by simply declining to rent to people with pets.

A better way to give tenants the right to keep pets would be to take a "don't ask, don't tell" approach. We should confirm once and for all that landlords have no business making decisions about who besides themselves shall get to keep a pet, and prohibit including a "no-pets" clause in tenancy agreements.

Modifications
Ensuring that tenants can make minor modifications to their home is the final piece of news coming out of the Victorian proposals. It makes good sense, and again it brings Victorian laws in line with ours in New South Wales. With this kind of reform the devil is in the detail, as questions of who gets the value of an improvement if the tenancy ends prematurely will need to be considered thoughtfully. We haven't quite gotten this right in New South Wales yet, either.

Caveat Rentor 2 - Tenancy Economics

Today's post is a guest entry from our Principal Solicitor, Grant Arbuthnot. Grant has more than 20 years experience advising tenants, their advocates, and has worked for the Tribunal and community legal centres as well as the Tenants' Union. Here are his thoughts on tenants as consumers.

Economists and accountants both agree this joke stinks. 

The assumption a healthy consumer market has suppliers competing on price, quality and service for the business of consumers allows another examination of our rental market.

At present, there is a shortage of supply of affordable premises for rent. Competition between prospective tenants for available premises is understandable.

Consumers competing for the business of suppliers is not healthy. Consumer competition means that pricing favours the suppliers, and that quality and service are not significant issues.

Tenants might expect that once a tenancy has been secured the competition will cease. However, this is not the case. Sitting tenants compete with prospective tenants to retain their tenancy.

In a fixed term tenancy, tenants are aware that they can be required to leave at the end of the fixed term. Fixed terms are rarely greater than a year. In a periodic tenancy the vulnerability is present and constant.

This is because the law allows landlords to dispose of tenants without having to give a reason.

Tenants who demand contract performance by the landlord risk being replaced from the surplus of prospective tenants.

This is usually about repairs. It is the most popular breach of contract by landlords. The likelihood of receiving a termination notice (without grounds) is increased by demanding repairs.

It is not surprising that many tenants put up with expensive and substandard premises to avoid the stress, cost and inconvenience of having to move house.

Amending the Residential Tenancies Act cannot undo the problems of supply and demand. But abolishing no grounds termination can relieve sitting tenants of the constant competition with prospective tenants. They might even get some repairs done.

To find out more about how tenants are affected by unfair evictions, visit Make Renting Fair.

How will your tenancy end?

There are over two-dozen ways your legal interest in property - aka your tenancy - could end if you're renting in New South Wales; even more if you're in social housing.

In most cases, your tenancy doesn't end without you relinquishing the property to the landlord. In all cases, a trigger of some kind is required. A tenancy doesn't end simply because the fixed-term period concludes - after the fixed period your tenancy continues as a "periodic agreement" under the same conditions as before.

Some triggers for termination are less common than others. For instance, your tenancy might end if your landlord's interests become vested in you - perhaps if you were to marry, or form some other legal union under which all your property interests merge. Or it might end if a person with superior title, such as a mortgagee, becomes entitled to exclusive possession of your home. Similarly, your tenancy might end if a person succeeding title, such as the beneficiary of a reversion of your landlord's property rights, becomes entitled to the property at the exclusion of others.

Your interest in a tenancy ends if a final apprehended violence order that excludes you from the premises is ordered against you.

Your tenancy could end if you die.

Your tenancy could end if your home becomes unlivable through no fault of your own or the landlord's - for example a severe storm taking out part of the property.

Your tenancy could end by returning the property to the landlord by prior agreement. For that matter, it could end by returning the property to the landlord without prior agreement - although that method will generally always cost you something.

You could end your interest in a co-tenancy by giving notice and moving out. You could end your co-tenant's interest by taking them to the Tribunal and getting an order, in exceptional cases.

You could trigger the end of your tenancy by obtaining a Tribunal order for termination on hardship grounds. Your landlord could do the same.

You could end your tenancy because the landlord isn't keeping their part of the bargain. If you're not meeting your own obligations, your landlord could do the same.

Your landlord could apply to the Tribunal to end your tenancy if you've been using the place for an illegal purpose. They could also do that if you've threatened, abused, intimidated or harassed them, or if you've caused serious damage to the place or injury to them or a neighbour. They'd have to prove it, though...

You could end your tenancy if the landlord decides to sell. Your landlord could end your tenancy if they do sell, and the buyer wants to move in - but only if you're in a periodic tenancy.

You could end your tenancy if you need to move into an aged-care facility, or are offered a place with a social housing landlord.

If you're a social housing tenant, your tenancy could end if you become ineligible for social housing, or if your landlord wants to move you to another place and you decline. Strict procedures are to be followed in either of these scenarios.

You could end your tenancy because the rent is increased, if you're in a fixed-term agreement of two years or more (but hardly anybody is...)

You could end your tenancy without a reason, at the end of a fixed term or during a periodic agreement. Your landlord could do the same.

But there is always a reason to end a tenancy.

As a tenant, being able to end a tenancy "without a reason" is appropriate, as it allows you the basic freedom to relocate as your housing needs change. In general, there is no reason to justify those needs to your landlord, or explain to them how your circumstances have changed such that you now wish to move house. Your landlord should have no concern beyond knowing when the property will become available to them again, so that the comparatively simple process of finding a new tenant can be commenced.

On the other hand, landlords being able to end tenancies "without a reason" is bad public policy. It undermines tenants' abilities to establish their homes with any certainty. As we see it, landlords tend to use the "no reason" option in one of three circumstances: where they have a good reason that the law does not accommodate, where they have a good reason but would rather not be put to the trouble of proving it, or where they have a questionable reason that they'd rather not go into.

A fairer renting law would give landlords a couple of additional reasonable grounds, and remove their ability to end tenancies without a good reason. With this in mind the Tenants' Union of NSW, along with more than 40 allies and supporters, are calling on the Government to Make Renting Fair. Visit rentingfair.org.au to find out more.

Dealing with property as the landlord sees fit

Anyone with a passing interest in tenants' rights will know the biggest issue we face is housing insecurity. It's written into the very laws that claim to give us certainty and stability. Landlords are lawfully entitled to end tenancies without a reason, which completely undermines all the rights that tenants do have. It creates a deep, dark hole for tenants who fear that sticking up for themselves will just unsettle their ability to stay housed.

We know the best way to give housing security to tenants is to get rid of any legal right for landlords to end tenancies without grounds. In New South Wales this means making some changes to sections 84 and 85 of the Residential Tenancies Act 2010. When we try to bring this up in polite conversation we're often chided for our naïveté and told such change would impinge upon a landlord's right to deal with their own property as they see fit. This, we're assured, is just a stretch too far.

Indeed, when Fair Trading NSW kicked off the statutory review of the Act they included some commentary and questions around ending tenancies without grounds:

Commentary: There have been suggestions that 'no grounds' terminations be removed and that the landlord be required to provide a ground for termination from a prescriptive list of possible reasons. This proposal would need to balanced against the view that landlords are entitled to deal with their property as they see fit. 

Question 33: Should landlords be required to provide a reason for terminating a tenancy? If so, what types of reasons should be considered?

... and of the 180 or so responses they received, about half indicated they would like landlords to be required to give a reason to end a tenancy. One in about three responses had nothing to say on the matter, and the remaining one in five said they're okay with the way things are.

One of those who indicated they're comfortable with the status quo was the Law Society of NSW. They said:

Landlords should not be required to provide a reason for terminating a tenancy, provided the landlord complies with the requirements for notice, the landlord should be entitled to deal with the property as the landlord sees fit.

Tsk tsk. Lawyers should know better. There are many, many ways the law intervenes to prevent landlords from dealing in property as they see fit.

But they're also a pedantic bunch, and we know they like to get this stuff right. Our Principal Legal Officer has drawn up a quick guide for any lawyers looking to brush up. Over to you, Counsel...

What about the landlord’s absolute right to possession of the property?

... the landlord should be entitled to deal with the property as the landlord sees fit.*

This “should” statement turns out to be wishful thinking. It was almost true in feudalism. But, the landlord was still subject to the terrible power of the Crown. Not even the Church was safe - see Henry VIII.

In modern Australia all land is held by or of the Crown. This mirrors feudalism, but the whole picture is more complex.

The landlord has limited control of the use of the land. There is much control of what land is used for. There is control of what happens under the surface and in the sky above. For example, the Mining Act 1992 and the Civil Aviation Act 1988 (Cth).

The landlord cannot build anything substantial on the land without approval - Environmental Planning and Assessment Act 1979. Approval of the use of land is controlled by zoning – Local Environmental Plan. Growing certain plants is prohibited – Drug Misuse and Trafficking Act 1985. Some other plants are subject to controls as weeds – Noxious Weeds Act 1993.

The title can be taken away. Our governments can compulsorily acquire private land for various purposes. There is legislation for this at state and commonwealth level. For example:

· Local Government Act 1993, Chapter 8 Part 1
· Roads Act 1993, Part 12
· Land Acquisition (Just Terms Compensation) Act 1991
· Lands Acquisition Act 1989 (Cth)

And by random strangers, by adverse possession – Limitation Act 1969.

The landlord is not entitled to deal with the property as he or she sees fit. The landlord’s entitlements in relation to land are conditional and controlled.

The power the landlord has to evict tenants without a reason is less a power in relation to land than a power over people: a power to cause inconvenience, cost and distress.

No grounds termination is an anomaly. The Residential Tenancies Act 2010 should be amended to require grounds for eviction.

*1 February 2016, Law Society of NSW submission to the statutory review of the Residential Tenancies Act 2010, at 33

Long term leases: merely fiddling around the edges

There has been some discussion on the Brown Couch lately about long term leases, which are often touted as Australia's solution to a chronically insecure private rental market.

A recent posting suggested the NSW Government is considering options for long term residential tenancies. Our worry is that optional long fixed term tenancies, with reduced rights for tenants, would be offered on a take-it-or-leave-it basis. Read more here.

Another posting examines the probable cost of entering into a long term tenancy. You may check it here. And, there’s a further posting here which argues that considerable disagreements over who is responsible for which repairs and maintenance costs (structural, general or cosmetic?) may be far greater than expected. And another posting talks about the experience of protected tenants in NSW because their lease is silent on the issue of repairs. Check it here.

The interest in long fixed-term tenancies is laudable. However, if it is because more people are renting for longer, then this is not the answer, because only a few landlords will ever take it up.

The answer is at the federal level
The answer is more with the federal government which has the 'levers' to change the types of landlords who dominate in the private rental market.

Private rental housing is structurally insecure because the private rental market is enmeshed in the owner-occupier market. Most landlords are individual persons who own a single rental property for speculative purposes (that is, most are operating at a loss – they are negatively geared – and hoping for capital gains). In order to maximise the prospect of capital gains, they need to be able to sell their property with vacant possession when it suits them, selling to either other landlords or owner-occupiers. This speculative strategy is encouraged by our taxation laws. So, tax changes to negative gearing and the treatment of capital gains are necessary to discourage, not encourage, speculation in the private rental market which has led to this proliferation of ‘mums and dads’ investors. Because of this Jennifer Duke says tenants are at the mercy of their landlord’s personal life decisions. Read more here.

Melbourne Institute of Applied Economic and Social Research (The Household, Income and Labour Dynamics in Australia Survey: Selected Findings from Waves 1 to 14, 2016, p 74) puts the proportion of households owning investment housing at 13.0% in 2014. Ownership by such landlords is not conducive to the existence of affordable and secure rental housing stock.

But the Federal Government flatly refuses to do anything about negative gearing or capital gains tax arrangements. In fact, Liberal MP David Coleman, who chaired the Federal Government’s 20-month inquiry into home ownership, states the report found that there was no structural problem with housing affordability. Read more here and here.

Cartoon by Ron Tandberg, appearing SMH 16/12/16

For another view on the dynamics of the private rental market across Australia, check out the publications here and here.

Here's an interesting take by Michael Kaziol who asks ‘Renting property? Don't hold your breath for a long lease.’ You may read his article here. There also are other impediments at the federal level under the existing regime which highlight the importance of moving away from a rental market dominated by ‘mums and dads’ investors. Read about one here.

Rather, we need to remove the barriers and provide incentives so that superannuation funds direct their funds to institutional landlords, especially not-for-profit housing organisations, so that they might expand their residential rental stock. At last, we are finally seeing movement on this front in Australia. See report on HESTA’s funding of social and affordable housing in Queensland here. Outgoing Reserve Bank board member Heather Ridout has backed a greater role for institutional investors in funding more affordable housing. Ms Ridout, who also chairs Australian Super, told a panel at a Citi conference, that the fund had invested in social housing in London, where it has backed residential development projects that include social housing. See more here.

Michael Pascoe writes a sobering piece here on why institutional investors steer clear of the private rental market. However, this may be about to change. Just recently Jessica Irvine wrote about the best thing for renters since 3M hooks. Read more here. There is more about this model for financing affordable housing here. Even if this proposal was to draw upon even a small slice of Australia’s multi-trillion dollar superannuation industry, its impact would be significant and vulnerable tenants would benefit from a greater supply of affordable properties, owned and run by not-for-profit institutional landlords more committed to providing a secure tenure.

Coming back to New South Wales …
If we insist on toying with long term leases and limit our focus to what the State Government can do, we should consider a change in the current land tax. As things stand, the very narrowly defined current land tax regime discourages landlords from owning more than a few properties. We need go no further than a previous blog on The Brown Couch here to look at alternatives.

Section 20 of the Residential Tenancies Act allows landlords to omit or vary some mandatory terms of the statutory residential tenancy agreement, and include otherwise prohibited terms. Accordingly, this section should be amended to explicitly state that a landlord cannot opt out of their obligation for repairs of a structural nature and, further, what constitutes ‘structural repairs’ should be defined. This will provide clarity and avoid many disputes at tribunal hearings.

A dilemma arises where the landlord is a social housing provider, because of the operation of Section 148 of the Residential Tenancies Act 2010. This allows a social housing landlord to evict a tenant who refuses to accept an offer of alternative social housing premises, regardless of the fixed term of their social housing agreement on a specific property. This undermines the purpose of a long fixed-term lease.

A current anomaly with long term tenancies of 20 years or more requires urgent legislative action, because it allows a social housing landlord to evict a tenant in fewer than 28 days, even without issuing a notice of termination. This arises as a result of Section 154G of the Residential Tenancies Act 2010, which commenced on 18 December 2015 ... a massive step backwards for long term tenancies. It requires the Tribunal to reduce the period before a possession order is made from 'not less than 90 days' to 'no more than 28 days', unless there are 'exceptional circumstances justifying a later day'. At law, the words 'exceptional circumstances' have a very high bar. Section 154G is an amendment which forms part of the Residential Tenancies and Social Housing Legislation Amendment (Public Housing - Antisocial Behaviour) Act 2015, but long term tenancies have nothing to do with anti-social behaviour. Indeed, this new provision defeats the purpose of an important provision for long term tenants (who are usually older tenants), that came into force under the 2010 Act.

But, this is merely fiddling around the edges …
The answer is to make renting generally more affordable and secure. So, a far better alternative is the introduction of a 'reasonable grounds' eviction regime in residential tenancy legislation, in place of the provisions that allow a landlord to evict a tenant for no reason. Read more here. This would make long term leases less important from the tenant’s perspective, because once a fixed term expires the landlord would have to provide their reason if they required vacant possession … and this reason could be tested in a tribunal. Let’s make this happen!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

21st Century Bonds - part 3

If you haven't already heard about the Rental Bonds Online service, chances are you soon will.

Rental Bonds Online: coming to all new tenancy agreements?

That's because the NSW Government has just changed to the Residential Tenancies Act 2010 to make it more or less mandatory for your next landlord or their real estate agent to tell you about the service, which allows tenants to electronically transfer a rental bond payment directly to the Rental Bond Board. This is great, as it means you'll no longer have to hand over wads of cash, or go out of your way to get bank cheques or money orders in order to pay a bond. It also means landlords and agents won't even have to see your bond money at all - unless they become entitled to some of it at the end of your tenancy...

The Government has made this change because, to date, only a relatively small number of new tenancies have had a bond lodged via the online service. This is despite a high number of landlords and agents having registered to use it, suggesting that many are not telling tenants about it. Instead, they continue to take tenants' bond money to lodge with the Rental Bond Board themselves.

The change will come into force on 30 January 2017. From that time on, a landlord or real estate agent will be prevented from "requiring or receiving a rental bond from a tenant" unless they have registered to use Rental Bonds Online, and have given the tenant an opportunity to pay their bond to the Rental Bond Board directly, using the service. The only way landlords and real estate agents will be able to lawfully avoid telling you about the service will be to refrain from taking a bond in the first place.

No doubt we'll be hearing more about this over the next couple of months...

Running repairs? The cost of longer term tenancies: part 2

Last week on The Brown Couch we talked about how much it could end up costing tenants who sign up to a longer term lease in exchange for taking on responsibility for repairs and maintenance – if such a model for long fixed term tenancies is taken up by the Government.

One aspect we didn’t touch on was the question of what kind of repairs tenants might be liable for in this scenario, and how exactly liability would be set out?

Commercial tenancies have been suggested as an example of how this might be determined.

In commercial tenancies responsibility for repairs and maintenance of a premises is generally set out in the lease – though not always. The lease should outline what repairs a tenant is and isn’t expected to pay for. Clauses are commonly drafted to imply that the tenant has responsibility for the general repair and maintenance of premises, but exclude responsibility for repairs related to ‘fair wear and tear’, structural repairs or costs relating to capital expenditure (for example replacing air-conditioning units). If these are excluded they are not the tenant’s responsibility, but they are also not automatically the landlord’s responsibility. They are only the landlord’s responsibility if this has also been specifically outlined in the lease.

Not surprisingly perhaps, repairs and maintenance are a common area of dispute in commercial leases.

If tenants in private rentals were expected to take on repairs in exchange for longer term tenancies, we would certainly hope there were clear limits set on what repairs they were responsible for.  But we foresee that under an arrangement similar to those made in commercial tenancies a whole lot of confusion and disputes regarding repairs could arise. We can imagine many disagreements over where ‘general’ repair and maintenance ends and structural begins.

The first comment we received on our first discussion in this series spoke broadly to this concern. Anonymous told us:

I once rented a property where I was responsible for the first $20 worth of repairs (a number of years ago now). This caused no end of drama e.g. electrician visit of $87 was $20 mine, rest landlord but replacing washes was solely my problem as cost of washers was less than $20. Never again. It was 6 years of arguments.

Even where it seemed the terms were set out quite clearly (tenant responsible only for “the first $20 worth of repairs”) the result was: “6 years of arguments”.

Currently under the Residential Tenancies Act 2010 the landlord is responsible for providing and maintaining the rental premises in a 'reasonable state of repair'. They don’t, however, have to fix any damage caused by the tenants. Already many disputes arise between tenant and landlord because the landlord claims that the tenant is in some way responsible for the problem. Disagreements commonly come up around issues like vermin, mould and guttering – either the landlord claims the tenants caused it, or that they failed to notify them soon enough or take adequate measures to ‘mitigate’ the problem (i.e. take steps to limit the extent of the problem and subsequent costs of any repair or replacement).

Where a tenant becomes responsible for the general repairs and maintenance of a property, we're worried landlords might similarly try to push 'structural' repairs on tenants on the basis they are a result of the tenants failing to meet their end of the bargain and keep up with the general repairs and maintenance required.

Tenants, under such a model, might also become vulnerable to arguments around ‘waste’. 'Waste' as a legal concept refers to any permanent damage done or allowed to a property by a person who is legally in possession of it, and where the damage or harm has diminished the value of the property. A landlord can seek compensation for 'waste', and this can include the cost of restoring the property to its original condition after any changes have been made, even if these changes were intended as improvements.

Currently we believe an action for damages because of 'waste' is unlikely to succeed against a tenant covered by the provisions of the Residential Tenancies Act 2010, largely because of the landlord’s current obligations around repairs and maintenance. This wouldn't necessarily be the case if long fixed term tenancies were offered that varied or shifted the obligations relating to repairs to tenants.

We mentioned in our previous post that many private rental tenants are already facing very high housing costs. They may not be able to attend to repair and maintenance issues as they occur, or even perhaps during the duration of the lease.

In this situation, in addition to seeking compensation to undertake any required repairs at the end of a tenancy, a landlord might also take an action for damage on the basis of ‘waste’.  So they could seek further compensation (that might, for example, cover significant structural repairs) claiming the tenant’s failure to attend to repairs in a timely manner had led to a diminishment in value of their property. However a landlord also may be able to seek termination of an agreement during the lease, on the basis that that the tenant has failed to meet their obligations to undertake repairs and maintenance work.

If the Government really wants to improve security for tenants there is a much easier way (and yes, we've talked about this before) - they need to look at changing the current provisions in NSW tenancy legislation that mean tenants can be evicted for no reason. Because it's clear the costs of long fixed term tenancies are just too high.