Australia, the land of indefinite, insecure tenancies

There's been a lot of talk lately about the insecurity of renting in Australia, and how things would be better if we can somehow get everyone onto longer leases. There's a perception that Australian tenancies are notoriously short, with the majority of leases lasting around 6 or 12 months.

We're often asked how long leases ought to be in order to give renters the security they need. Take, for example, this recent interview Leo did with ABC 24's Breakfast program, where he is asked (at 1:50) "what length of tenancies would you like to see become available for people?"

And Su-Lin Tan's latest piece in the Australian Financial Review - Renting in Australia is generally 'miserable' but doesn't have to be - wades into similar territory. Tan notes the growing number of Australians "not interested in buying a home" and adds:

But one of the biggest obstacles is the lack of long-term leases, a stumbling block for people who have kids in school, long-term job commitments or simply want a settled life.

Referring to data and commentary from the recent Unsettled report, Tan also notes that the Netherlands, Germany and Denmark offer "infinite leases".

For a more comprehensive look at how European tenancies work, there's the recent publication of the International Union of Tenants report from members to its 20th congress, Rent Regulation and Security of Tenure in the Private Rental Sector. Or, for a quicker grab, there's UK Shelter's map of renters rights in Europe. These tell us that for the majority of European countries tenancies are "protected" with fixed terms of three years, if indeed they are not "permanent" and can only be ended with legal grounds.

And what of Australia? In all jurisdictions tenancies tend to begin with a fixed-term agreement. It is for the parties to decide the length of that term, and it is a matter of convention rather than law that most tenancies begin with a term of 6 or 12 months. If a tenancy agreement is not formally terminated following the processes set out in our renting laws, or a new fixed term created, it carries over and becomes a periodic or continuing agreement once the fixed term expires. It does not end simply because the fixed term expires. These are essentially permanent agreements similar to what we see in parts of Europe, where tenants' have some of the strongest protections against eviction and unreasonable rent increases in the world.

So what makes Australia different? What's missing from our laws, that operates in those parts of Europe that we look to for inspiration, is the part about not being able to end tenancies without legal grounds. Or rather, in all of the Australian states and territories it is lawful to end a tenancy without a reason, so the legal ground becomes "no grounds". In New South Wales this can happen at the end of a fixed term agreement with 30 days notice to the tenant, or at any time during a periodic agreement with 90 days notice to the tenant.

When issued with a valid notice of termination without grounds, there is generally nothing a tenant can do to save their tenancy but beg. The rationale for this is that "landlords should be able to deal with their property as they see fit". While in Europe, landlords presumably still manage to deal with their property as they see fit, but they must do so within structures that protect tenants from unfair or unreasonable evictions.

A tenancy cannot be terminated without grounds during a fixed term, which is why it's often suggested that longer fixed terms would be a good thing. It might also explain why some tenants enter into new short fixed terms at the expiry of their term, although this might also be because landlords and real estate agents often insist - threatening termination without grounds if a "new agreement" isn't signed. And while longer fixed terms may suit some people, we can't help but notice that tenants frequently ask for advice on how to end a fixed-term agreement early. Some might be encouraged by the use of longer fixed terms, but they are not the catch-all solution we're after. Indeed, long fixed term agreements might present unacceptable risks to many tenants, if the means by which they are encouraged is the erosion of tenants' rights.

How long are Australian tenancies then? The Unsettled report doesn't give us much detail on this, focusing instead on the length of fixed terms for Australian renters. Unsurprisingly, it found that 83% of Australian renters have no fixed term agreement, or are on an agreement of 12 months or less. It also found that half of Australian renters have moved three times or more, including 19% who have been renting for less than five years, and 42% of those under the age of 35.

For tenancies in New South Wales, tenants' bonds lodged with the Rental Bond Board reveal a little more. From data released under a freedom of information request in 2016 and made available as part of the NSW Government's open data portal, it is clear that only a small proportion of tenancies end within 12 months or less. The majority continue into a second year and a significant amount go on for a third year after that. Slightly more than one in ten rental bonds have been held by the Board for more than three years.

Bonds lodged with the NSW Rental Bond Board, by duration

Whether they are (or were) attached to agreements with a fixed term of 6, 12 or any number of months, these tenancies are indefinite. They are insecure because they can be brought to an end without grounds. If predictability and stability for long-term renters is what we're after, we should focus less on encouraging longer fixed terms, and more on getting reasonable grounds for termination into our renting laws. As long as their home remains available to rent, and they continue to meet their commitments under the agreement, tenants should not be asked to leave without a good reason.

Can I hang electoral material in my rented property?

It's election time in Australia, and political signs on front lawns and windows are cropping up across the country. We've been contacted by a number of tenants in recent days asking about their rights to have a sign up in their property - some have been approached by landlords asking them to take the advertising down again.

Our legal eagles got interested in the question so here's the skinny on your rights to hang political signage.

The TU does not endorse political parties or candidates. The TU does endorse Pedro.

The High Court

First things first, Australians do have a right to political expression. In 1992 in Nationwide News Pty Ltd v Wills and Australian Capital Television Pty Ltd v Commonwealth (ACTV) 177 CLR 1 the High Court made a decision confirming that right despite there not being a specific constitutional protection as in other countries like the USA. Read more here.

Council Requirements

Councils have rules around signage on properties and on the street. While it might be unlikely a little sign in your front yard or window needs approval, it could be worth checking with your local council about the size and type of signage you propose to hang, particularly if it's on the bigger end.

Strata by-laws

Most strata blocks have by-laws that restrict you from changing the external appearance of the lot without first gaining consent of the owner's corporation. Arguably election material may fall afoul of this by-law - if your strata brings it up with you, check out our factsheet on living in strata and get advice!

Tenancy Rights

When you rent premises, you become entitled to the ‘reasonable peace, comfort and privacy’ in your use of the premises. The landlord/agent must not interfere with, or cause or permit anyone to interfere with, your peace, comfort and privacy.

In relation to electoral signage, we consider it a breach of a tenant's reasonable peace, comfort and privacy for a landlord to demand the removal of political signage so long as the signs are legal, and not causing damage to the property.

However, all these rights can't stop New South Wales landlords from giving you a "No Grounds" termination notice, and it's unlikely that the retaliatory provisions will help. This alone may prevent many tenants from participating fully in the election process. One more reason to support stronger tenancy rights, for democracy!

If you are getting hassled by your landlord about political signage, get advice from your local Tenants' Advice and Advocacy Service.

New Rules for Swimming Pools

From today, there are some potentially significant changes to the rules around renting a house with a swimming pool. If you are entering into a new tenancy agreement for a house from today, this information will apply to you.

Landlords who enter into a new residential tenancy agreement from 29th April will need to take extra steps to ensure that the swimming pool complies with the Swimming Pools Act 1992. It is a breach of the tenancy agreement if these obligations are not followed, as well as potentially attracting fines.

The physical requirements that most people are familiar with like ensuring a fenced off area around the pool, have not changed. The changes are all about ensuring that pools comply with those previous requirements, through a system of certification.

These new rules do not apply to properties with a pool shared between more than two lots - mostly because those properties already had a stricter inspection and compliance regime in place.

A swimming pool register has been created, and it is intended that over time all swimming pools will be registered. The way this is enforced is that properties cannot be bought or leased without getting the required paperwork from the register.

What does my landlord need to do?

Most landlords of homes with private pools (meaning only one or two dwellings share the pool), will need to obtain a Certificate of Compliance from the NSW Swimming Pool Register. This means that the landlord has had the pool inspected by either the Local Council, or an accredited inspector, and the pool passed the inspection.

At the time you sign the agreement, the landlord will need to provide a current Certificate of Compliance (one issued within the last three years). A new building (built within the last 3 years) doesn't need a Certificate of Compliance, instead you need to be given the Certificate of Occupancy issued by the Local Council, and a Certificate of Registration, issued by the Swimming Pool Register.

You can also check if a property has been registered and inspected- both a Registration Certificate and a Certificate of Compliance need to show up for the landlord to be complying with these new requirements. We tested this out- see our results here.

If the pool did not pass the inspection, the owner will be informed by the inspector what work is required to bring the pool up to scratch and can be ordered to do the work by the Local Council if necessary.

What if my landlord doesn't supply a certificate?

The landlord will be in breach of the tenancy agreement if a current certificate is not be supplied at the time the tenancy agreement is entered into.

You can:

• First, get some advice from your local Tenants Advice and Advocacy Service;
• You may be able to seek orders that they comply through the Civil and Administrative Tribunal;
• You might make a complaint to your Local Council;
• Or, you might make a complaint to NSW Fair Trading

For further reading, we recommend checking out other sources of information that have been published for different purposes, such as info from the official sources such as the  Swimming Pool Register, and Fair Trading NSW's swimming pool page.

Pool Rules- Going for a Lucky Dip.

Today, 29th April 2016, new rules for landlords leasing out properties with a pool started. Read our Tenants' guide to the changes here.

These laws have had a long lead in time. They were first intended to apply in April of 2014, but due to property owners across the state all but ignoring them, the requirements were delayed first to 2015 and again to 2016. The Department of Local Government should be congratulated for finally biting the bullet and bringing them into force.

We wondered if two years was long enough for property owners to organise an inspection of their pool. So we picked 15 houses with pools being advertised today from around the state, and in a range of rent prices- from $270 per week up to $2000 per week. All the properties were being managed by real estate agents, though that wasn't a criterion.

The answer was a resounding NO. 2 years warning is apparently not long enough. Just 3 of the 15 properties complied with the certification rules and would be able to produce the correct documents to the tenant.

There is hope though. Of the three that did pass, all three have registered in the last 6 weeks- one of them just two days ago. While it is obviously just a tiny sample, it suggests people are starting to get the message and compliance may well pick up now that the rules are actually in effect. In the meantime, if you have concerns that your new landlord has not complied- give your local Tenants' Advice and Advocacy Service a ring.

Top tenant 'mistakes' include knowing the law

Anybody foolish enough to spend time on the internet (you know who you are!) will know we are firmly ensconced in the age of the listicle. Newsworthiness, inanity, and even the number of things listed are irrelevant considerations - 29 Essential Albums Every 90's Kid Owned is what gets the clicks. Indeed, the medium has already reached a higher plane, arriving at the ironic, self-referential listicle.

So with the number of long-term tenants sharply on the rise, it is perhaps no surprise that tenancy law has now entered this brave new world of journalism. Earlier this week, Fairfax Media brought us The 10 mistakes landlords and tenants make.

Next time on The Brown Couch: 27 hilarious but true reasons why Taylor Swift's cat who grew up in the 90's will restore your faith in humanity

The tenant errors nominated do include genuine missteps that often leave renters high and dry - such as failing to provide notice before vacating, or not keeping records of communications with the other side. 

But two 'mistakes' did stand out as somewhat curious:

"Not reporting necessary repairs to the property manager"

"Feeling uncomfortable about asking for changes to the lease upfront"

Self-defeating fools! Of course, tenants are entitled to have repairs for which they are not responsible addressed by the landlord - and tenants are in fact obliged to report damage to premises as soon as practicable after becoming aware of it! And, like most any other contract, the parties to a residential tenancy agreement are free to renegotiate terms. Why oh why - Tell me why! - do tenants work against their own interests in this way? It categorically does not make sense. 

Except, wait...

Could it actually have something to do with the fact that landlords are presently empowered to issue tenants with a notice of termination for literally no reason? And that they can pull the pin at any point - either for the end of a fixed term or with 90 days' notice in a periodic tenancy? Could it be that the Tribunal is required to enforce a valid notice so issued? And that mechanisms for tenants to dispute 'no grounds' notices as retaliatory are notoriously difficult to use?

Of course it does. The threat of arbitrary termination in this manner hangs over the head of every tenant. Renters know their housing is inherently insecure, as our 2014 survey showed. And this naturally influences their approach to landlord-tenant relations. The consequence is that tenants are too often reluctant to enforce basic and fundamental legal rights for fear of putting their landlord offside. It is only too easy for a landlord to be rid of an irritating tenant that insists upon all that he or she is entitled to. And better still, very low vacancy rates mean a replacement will be found almost immediately. 

Perhaps tenants aren't so foolish after all.

It is for these reasons that The Tenants' Union argues for the abolition of no-grounds termination provisions from the Residential Tenancies Act. Instead, we say landlords should have access to an expanded list of legitimate termination grounds, such as needing the property to reside in personally. 

It also goes to show that the media isn't the best source of guidance on where you stand as a renter. For that, you should contact your local tenants' advice service - and of course sign this petition to ensure these vital but underfunded services continue to have the capacity to take your call. 


Read more about the Tenants' Union's opposition to no grounds terminations in our report on five years of the Residential Tenancies Act, available here.

Your rights in action: Peace, comfort and privacy

In todays guest contribution, the Brown Couch welcomes contributor Anne Coates. Anne is a Distance Education Student with a story to tell! This article first appeared in the April edition of Tenant News - the TU's regular newsletter.

As a distance education student, my rented apartment is not only my home, but also my main place of study. So I particularly value the right to ‘reasonable peace, comfort and privacy’. One way this right is maintained is through the landlord or agent giving proper notice, prior to access – at least in theory! Recently I discovered in practice, things may be rather different.

Our landlord, it turns out, has decided to sell the property. In preparation, a tradesperson was arranged by the landlord to paint all the windows. Our notice of this work was a knock on the door by the painter, one Thursday morning just after 7am, requesting for all the windows to be opened, and left open ‘for the next few days’.

The failure to give adequate notice (not less than 2 days notice for maintenance), and the painter’s noisy scissor lift starting each morning from 7am, upset the 20 odd tenants in the apartment block. The tenants exchanged ideas for action. Some put up notices in response to the painter’s sign for ground floor tenants, while others sent emails to the Managing Agent. Eventually, the message made its way to the painter, so towards the end of the job the noise was not starting until 8am (the legislated time).

The following Tuesday a letter under our door advised that a Selling Agent (not the Managing Agent!) wanted to inspect the premises on Friday at 9.30am, another failure to provide adequate notice for access. Again, the protests of the tenants in the building resulted in the inspection not taking place. Our efforts in objecting to our rights being breached eventually resulted in the legislated 14 days written notice prior to showing the premises to prospective buyers. So, as one of my neighbours’ signs appropriately summed up, “Check your lease and be empowered!”

For more info, check out Factsheet 8, Access and Privacy at tenants.org.au

Sick of over-regulation (part 1)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Know your residential tenancy agreement

Brown Couch enthusiasts will recall our recent comments on real estate agents seeking to charge tenants for their time in the CTTT. Well, since then, a residential tenancy agreement with a strange set of additional terms has caught our attention.

It reads:

clause (x) - Should a dispute arise as a result of the tenants responsibilities, or neglect or failure to follow the Residential Tenancies Act or this agreement & the agent or its employees is required to prepare for &/or attend a CTTT hearing the tenant will be charged at a rate of $xxx.00 +gst per hour or part thereof.
clause (y) - The tenant agrees that inspections of the above property will be held on a quarterly basis. If the home is found in an unsatisfactory condition at these inspections a second inspection will be made and you will be charged $xx.00 for this return visit.

Now we've already suggested that it's a silly idea for real estate agents to try and charge tenants for their costs in the Tribunal. But it's worth revisiting some of that information because it similarly applies to fees for a 'second inspection' of the home. Here's what we said earlier:

The Residential Tenancies Act 2010 stipulates that tenants can only be required to make certain types of payment to the landlord under their residential tenancy agreement. These are bond and rent, and in many instances charges for water consumption ... Requiring a tenant to pay [other, non-prescribed costs], would be in breach of the law, and could leave a landlord liable for a $2,200 fine.

Clause (y) presents an additional problem, because a landlord (or their agent) is only allowed to inspect the property a maximum of four times in any twelve month period. Technically, a 'second inspection' would be okay (as long as proper notice is given), but it should be counted as one of the four... so sensible landlords might want to consider other ways of harassing tenants into doing the washing up more frequently.

Right. So legislation doesn't allow landlords (or their agents) to ask tenants for more money, or to visit too often. But what if terms allowing such things are actually written into the contract? Can a landlord or a real estate agent use additional terms in a residential tenancy agreement to hold a tenant to a higher standard of behaviour, or to place upon them further liabilities, than are allowed under the Act?

The answer is a resounding 'NO'! The Act is clear (at section 219) that 'contracting out' is prohibited. Any term that excludes, evades or limits the operation of the Act (or the Regulations) is void, and steep penalties can apply to anyone who tries it on.

"Great news!", you might be thinking... "we can all relax and give thanks to the Parliamentary Council for drafting such a useful law, and to the NSW Government for keeping it intact! Our rights as tenants are impervious to the innovations of the real estate industry!"



But let's not get carried away...

Something that has also caught our attention of late is the curious case of Grima v Plummer - a decision made under the old (1987) Act, to which a similar 'contracting out' provision applied. In this matter, the CTTT allowed a landlord's claim for cleaning charges, after the tenancy had ended, based on additional terms that created obligations "more onerous than those contained" in the standard form residential tenancy agreement. These terms required the tenant to leave the premises "in a clean and tidy state (as per the condition report)", and to "meet the full cost of flea extermination"; whereas the 1987 Act required tenants to "leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, as set out in any condition report".

With respect, we'd have thought that an outgoing tenant's cleaning obligations were pretty bread and butter stuff for the Tribunal. For a decision this kind - which relies on terms that contracted out of sensible legislative provisions - to appear on the record is surprising. But it serves as a pertinent reminder that additional terms can bite - even when they're not actually allowed!

If you've got a residential tenancy agreement that contains strange additional terms, do what the lucky punter with clauses (x) and (y) did - call your local Tenants' Advice service for a chat.