Flat out on the Brown Couch - Part 2

Last week we brought you Part 1 of ‘Flat out,’ our breathless overview of the NSW Government’s proposed strata reforms. That was all about box office – the increasingly contested redevelopment proposals, and plans for tenant representation in strata governance. Like a kind of ersatz Jurassic Park: ‘50 Million Years in the Waiting’.

But not all that is golden glitters, and there is plenty more besides to interest tenants - in the Strata Schemes Management Bill particularly.

Look out for Flat Out 2 on PC wherever good tenancy games are sold

I’m a fixer; I fixed it

For one, the management bill should go some way to addressing a common impasse between tenants and landlords. Too often, tenants are frustrated in their efforts to obtain basic repairs to common property – including any structural wall - with the landlord refusing to take action because the owners corporation won’t sanction the works. This intransigence often persists even in the face of Tribunal orders requiring the landlord to do the work. Of course, such circumstances are far from ideal; Tenants are denied a basic right under the Residential Tenancies Act 2010, and landlords are forced to choose between breach of their residential tenancy agreement and defiance of building governance.

Under the new regime, owners will be able to undertake ‘minor cosmetic works’ to common property connected to their lot without reference to the owners corporation. Such works include replacing carpets or curtains, painting, and filling minor cracks. And an owner will only need a standard resolution – that is, a bare majority of votes – for ‘minor renovations’ such as replacing wiring, kitchen works, and addressing faulty light fittings.

Whilst these provisions are clearly no panacea, and do not touch on major works such as structural repairs, we suspect they will come in handy for a good number of tenants with hamstrung landlords looking to do the right thing.

Everybody in the house

The Management Bill also takes aim at another common ill of the strata tenancy – overcrowding. Any Sydney resident will have heard stories of students and others crammed into every conceivable nook and cranny of inner city apartments, far beyond any sensible capacity. Famously, Domain brought us the story of the man renting a Newtown balcony for $215 per week: breezy. The serious health and safety risks of such arrangements are self-evident.

Mike D, Ad Rock, and MCA enjoy a night in at their city apartment

The proposed new laws will allow strata committees to enact by-laws limiting the number of occupants per bedroom to two or more. An owners corporation will be able to pursue contraventions of these laws through the Tribunal, to the tune of up to $5,500 for an initial breach, and up to $11,000 for further breaches within 12 months.

It is appropriate that committees are empowered to make and enforce rules forbidding the unsafe renting arrangements created by overcrowding. But we are concerned that, as it stands, an owners corporation can chase enforcement against “any person” in breach of the by-laws. This leaves it open for the many sub-tenants that end up in overcrowded apartments as victims of unscrupulous head tenants, the dearth of affordable rentals, or the difficulty of obtaining social housing, to be held liable for significant penalties.

This is, we say, obviously unjust. These provisions should be enforceable against responsible head tenants and lot owners, certainly, but not sub-tenants.  And we would gently note that not even perfect strata legislation, handed down from a divine legislator, could comprehensively address the serious issues that drive renters into overcrowded apartments in the first place. Clearly a broader response is needed.

On the subject of enforcement, the Bill also includes general provisions allowing owners to challenge by-laws in the Tribunal. NCAT may invalidate by-laws it finds to be harsh, unconscionable, or oppressive.

Unfortunately, these otherwise welcome measures are a closed shop. Tenants cannot make the relevant Tribunal application, so anybody affected by an unjust by-law will need their landlord to pursue it on their behalf. And presumably ask nicely for the favour, Sir. It’s not hard to see a great number refusing to go down the time-consuming Tribunal road in a fight against their own strata company.

We think this option should instead be open to any occupant affected by harsh, unconscionable, and oppressive by-laws. More so because lot owners who refuse to take this action may also be in breach of their tenancy law obligation not to permit interference with tenants’ comfort. So opening up these provisions to all affected would provide the added bonus of preventing disputes between owners and renters.

Return to redevelopment

Finally, we return briefly to the battleground that is the Strata Schemes Development Bill. The new rules have overlooked an important consideration – what happens to tenancy agreements when the owners corporation affirms a decision to redevelop. As it stands, seldom used ‘fall back’ provisions in the Residential Tenancies Act, concerning a party gaining superior title to a property over the landlord, will apply. These would allow a developer-purchaser to terminate all tenancy agreements without notice, and seek Tribunal orders for vacant possession immediately.

This must be addressed, as it will place tenants who have broken no law and breached no contractual obligation at the serious risk of short-term eviction. The easiest way around this problem is a simple amendment to the Residential Tenancies Act - extending provisions that protect tenants for 30 days when a mortgagee comes into possession to tenants affected by strata redevelopment.

That’s it for our Brown Couch series on the strata reforms package. But feel free to put any further comments or questions in the box below. Alternatively, we encourage you to check out the Tenants’ Union’s full, formal submission here.

News from Central Dogma

You most likely do not know it – assuming you are halfway normal, you have almost certainly never even considered the question – but the Tenants’ Union’s network runs deep. Like the all-pervasive roots of an old growth forest, the subject of a Dan Brown novel, or an unhinged diatribe from Alex Jones, we form part of a global system…of tenants’ interest groups.

From Tanzania to Tennessee – and of course Telopea – we are at the coalface advocating for tenants’ rights. And like any global society, we have our own international headquarters. The International Union of Tenants was born in Zurich in 1926, but now finds its home in Stockholm.

International Union of Tenants General Secretary Magnus Hammar (dressed as Pitbull)

Whilst we appreciate the insights and perspective afforded to us by this intercontinental connectedness, we aren’t really detailing our every move back to Sweden. Plus our membership of the IUT is by free association. So put away that tinfoil hat!

And something provided to us recently by the IUT as part of their regular email rounds did give us food for thought. As you probably do know, rent control and its numerous variants have featured prominently in housing conversations of late.

The IUT highlights recent comments made by Kshama Sawant, a Seattle City council member, on the topic of controlling rents. Councillor Sawant compares rent regulation to minimum wage laws; ‘they are both minimum standards necessary to protect against the natural imbalance of power between landlord and tenant, or employer and employee. Rent control is not about repealing the market; it’s about reining in its excesses.’

We really should stress that Sawant’s views do not form part of any official TU position, decreed to us from above. And in any case, it’s not entirely clear which form of rental regulation the Councillor favours.

But we certainly applaud her comparison as both refreshing and engaging, in consideration of the proper role of Government in regulating markets for living space. Given the fundamental importance of shelter – a human right, after all – is it appropriate that we see its attainment as worthy of the same protection as the celebrated right to basic remuneration? How would we best achieve that in addressing the question of rent regulation?

And how would such an approach impact upon other facets of renting policy or housing affordability issues? For one, the Tenants' Union is a long-term proponent of the abolition of no grounds terminations for tenants in NSW. They feed housing insecurity, and disadvantage tenants in every aspect of their relationship with the landlord. At the very least, we suggest that this issue could also be looked at through a very similar lens. 

On a related note, the IUT would be pleased to have us remind you that October 5 is International Tenants Day! Get the streamers ready and the party pies in the oven. And stay tuned from us – we must just have a celebration going here at home.

The Real Magnus Hammer, Sydney, November 2012

Read more on the Tenant's Union's position on 'no grounds' terminations in our 5 Year report on the Residential Tenancies Act 2010

The wedding that stopped a suburb...

The Brown Couch joins the growing list of Sydney's finest tabloids in congratulating Salim and Aysha Mehajer on their recent nuptials. From all accounts, it was a cracker of a party.

Congratulations, Salim and Aysha.

Not only did they draw a significant crowd on their special day, they seem to have captured quite a bit of attention on the social pages as well. Unfortunately, not everybody saw the happy event for what it was. In fact, one social commentator within the broad circle of your correspondent's acquaintance was heard to say something akin to "I was almost ready to believe this was an ad for another season of [Paul Fenech's TV trash-masterpiece] Housos". Oh, touché!

But the link is not as tenuous as it might at first appear. Indeed, the sort of cavorting and carrying on that seems to have been the hallmark of the Mehajer wedding - with reports the event included closing off an entire street and threatening to tow neighbours' cars if they were parked in the way - is just the kind of thing many 'Housos' would simply love to be able to do. But of course, they can't, because of a general prohibition on tenants engaging in the kind of behaviour that would interfere with the peace, comfort and privacy of their neighbours (at section 51 of the Residential Tenancies Act); along with the specific provision that requires extra scrutiny of social housing tenants, to ensure their tenancy has no serious adverse effects on the neighbourhood (at section 152).

But evidently, Salim and Aysha are not Housos. With the kind of wealth on show at their wedding on the weekend, they'd be hard pressed to meet the eligibility criteria on income alone. So they're far more likely to get away with the occasional street party indulgence without it costing them the right to remain in their home - which is something we've discussed before.

Social housing tenants, on the other hand, are not so lucky. They are about to be subject to even further restrictions on their ability to annoy their neighbours, with the introduction of 'strike notices' a key feature of the Residential Tenancies and Housing Amendment (Public Housing - Antisocial Behaviour) Bill 2015 that is currently before the NSW Parliament. Strike notices will allow social housing landlords to end tenancies because of behaviour that is actually not so bad as to justify the termination of a social housing tenancy agreement. Annoy your neighbours three times in a year, and you're gone.

The moral of this story is that street parties can be fun, but clearly they're not for everyone.

Flat out on the Brown Couch - part 1

You may have noted, dear reader, that the Brown Couch has remained empty, at least relatively speaking, in recent times – its grooves gently smoothing and that coffee stain resolutely untreated. There’s a bit of dog hair too.

Rest assured that we love the old sofa as much as ever. We have just been busy finalising submissions relating to three important Bills in the sights of NSW Parliament - the ResidentialTenancies and Housing Legislation (Public Housing – Antisocial Behaviour) Bill, Strata Schemes Management Bill, and Strata Schemes Development Bill.

Our poor neglected couch. Who can lend us that book of kooky stain removal tips?

The bulk of media contributions – quality and otherwise – to discussion of these reforms have concerned the social housing Bill. This is a very worthy topic, though of course the old rorters crackdown line remains as attractive as ever.

But we thought we might take you through how the proposed reforms to strata law will affect renters, too.

Make no mistake, this is a big deal; tenants occupy half of all strata lots in NSW, and this is the first sweeping look at the relevant legislation in half a century. It probably comes as no surprise, then, that we have no one stance on the reform package. There’s certainly much to like – even if it’s mostly a case of heading in the right direction (remember that?) as opposed to a final, lasting achievement of tenant equality. Elsewhere, we’re ambivalent. And other new provisions, particularly those concerning the processes around sale to developers, are cause for real concern and urgent attention.

So today’s entry will be the first of a two-part series, focusing on the most striking of the planned new laws from a tenant’s perspective.

The knockdown job

The redevelopment Bill contains probably the most dramatic change of the package. This reform is also the strong favourite to impact upon renters and other vulnerable people most if passed in its current form.

Under current law, approval for redevelopment of a strata scheme requires the votes of 100% of owners. Even the poorest member  - not just your figurative USAs and Chinas – holds a veto power on any decision to demolish their home.

Can we level it? Yes we can!

To encourage 'renewal', the new law will require only 75% of votes to achieve the same. The implications for long-term residents in hub or hipster neighbourhoods are obvious. Any redevelopment conceived in even the slightest rationality will result in much more valuable lots. For many residents who bought into a scheme decades prior – and did so under the assumption they had attained security - this will mean an inability to buy back into the area in which they have formed a lifetime of connections. Where they will go is anyone’s guess, though we suggest further housing insecurity will often come with the displacement.

For tenants and other renters, the 'renewal' process should mean even less affordable housing in desirable areas. And tenants will not be compensated for the financial and other costs of having to move when the decision is taken to end a scheme including their lot.

It follows, of course, that we strongly support the retention of current provisions requiring 100% of votes for redevelopment of strata schemes.

Peeping through committee cracks

On the strata management side of the package, the headline grabber is the introduction of ‘tenant representatives’. In buildings where tenants occupy more than half the lots, renters will be able to elect a representative to the strata committee.

Unfortunately, this position will not be one of substantive power, as the tenant representative will not be able to vote, hold office, put a motion to the committee, or even be counted towards a quorum. They can also be excluded from the discussion of any financial matter.

Still, a committee’s tenant representative could well provide valuable insight into the impact of governance decisions on tenants and other renters, as well as an ‘on the ground’ perspective a great many owners lack. We say there is no reason why committees where more than half of lots are owner-occupied should be denied this insight - particularly given it would not disturb the balance of committee powers established in the Bill. We also think a tenant representative should have the capacity to move a motion on any matter for which they are present, as a more direct and meaningful expression of tenant sentiment on issues before the committee.

On a similar note, tenants may also have a right observe owners corporation general meetings under a reformed strata law. This will increase transparency, and provide tenants with first-hand notice of any discussions affecting them. We’d like to see the drafting of these provisions tightened to give effect to their apparent intent.

These are, perhaps, the big-ticket items, but there’s much more in the reform package that warrants a closer look. Stay tuned for part 2 next week.

Read the Tenants’ Union’s full submission on proposed reforms to strata law here.

For more on the Strata Schemes Redevelopment Bill specifically, we also recommend the Shelter NSW submission.

Further comment on the 'antisocial behaviour' amendment bill

We understand the NSW Government's Residential Tenancies and Housing Legislation Amendment (Public Housing - Antisocial Behaviour) Bill 2015 is scheduled for debate in the lower house today. We have issued the following statement.

Residential Tenancies and Housing Legislation Amendment (Public Housing – Antisocial Behaviour) Bill 2015

This comment is in addition to the Tenants’ Union of NSW’s preliminary comment on the Residential Tenancies and Housing Legislation (Public Housing – Antisocial Behaviour) Bill 2015. Our preliminary comment was issued on 5 August 2015, after the bill was introduced into the NSW Legislative Assembly without consultation.

Our preliminary comment outlines our concerns that the bill will limit the Tribunal’s ability to function by removing its discretion in certain termination proceedings, and restricting its ability to consider evidence in matters concerning social housing tenancies.

This comment provides additional focus on the bill’s key provisions.

Changes to the Residential Tenancies Act 2010

The bill will amend Part 7 of the Residential Tenancies Act 2010, and changes will affect all social housing tenancy agreements. This includes public housing tenancies, as well as social housing tenancy agreements entered into with each of the 133 Community Housing landlords who are registered to operate in New South Wales.

Key changes are as follows:

One strike evictions

Clause 154D will remove or significantly restrict the Tribunal’s discretion to decline to make termination orders in cases involving illegal use of social housing premises. Regardless of whether the tenant is involved with, or even aware of the conduct in question, the Tribunal’s discretion will be removed in cases where it is satisfied that a high level crime has been committed on or in relation to the premises. The Tribunal’s discretion will be limited to considering the ‘exceptional circumstances of the case’ – circumstances that are one of a kind – where it is satisfied that premises have been used for any other unlawful purpose that justifies termination. This will also apply regardless of whether the tenant was involved in, or even aware of the conduct in question.

In introducing this bill to the Legislative Assembly on 5 August 2015, Minister for Social Housing, the Hon. Brad Hazzard MP, made reference to a scenario where “a mother and son are living together in social housing with the mother holding the lease and the son found to be dealing drugs. While the mother is the tenant and is liable for the breach, if she is unaware of the drug dealing it is unlikely she will be evicted.” The bill will not produce this outcome. Quite simply, if the mother in this scenario is taken to the Tribunal because of her son’s conduct, her tenancy will be terminated. To avoid the loss of her tenancy, her landlord will have to refrain from taking the matter to the Tribunal. Thus, the bill transfers the question of discretion on termination of tenancies away from the Tribunal, placing it instead in the hands of social housing landlords. This assumes that social housing landlords will not pursue matters that will result in unjust outcomes.

The case of Aboriginal Housing Office v Corrie clearly demonstrates that this is not always so. The tenancy manager in the Corrie case was Family and Community Services Housing, and they took Ms Corrie to the Tribunal after her casual boyfriend did several $10-$20 marijuana deals from her social housing property over a period of two weeks. The Tribunal terminated the tenancy, believing it had no discretion to decline to make such an order because of the District Court’s decision in New south Wales Land and Housing Corporation v Cain (which was subsequently overturned in the NSW Court of Appeal, but not before the Corrie matter was decided). In making its decision, the Tribunal noted that the tenant was not involved in the drug deals, was not charged, had co-operated with police (they sent a letter of support for her to the Tribunal), had no previous trouble with her tenancy, was an Aboriginal single mother with prior experience of domestic violence and mental illness, had no experience of renting privately, and that her four young children were settled in school. The Tribunal made the order, saying: “if I had discretion whether or not to terminate the tenancy agreement, I would exercise that discretion in favour of the tenant and I would refuse to make the order of termination”.

Given such matters do make their way into the Tribunal from time to time it is important that the Tribunal retains this discretion not to terminate. If it is the intention to transfer that discretion to social housing landlords then some further check on the landlord’s decision to apply to the Tribunal for termination orders should be inserted into the legislation. For instance, the social housing landlord could be required to demonstrate, to the Tribunal’s satisfaction, that they have investigated and identified whether any children, spouses or other occupants will be unjustly displaced by a termination order, and have taken steps to prevent this, before the Tribunal will hear the substantive case brought before it.

Three strike evictions

Clause 154B, 154C & 156A set up the “three strikes” rule. They provide that a social housing tenancy can be terminated for a series of breaches that, each taken alone, would not be sufficient to justify termination under the existing sections 87 and 152 of the Residential Tenancies Act 2010. Critically, clause 154B will operate such that a breach of a social housing tenancy agreement that is no longer current will be actionable under an agreement that is current, even where the breach would not have been sufficient to justify ending the first agreement.

Clause 154C will establish a scheme for recording “strikes” against social housing tenants. It will allow, at subclause (g), for the landlord to specify how a submission in reply to a strike notice may be made, and the date by which a submission must be made. This gives an extraordinary amount of leeway to a social housing landlord to set the terms on which a tenant may respond to an allegation of breach, and will rely on the landlord’s ability to provide natural justice in an effective and consistent way. If such a scheme is to be included in the Residential Tenancies Act 2010, the manner in which a tenant may make submissions against a proposed “strike” should be prescribed by the legislation, not left up to landlords.

This is especially important because clause 156A will provide that the details in a “strike notice”, for which a tenant has failed to properly provide a submission in response, may become conclusive proof of the matters alleged in the notice. Even without the concerns raised above, clause 156A will substantially reduce social housing tenants’ ability to test allegations of breach that are levelled against them. This is not in the interests of justice.

Debts arising from subsidy variation or cancellation

Clause 154A will overturn the NSW Court of Appeal’s decision in New South Wales Land and Housing Corporation v Diab by making a debt that arises from a cancellation or variation of a rent rebate actionable as rent arrears. Rent rebates are provided for in the Housing Act 2001, which allows for cancellation or variation of a rebate after an investigation of a tenant’s weekly household income, as conducted by the landlord. A mechanism to review a landlord’s decision to cancel or vary rent rebate currently operates, but its decisions do not bind landlords. If debts arising from such procedures are to be treated as a breach of a social housing tenancy agreement, the Housing Act should be amended so that a landlord’s investigation and decision to vary or cancel a rebate is reviewable in the New South Wales Civil and Administrative Tribunal.

Recommendation

The Tenants’ Union of NSW agrees that a better response to dysfunction in neighbourhoods should be a high priority for Government. We accept the prevalence of dysfunction is a genuine concern for residents in neighbourhoods with high concentrations of social housing tenancies, and areas of relative socio-economic disadvantage. But the schemes set out in the Residential Tenancies and Housing Legislation Amendment Bill (Public Housing – Antisocial Behaviour) Bill 2015 go too far.

The Tenants’ Union does not support the bill. We call upon the NSW Government to withdraw the bill, and embark instead upon a genuine process of consultation with tenants, housing advocates, social housing landlords and other interested parties to develop and implement strategies to improve cohesion and resilience in all neighbourhoods where there are high degrees of disadvantage. By contrast, the bill will only encourage adversarial and punitive responses.

Where criminal and antisocial behaviour cannot be tackled through greater investment in neighbourhood and community cohesion, the Residential Tenancies Act 2010 already provides adequate avenues for social housing landlords to end tenancies, including on all of the grounds set out in the bill.

TU's preliminary comment on the 'antisocial behaviour' amendment bill

The Tenants’ Union of New South Wales holds strong concerns about the Residential Tenancies and Housing Legislation Amendment (Public Housing – Antisocial Behaviour) Bill 2015. The bill, which will make significant changes to certain processes for ending social housing tenancies, among other things, has been introduced into the NSW Legislative Assembly without consultation. The Tenants’ Union takes this opportunity to issue a preliminary comment in relation to the bill. We will produce a substantial comment addressing the bill in detail at a later time.

The bill intends to ‘amend the Residential Tenancies Act 2010 and the Housing Act 2001 to facilitate the termination of public housing tenancies for antisocial behaviour and for other purposes’. The primary means by which it will achieve this is by removing the New South Wales Civil and Administrative Tribunal’s ability to properly act as the independent dispute resolution forum in cases involving social housing tenancies.

It will do this in two ways:

• By removing the Tribunal’s discretion regarding termination of tenancy agreements in certain cases, in circumstances where discretion is necessary to avoid injustice.
• By restricting the Tribunal’s ability to consider evidence in certain matters, other than evidence tendered in support of applications by social housing landlords.

If passed, the bill will render the Tribunal incapable of delivering just outcomes in many cases. Rather than consider and determine social housing tenancy disputes as the independent arbiter, the Tribunal will be reduced to an administrative tool for social housing landlords.

Removing the Tribunal's discretion

The bill will mandate the immediate termination of social housing tenancies in cases where various criminal offences can be established at the civil standard of proof. But termination is not a just outcome in all circumstances. The Tribunal’s ability to decline to make termination orders is an important safeguard. Removing this ability will lead to injustice.

Under current tenancy law landlords can apply to the Tribunal for orders terminating a tenancy on the ground that the premises have been used for an illegal purpose. Where this is proved, the Tribunal may terminate the tenancy or, at its discretion, decline to terminate, considering the circumstances of the case. It is especially important and appropriate that the Tribunal have discretion in the following circumstances:

• Where a person other than the tenant has committed the offence.
• Where other household members not involved in the offence would also be evicted.
• Where criminal justice outcomes allow for the rehabilitation of the offender in their home.
• Where criminal justice outcomes have already been applied, and justice served.

Social housing landlords are known to have taken termination proceedings in all such circumstances. Even so, the Tribunal’s discretion is never applied without rigorous consideration of all relevant factors.

Restricting the Tribunal's ability to consider evidence

The bill will allow social housing landlords to certify that certain evidence is ‘conclusive proof’ of relevant matters. It will do this in relation to applications for termination where a tenant has accrued three ‘strikes’ against them, and for compensation for the cost of repairs to damaged property.

In relation to the accrual of three ‘strikes’, a certificate from a social housing landlord will be conclusive proof of an alleged breach of a tenancy agreement, as long as the Tribunal is satisfied a ‘strike notice’ was issued to the tenant in relation to the alleged breach and the tenant did not raise an objection to the notice within fourteen days of receiving it. This creates an administrative burden that will be particularly onerous for tenants who have low literacy skills, limited support networks, poor mental health, or are otherwise hindered from responding to a ‘strike’ notice within the required time. Tenants who fail to meet this burden will be limited in how they may respond to ‘certified’ evidence of the landlord, and this could lead to the Tribunal being denied the opportunity to consider all relevant matters.

In relation to the cost of repairs to damaged property, a social housing landlord may determine the ‘reasonable cost’ of work by producing a certificate that the Tribunal must take as conclusive proof. This assumes that social housing landlords’ are charged commercially competitive rates by their repairs and maintenance contractors, but this is not always the case. In fact, the NSW Land and Housing Corporation has identified this as an issue, and intends to change the pricing structures within its contracts to address it. But the bill provides no restrictions or limitations to this provision, or any indication as to who will be delegated to produce such certificates. It will be open to misuse.