NT Housing evicts girl, 14, after father dies

There's an appalling story on the Herald's website today: Territory Housing officers evicted a child after her father, the tenant of the premises, died. It's reported that the officers gave the child 10 minutes to pack before changing the locks and boarding up the premises.

Territory Housing has since admitted a 'serious error of judgment' and unreservedly apologised to the child, who will be allowed back in.

Could something like this happen here in New South Wales? Well, 'serious errors of judgment' can happen anywhere, and Housing NSW is not immune from making them. But such an action would be plainly unlawful under New South Wales law.

Here, when a tenant dies their tenancy does not end (nor does a tenancy end when a landlord dies); instead it continues until terminated, usually by a representative of the tenant giving a notice of termination to the landlord and removing the tenant's effects, or the landlord giving a notice of termination or applying to the Tribunal for a termination order (to be fair to Housing NSW, there's quite a few published cases where they have taken this course of action), or some other sort of arrangement by consent of both the landlord and the tenant's representative.

It's different in the NT: at s 82(1)(e) of its Residential Tenancies Act, a tenancy automatically terminates where:

a sole tenant dies without leaving in occupation of the premises a spouse, de facto partner, or dependants, of whose occupation and relationship to the sole tenant the landlord has been notified before the death.

More worrying still, there's a special provision for NT public housing at s 82(2), whereby 'the tenancy is terminated whether or not a spouse, de facto partner or dependant of the sole tenant is left in occupation of the premises.'

Another worry: in 2007, the NSW Office of Fair Trading proposed amendments to the NSW Residential Tenancies Act 1987 that would, amongst other things, provide for the automatic termination of a tenancy upon the death the tenant. The Tenants' Union objected to that proposal at the time; now, as the amending legislation is being drafted (for circulation later this year, we're told), let's hope that our legislators have thought better of that proposal and ensure that a tenant's survivors don't have to worry about summary eviction.

Freud on the Brown Couch

There's a couple of interesting pieces in the opinion pages of today's Sydney Morning Herald. Please do have a look.

First, Damon Young takes apart the cliche of the 'dream' of homeownership, observing that the high cost of owning is an oppressive nightmare for many. Life-long renter Sigmund Freud, who knew a bit about dreams, preferred to spend his money on things that made his home-life beautiful, rather than interest payments.

(Sigmund Freud, tenant)

Secondly, in a letter to the editor Marco Fante of Katoomba has put together just about the neatest critique of the Australian housing bubble - and recent comments on the problem by Reserve Bank Governor Glenn Stevens and Prime Minister Kevin Rudd – that you'll find expressed in less than 200 words.

The bubble is there, but it has been with us for nine years. The higher cash grants have merely sustained an already inflated market. As reassuring as it is to see these misgivings emerge among banks, it seems to be a case of too little, too late.

The concerns of Mr Stevens about land values are well-founded, but supply factors do not come close to accounting for the near trebling of house prices in the earlier phase of the boom (when the word bubble was rarely heard).

The bubble may eventually burst or slowly deflate, but the lasting improvement in supply and affordability Stevens wants to see will never eventuate as long as government policy encourages speculative investment in established homes.

In his recent 6000-word essay, Kevin Rudd promised a tax system "that encourages productive investment". His Government could begin by reconsidering the largesse that successive administrations have heaped on the housing market in the form of grants, negative gearing and capital gains tax concessions.

The least it could do is ensure that the bulk of these benefits are directed toward those who would build new dwellings rather than those who gamble on the price of existing properties.

Well said, Mr Fante!

Furthermore...

Brown Couch reader and legendary tenants advocate, Robert Mowbray, has dropped me a line in response to last week's post about the Landlord and Tenant (Amendment) Act 1948. You'll recall that I mentioned that so-called protected tenants under that Act have great difficulty getting repairs done, and that landlords sometimes let their properties go to ruin in the hope of establishing one of the grounds for termination permitted by the Act (usually referred to as 'ground (m)'). Dr Mowbray and the Older Persons Tenants Service (OPTS) have recently been dealing with such a case. Here's a snap of the view from out of the tenant's ceiling.

(Used with permission of the tenant.)

In this case the tenant, 'Gladys', has occupied the premises for some 60 years, and lived on the same street for all of her 94 years. Because of its restrictions, premises subject to the 1948 Act ('controlled premises') are bought and sold at a significant discount, so Gladys has had a succession of landlords over the years, each, presumably, hoping that one way or another she'd shuffle off and thereby leave the owner with a handsome windfall. And, with the hole in the ceiling opening up and the need for reconstruction growing, 'ground (m)' looms.

I'll let Robert finish the story: he's written it up for the next article of 'Around the House', the newsletter of Shelter NSW. Do join up and get your copy. And if you or someone you know is a very long-standing private tenant (ie in the same place since before 1986), please consider getting in touch with OPTS to see if the 1948 Act might apply.

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And further to another recent post – our study of Friz Freleng's 1950 Room and Bird and its significance for landlord-tenant-pet relations – readers of the Brown Couch will be pleased to learn that agent-baiter par excellence David Thorne has recently corresponded with his landlord's strata manager about an alleged dog. Not to worry, writes Mr Thorne:

I am currently soundproofing my apartment with egg cartons as I realise my dogs can cause quite a bit of noise. Especially during feeding time when I release live rabbits.

Do follow the link and read the whole correspondence. He should write for the cartoons.

Rent and Sales Report No 88: rents flat

The latest Rent and Sales Report is out and, like last quarter's report, it shows that median rents for new tenancies have more or less flattened.

For the June quarter:

Sydney, inner ring: up 1.1 per cent

Sydney, middle ring: no change

Sydney, outer ring: no change

New South Wales: up 1.5 per cent.

As usual, with the arrival of a new Rent and Sales Report (itself an excellent publication) comes silly reporting. Contrary to the analysts at Yahoo!7 News, I don't think these data 'signal the end of the affordability crisis.'

The flattening of rents is the achievement of the recession, and nothing's affordable if you don't have a job.

I think the recession has done this work on rents by moderating demand, and this has been done through a number of different mechanisms:

1. Not so much bidding up, and more bidding down. I think it's fair to say that applicants for new tenancies are, overall, less confident about their employment, so may be making lower offers for vacant properties, or at least not bidding up asking rents. I expect, too, that agents may be anticipating this and moderating their asking rents.

(I expect similar things are happening in established tenancies, too (remember, the Rent and Sales Report refers to new tenancies, not established tenancies): when landlords are serving rent increase notices, more tenants are negotiating them down (eg 'things are tight, not getting as many shifts, can't afford it'), and landlords are anticipating this.))

2. The 'Packed to the Rafters' solution. Would-be applicants who are even less confident about their employment are not applying for tenancies. Younger persons are staying home with their parents. Renters who are living in share-houses are not moving out on their own. Some who have been renting are moving back in with parents, or into share-houses, and this is freeing up rentals.

(Packed to the Rafters - the 7 Network's heart-warming hit show about the unaffordable housing crisis.)

I suspect there's also a factor at work on the supply side, too, but it's difficult to say anything confidently because of deficiencies in the short-run data about rental housing supply (ie the vacancy rate). At a guess:

3. Unoccupied dwellings coming onto the rental market. As previously observed, Australia has a huge reservoir of unoccupied dwellings. I expect the owners of a few of these dwellings are now thinking if they should do something productive with them – like rent them out and actually derive an income from them.

And finally, we can anticipate that another factor might be put forward on the supply-side: the First Home Owners Boost. But I don't think so – a lot of the Boost will have gone to purchases of existing properties that might otherwise have been on the rental market, so even as a new first home owner frees up a rental property (assuming they have not been practicing the 'Packed to the Rafters' solution), they also often take up another. To the extent that the Boost has gone to new dwellings, it could free up more rental properties, but plenty of those new dwellings would not yet be ready to be occupied and, as I say, I expect it is the smaller component of the Boost program.

The Landlord and Tenant (Amendment) Act 1948

Submissions have just closed on the proposed Landlord and Tenant Regulation 2009. It sounds grand, but neither the Regulation nor its parent, the Landlord and Tenant (Amendment) Act 1948, will ever touch the very great majority of landlords or tenants in New South Wales.

The 1948 Act is the last remaining piece of rent control legislation in the State. Most people are aware of 'rent control' only through American TV shows, and over the past few years of painfully high rents I received numerous calls for journalists and others wondering if we too should implement such a system. In fact, New South Wales has had rent control, on and off, since 1912. The 1948 Act still stands, but over the years it has been amended to progressively limit its application, so that only a relative few long-standing 'protected tenancies' (no-one knows how many, maybe a couple of hundred) are still subject to its provisions. No new protected tenancies have been created since 1986.

The 1948 Act is based on national rent and price controls implemented in the Second World War, and for 'controlled premises' (strictly speaking, the Act applies to premises, not persons or tenancies), rents are limited to 'fair rents', as determined by a Fair Rents Board, which may be considerably less than the market rent. (It might be noted that this is much tougher on landlords than the rent increase reforms proposed by the Tenants' Union in relation to the Residential Tenancies Act 1987.)

The corollary of rent control is, so to speak, eviction control, which is another purpose of the Act (they go together: you can't keep rents down if landlords can readily replace a tenant with someone who'll pay more, and you can't keep tenants in place if landlords can increase the rent prohibitively). Protected tenants can be evicted only on certain prescribed grounds (again, this is generally much more restrictive on landlords than the reasonable grounds for termination proposed by the TU). The 1948 Act also provides additional protections for certain classes of protected tenants ('protected persons' – mostly persons with a connection to the armed forces, reflecting the wartime origins of the Act), who are even more difficult to dislodge than other protected tenants.

Landlords, of course, hate the 1948 Act. (In fact, the policy behind the Act is not so much pro-tenant as pro-owner-occupier: it was one factor – along with war service home loans, subsidies to building societies and public housing sales – for the strong increase in the rate of owner-occupation through the 1950s and 1960s.) And it's not entirely a picnic for tenants either. It's very difficult for protected tenants to get repairs done, and many landlords deliberately let their controlled properties go to ruin in order to establish one of the grounds for eviction (if the tenant has not moved out along the way). Protected tenants also often have to put up with landlords' attempts to oust them from the protection of the Act by trickery (eg getting the tenant to give possession back to the landlord on the pretext of having repairs done) or outright harassment (eg cutting off the power).

And anyone who cherishes clarity of legal drafting is going to have trouble with the 1948 Act too. Have a read of it, if you dare – it can permanently change you. The litigious landlord and outlaw lawyer Peter Clyne, having 'worked with it, sneered at it, ranted about it and begged a succession of governments to give it the coup de grace', confessed to having grown to like 'this exciting and damnable statute':

Like the dark lady of one's dreams, it is a stimulating statute, full of warm little corners of dark mystery where no amount of illumination will ever spread light – pulsating with mini-wars, an intellectual challenge to the confident, and a source of comfort to the underconfident. They can sharpen their teeth on the orgies of obscurity with which the courts, attempting to interpret my friend, occasionally enlighten us. After all, if you can understand the High Court's decision in Allen v Belmore Property Co Pty Ltd (114 CLR 454), you have passed your baptism of fire, and should be able to understand anything.

We don't hold it out as a model for contemporary tenancy law, but the TU likes having the 1948 Act on the books too, and for a proper reason. The persons to whom it applies made their housing arrangements on the basis of the Act long ago. They should not be disturbed now.

Anyway, back to the proposed Regulation. It's basically an update of the previous Regulation, so the TU supports it... except in one respect. The proposed Regulation omits a definition from the previous Regulations, and the effect of the omission is to remove from the status of 'protected persons' (ie those with additional protections against eviction) veterans of the Malayan Emergency of the 1950s, and their dependents. The TU, therefore, submitted that the definition should be retained, and any protected tenants who are veterans of the Malayan Emergency, or who are the dependents of Malayan Emergency veterans, should keep their status as 'protected persons' under the Act.

(As I said, the Act has a way of getting to you.)

The Great Race

We're now past half-way in the term of the present Federal Parliament, so the race to the next election is on.

(And they're off.)

Team Turnbull, having previously hoped to ride to an early victory on a second-hand Mazda Bravo ute, but which backfired spectacularly and veered off course so dramatically as to go backwards, has now taken the dust sheet off that faithful conveyance, the Debt Truck, which served the Coalition so well in 1996. (It is reported that Labor, in turn, has taken to the streets of Wentworth with its own 'Supporting Jobs' Truck.)

(Malcolm Turnbull, and the Debt Truck.)

The Debt Truck comes streaming charts and graphs, courtesy of Shadow Treasurer Joe Hockey, of the debt incurred by the Government as a result of its stimulus packages and reduced revenues.

If the Brown Couch had a debt truck, it might be festooned with the following charts and graphs. They depict what might be called, only a little unfairly, the Coalition's debt bombshell, from its most recent period in government. The explosive charge of this bombshell, however, is not government debt, but housing debt.

First, here's what Australian owner-occupiers came to owe their banks and other financial institutions over 1996-2007.

(RBA Statistical Tables D02: Lending and Credit Aggregates. Click on the image for a better view.)

Next, what Australian housing investors – or, better, speculators – owed over the period of the Coalition Government.

(RBA Statistical Tables D02: Lending and Credit Aggregates. Click on the image for a better view.)

Finally, let's put them together: here's the debts of owner-occupiers and 'investors' combined.

(RBA Statistical Tables D02: Lending and Credit Aggregates. Click on the image for a better view.)

From March 1996 to November 2007, total housing debt went from $177 billion to $908 billion - the Coalition's 'debt bombshell' of $731 billion.

Now, that's not government debt - it's debt owed by individual persons (and corporations) for the cost of housing. Government debt does not put at risk the roof over your head - at least, not in anything like a direct way. Housing debt, whether you're an owner-occupier or a tenant, does.

As I said, it is a little unfair to lay the blame for Australia's housing debt bombshell with the Coalition only. Individuals borrowed too much. Banks lent too much. The previous Labor Government provided the basic reasons why individuals borrowed too much: the capital gains tax-exempt status of owner-occupied housing encouraged owner-occupiers to throw money at housing; and as for investors, even though they had to pay CGT, negative gearing allowed them to invest not on the basis of the rental income generated, but gambling that an owner-occupier or speculator would throw a larger amount of money at them later.

Apart from the fact that it generally approved of all this, the Coalition's great claim on culpability for the housing debt bombshell comes from its turbo-charging of house-price speculation through changes to CGT – so that if you make your money speculating, you pay only half the tax you would if you make by actually earning it, or through rents, or interest.

(Peter Perfect and the Turbo Terrific.)

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Meanwhile, Kevin Rudd has successfully thwarted the designs of blog-writers to shoehorn him into an over-extended Wacky Races metaphor by sitting down and crafting a thoughtful essay on the financial crisis. There's a lot in it with which we agree. As Rudd says of the causes of the crisis:

'in many Western countries the boom was created on a pile of debt held by consumers, corporations and some governments. As the global financier George Soros put it: "For 25 years [the West] has been consuming more than we have been producing and living beyond our means".'

And he continues, with particular reference to housing:

'these debts were racked up on the back of skyrocketing asset prices. In several countries, stock prices and house values soared far above their true long-term worth, creating paper wealth that millions of households used as collateral for their growing debts.'

I think he's onto something. The challenge now is for the Government to dismantle the house-price-bubble-making machine that previous governments have built into our tax and finance systems.

Rents moderate as recession bites

The ABS has today published its Consumer Price Index for the quarter ending in June 2009, including figures for rents.

Across the Australian capital cities, rents were up 7.2 per cent for the year, which is well above the rate of inflation generally (1.5 per cent). Sydney rents were up 7.1 per cent.

However, for the June quarter, rents moderated: up only 1.4 per cent (up 1.5 per cent in Sydney). This is still above the inflation rate for the quarter – a mere 0.5 per cent – but it still represents a significant moderation.

This is consistent with what we saw in the most recent Rent and Sales Report, which reported that rents for new tenancies in New South Wales had flattened.

Something to keep in mind if your landlord is still hoping for 10 per cent, as 'predicted' by BIS Shrapnel.