Why you need More Bang for Your Bond!

Renting can come with one or two challenges in New South Wales, but often the first and most pressing is paying the bond. In Sydney, where median rents are pushing $500 a week, it means keeping a couple of grand handy just in case you need to move on short notice. But tenants can console themselves that they remain entitled to recover the bond as soon as their tenancy ends.

Bonds are tenants’ money – the Rental Bond Board only ever holds them on trust. Of course, a landlord can make a claim against a bond if the tenant has caused them some financial loss. But where there is a dispute about who gets the money, the landlord bears the onus of proof. They must demonstrate how and why it should be put towards their costs, because on the face of it the bond is the tenant’s money.

This brings us back to those challenges for tenants. From fending off opportunistic or even downright bogus bond claims, to trying to get your landlord to take an outbreak of mould in the bathroom seriously, renting a home comes with built-in levels of despair. No doubt there are stresses for landlords, too, but perhaps they’re not on the same scale.

There are very different outcomes pursued by those who place themselves at the whims of a rental market. For landlords it is generally a question of wealth creation. If it all gets too hard, it is easy enough to liquidate and find somewhere else to park your money. But for tenants it’s about keeping a roof over one’s head. Bailing out is for the lucky few at one end of the income scale, and the unlucky at the other. For most in the middle, renting is often just a place to lump it while your landlord makes off with the proceeds.

You can also see this imbalance in the kinds of dispute each party is likely to bring to the Tribunal, and the types of remedy available. The most common action by landlords is to seek to end a tenancy, and have the tenant vacate the property. An officer of the sheriff can enforce this kind of Tribunal order, and they may use reasonable force if necessary. On the other hand, tenants are more likely to bring an action to have repairs and maintenance carried out, and there’s no real way to have this enforced. Where a landlord refuses to comply with a repair order, it falls to the tenant to take them back to the Tribunal and give it another go.

On top of this, landlords have the support of an entire industry of real estate agents and property investment experts to help them negotiate whatever difficulties they might encounter. Tenants don’t have this. But they do have large amounts of bond money held in trust by the Rental Bond Board. This money generates interest, and our renting laws say that interest on tenants’ bond money may be used to fund ‘advisory services’ for tenants.

In New South Wales, the Tenants’ Advice and Advocacy Services have received funding from the interest on tenants’ bonds for more than twenty years. Fair Trading NSW provides a service to tenants, too, but they are unable to replicate the work of Tenants’ Advocates. They are part of the machine of government, and they quite rightly remain impartial. Their telephone information services are available to tenants, landlords and real estate agents alike, and their operators approach each conversation as though the other side is listening. And as a consumer protection agency they must focus on a great deal more than just tenants’ and landlords’ rights and responsibilities - they have about 40 different pieces of consumer law to get their heads around. They are simply unable to develop the high levels of expertise in residential tenancy law and practice that independent, specialist services can.

But the Tenants’ Advice and Advocacy Services are struggling to keep up with demand. They have not had a real increase in funding since 2002 – although the number of people renting in New South Wales has gone up by 25% since then. In such an environment services are necessarily restricted to the most needy. Tenants with a ‘low-level’ need for advice or support are finding it difficult to get through.

The working family paying $500 per week to rent within a half-hour commute of the office, who’s just had their home sold out from under them and is worried about getting their bond back, has a genuine need for good quality advice. Sure, they might not be faced with the immediate prospect of long-term homelessness, but if such tenants are not able to obtain independent, specialist advice when they need it, then our system is letting them down.

This brings us back to tenants’ bonds, and the interest they generate. As the number of people renting goes up, so does the number of dollars held by the Rental Bond Board. And so too the amount of interest they earn. Currently, the NSW Rental Bond Board holds in excess of $1billion of tenants’ money, generating about $60million in interest each year.

For every single dollar of interest that tenants’ bond money earns, 68 cents goes to NSW State Government to fund services such as the Tribunal and the Rental Bond Board. 10 cents is added to that $60million surplus. 8 cents is put towards the funding of Tenants’ Advice and Advocacy Services. Less than one cent is paid out to tenants directly when they recover their bonds. The rest is divided between other community services such as financial counselling and a No Interest Loans Scheme.

Visit www.yourbond.org to see where your interest goes

This can’t go on. Tenants’ money should be used for the benefit of tenants.

The NSW Tenants’ Advice & Advocacy Services and the Tenants’ Union of NSW are currently campaigning for more of the interest on tenants’ bonds to be returned to tenants, and to better fund the Tenants’ Advice and Advocacy Services. Visit www.yourbond.org to find out how you can support the campaign.

'One strike' evictions will lead to injustice

The NSW State Coalition Government has announced today that if re-elected it will introduce legislation for immediate 'one strike' evictions for public housing tenants who have committed a serious criminal offence.

The change would mean that the NSW Civil and Administrative Tribunal (NCAT) would be required to make orders for the immediate termination of a tenancy where the premises have been used for certain sorts of serious offences.

Currently, the Tribunal is able to decline to make such an order, considering the circumstances of the case and whether termination is justified. Under the Government's proposal, the Tribunal would lose this ability.

If the Tribunal were to lose this ability, we would lose an important safeguard against injustice.

That's because termination proceedings can affect innocent persons. Under residential tenancies law, tenants are vicariously liable for the conduct of household members and guests – so termination proceedings can be brought where an offence is committed by a household member or visitor, and the tenant has had nothing to do with it. Indeed, a tenant may have no knowledge of that an offence has been committed, and they can still be held responsible for it.

Under the Government's proposed change, they'd lose their tenancy immediately, regardless of their state of knowledge or involvement, no matter how unjust that would be.

Other innocent persons may be affected. Even where it is the tenant that has committed an offence, they may have a partner or children who are innocent of the offence and who need housing. Under the Government's proposed changes, they would be evicted immediately too.

To see the injustice that would result from these changes, please read what happened to Sarah Corrie.

Ms Corrie's tenancy was terminated after she let her casual boyfriend stay a few nights at her house, whereupon he did a few $10-$20 marijuana deals from the premises, over a period of two weeks. Ms Corrie was not involved in the drug deals, was not charged, and co-operated with police (they even sent a letter of support for her to the Tribunal). Ms Corrie had never previously had a problem with her tenancy, and she's the sort of person who anyone would say should be assisted by social housing: an Aboriginal woman, a survivor of domestic violence, a single mother with four kids.

Her tenancy was terminated because, at that time, the Tribunal thought it had no ability to decline the order. It was following a decision made in another case by the District Court that held – wrongly – that the Tribunal could not decline termination in cases concerning drug offences. That decision was soon overturned by the Court of Appeal, but in the meantime Ms Corrie's case had been decided. And when you read it, you can see the Tribunal Member struggling with the injustice of it. As the Member said: 'If I had a discretion whether or not to terminate the residential tenancy agreement, I would exercise that discretion in favour of the tenant and I would refuse to make an order of termination.' But the Tribunal thought that, as a matter of law, it could not refuse, and made the order to evict Ms Corrie and her children.

The Corrie case shows an appalling lack of judgment by the housing officers who brought the proceedings, and the dangers of restricting the Tribunal's ability to properly check proceedings and decline orders where justice requires.

The Government should let the Tribunal do its job, not tie its hands.

Social housing tenants talk social housing

In response to the NSW State Government's social housing discussion paper, our colleagues at Redfern Legal Centre and Marrickville Legal Centre and local social housing tenants produced a video submission:

Well said.

The TU's own submission will appear soon on our policy and law reform page.

Land tax reform: reforming the rates

One of the remarkable things about the rental market in New South Wales (and the rest of Australia) is its domination by small landlords. More than three-quarters of landlords own just one property each, and large institutions are almost completely absent from the market. Affordable housing campaigners have dreamed about getting institutional investors – in particular, super funds – involved in rental housing, figuring they'd be better for affordability and security (because they'd be more interested in a steady flow of rents than in chasing speculative gains on premium properties).

One of the things standing in the way of institutional landlords is the current structure of land tax rates.

Land tax is currently levied at progressive marginal rates on the total value of land owned by the owner. These rates are zero for the first $432 000 worth of land owned; then 1.6 per cent of the value above that threshold up to the 'premium threshold' of $2 641 000; then 2 per cent of the value above the premium threshold.

And because those rates are applied to the total value of assessable land owned by the owner, large-scale land owners end up paying a higher rate of land tax than small land owners.

For example, the owner of land valued at $500 000 will pay $1 188 in land tax – in other words, 0.24 per cent of the value. Meanwhile, the owner of land valued at $5 million would pay $82 624, or 1.65 per cent of the value – in land tax.

That's strong preferential treatment for the small landlord.

A better way of doing land tax would be to have progressive marginal rates linked to each lot of land's value per square metre. This would end the preferential treatment of small landlords, without letting high-value property owners off the hook.

Reforming the rates, as well as broadening the base, would make land tax an even more effective measure for improving housing affordability.

Great tenant-detectives competition: a winner is announced

We recently asked readers of the Brown Couch – and crime fiction – to identify literature's great tenant-detectives (other than Sherlock Holmes, who is already known as the very worst tenant in London).

Please assemble in the parlour for the announcement of the winner...

Congratulations to Helen S, who identified not one but two great tenant detectives: Kinsey Millhone, from Sue Grafton's 'Alphabet' series of novels –

– and Stephanie Plum, from Janet Evanovich's numerical 'Plum' series.

Tough, resourceful, working against the odds: these two are exemplary tenant-detectives.

Honorable mentions to:

• Anonymous, for Dashiell Hammett's Sam Slade;
• PM, for Raymond Chandler's Phillip Marlowe; and
• Peter S, for Georges Simenon's Inspector Maigret.

Helen S gets a copy of Ruth Rendell's landlord-tenant thriller, '13 Steps Down'. Thanks for playing!

Family Feud is for tenants' rights!

Last night something big happened for tenants rights in Australia. Family Feud big.

In amongst questions about yo-yos, and what social events men find boring, there was a question that perked up the ears of a number of Brown Couch friends. The question, what are the reasons why tenants might get evicted. The answers, in order were: rent arrears; being noisy; being messy; causing damage; parties.... And that's it.

At first we thought they'd just forgotten about evictions for "no grounds" (when really, it's because you asked for repairs), or evictions for moving vulnerable people out to make way for casinos, or evictions for developers to double their money in a month.

Then we realised, this wasn't an accident. Family Feud and their audience of more than half a million Australians every night can arguably serve as a touchstone for community standards.

Family Feud asks 100 people for their answers to a variety of questions, and in this case gave the top five reasons a tenant might get evicted. In fact answer 5 (parties) only attracted seven responses, and there were only two responses not represented on the board.

What is important is that all of the answers were evictions for breaches of the tenancy agreement. The contestants, even the ones who gave "incorrect" responses, identified possible breaches of the agreement. No one thought tenants should be evicted for no reason.

We'd like to thank Grant and the Family Feud production team, the Dean and Beattie families, and most importantly, the people of Australia, for recognising the need for tenancy reform through the introduction of reasonable grounds terminations.

Visit our website for more information on our position in relation to reasonable grounds terminations