Happy anniversary, Residential Tenancies Act - part 2

On June 17th 2010, the Residential Tenancies Act 2010 became law in New South Wales. It came into operation a little later, on January 31st 2011, but it has now been on the statute books for a full five years. From today, the responsible Minister can commence the statutory review of the Act to see if its policy objectives remain sound, and whether its terms are still valid. He's got 12 months to table his report.

Looking forward to a comprehensive report

These questions need to be put into a bit of context. We should start by asking - what's been going in the New South Wales rental sector over the last five years?

Well, it's grown. There were 42 392 more renter households at the 2011 Census than at 2006, which itself saw an increase of 55 335 from 2001. There is no reason to think this trend has slowed, but research tells us the composition of these renter households has changed quite a bit over time.

Data from the tax office shows the number of rental properties in New South Wales has grown, too. From 2009-10 to 2012-13, the latest year for which this data is available, there was an increase of 85 930 properties in the market. In terms of its proportion to the number of rental properties across Australia, this is hovering around 30% but is in slight decline - probably due to the considerable price differences between NSW property and the rest of Australia.

This is all but confirmed by Lending Finance Data from the Australian Bureau of Statistics. The value of loans for housing investment in New South Wales has risen from 31.4% of the Australian total in 2009-10, to 41.3% in 2013-14. An eye-watering $51.9billion was lent to speculators buying up New South Wales property in 2013-14. We shudder to think what this figure will be for the end of the current financial year, with reports of a $5billion stamp duty windfall for the NSW Government giving a clear indication of what to expect.

It is absolutely clear that landlords have spent a fortune on their rental properties over the last five years. No doubt this will continue into the future. But, when we look at what they spend their money on, it is also clear that they would incur most of their expenses regardless of whether or not they have a tenant.

Of course, tenants have spent a fortune, too. The same tax data that tells us how much it costs to be a landlord shows how much rental income they've declared to the tax office each year. And tenants have paid a lot. In 2009-10 they paid $9.7billion in New South Wales. This had risen to $12.1billion in 2012-13. We expect it will have gone up even further since then.

These are all useful things to keep in mind when contemplating the policy objectives of a law like the Residential Tenancies Act 2010, and whether its terms remain valid.

We'll take a look at the terms of the Act in a forthcoming post.

Pet Friendly Landlords

The Animal Welfare League Australia is running a competition to find Australia's most pet friendly landlord. You can find out more and nominate landlords here: 

We'd like to make our own nomination - the NSW Land and Housing Corporation. 

For many years they have had the practice of allowing pets as standard. Their agreement currently states it as:

KEEPING OF PETS
38. The landlord agrees 
38.1 subject to any by-law applicable under clause 33* prohibiting pets, that the tenant may keep pets in the residential premises if the pets do not interfere with the reasonable peace comfort and/or privacy of neighbours.
38.2 The tenant agrees to remove any pet within 48 hours where in the reasonable opinion of the landlord the pet is not suitable to be kept on the premises and the landlord gives the tenant written notice to that effect
38.3 Clauses 38.1 and 38.2 do not apply to restricted dogs as defined by the Companion Animals Act 1998 or dogs declared as dangerous pursuant to that Act. The tenant must not keep any such dogs on the premises

Essentially, Housing leave the decision of whether to own a pet up to the tenant. This is only reasonable, as tenants are people who can make their own decisions, and be held accountable for that decision later in the event damage is caused or cleaning is required. The middle clause has given some tenants of the Land and Housing Corporation a little problem where the reasonable opinion of the landlord might be called into question- for instance, where neighbours and council have no issue with a dog but particular staff of the landlord do. In general however it is so far above the standard practice of other landlords it can be held up as the most reasonable approach to pets in rental we've seen in NSW.

If you've had a great experience with your landlord supporting your pet ownership, do consider letting the Animal Welfare League know.

Read more about this aspect of our Just Renting platform.

A good job that pays good money...

We've been holding our tongues a little through all the recent froth and bubble about house prices... but after Treasurer Hockey's comments today it's time to join the fracas.

Before we look at those comments in particular, it's worth taking a little tour of some key moments in the conversation so far:

Over the weekend, the Australian Greens released modelling showing the abolition of negative gearing could save $3 billion in foregone tax revenue over four years, and improve housing affordability. They've drawn the correct conclusion that when housing is unaffordable for first home buyers it puts pressure on rents, but they seem to have really missed a key point there: unaffordable housing-to-buy equals unaffordable housing-to-rent, and it's the private rental market where the real pain of an unaffordable housing market is felt.

The ALP has remained cautious in its response. They've said abolishing negative gearing would be tricky as it is not just wealthy people making off with your taxes... and cited the many "mum and dad investors" who could lose out. Mum and dad investors, of course, are those small time land holders who have an interest in only one or two properties. They're not especially interested in promoting housing affordability, because they're banking on prices going up to offset the losses they're making in the meantime. The same losses our tax system encourages them to make by allowing them to negatively gear...

But "mum and dad" landlords are not especially interested in tenancy management, either. They tend not to worry too much about improving their skills in that area. They're amateurs, in the true sense of the word. Of course, Australian renting laws don't really require them to become skilled in tenancy management - landlords can simply bail out of a tenancy as soon as it all gets too hard, without even needing a reason. Unaffordable housing is most painfully felt in the private rental market because the tenants of amateur landlords live there, knowing they can never be sure of anything.

Then today we hear the Treasurer has suggested that if housing was not affordable, nobody would be buying it. First home buyers just need to get a good job that pays good money, he says...! Well - news flash, Mr Hockey: most would-be home owners do have good jobs that pay good money. They need to, so they can manage the rent!

But without the backing of the kind of money you can only really get by having access to property wealth in the first place, that doesn't get them closer to owning a home. What it does is improve the prospects for anyone who is able to buy property - they'll have no trouble finding a suitable tenant who can meet their terms. Because true to Mr Hockey's word, people do continue to buy property. But it's mostly amateurs with a bit of equity to spare, borrowing up big on the promises of tax breaks and never ending price rises.

On the flip-side, all these cashed-up tenants - who would love to move into home ownership if only they could - make it especially hard for lower income earners to compete in the private rental market. And that, of course, is where the real pain of unaffordable housing is felt.

The rule of law

There's been a lot of focus on federal politics in the media over the last week. Some of it has been about housing affordability, which has mysteriously found its way into the national political discourse. But there's also been a bit of talk about the "rule of law".

It's the rule of law that has inspired today's discussion. What may or may not have been said about the Australian Government's ability to make a person stateless gives rise to a similar conversation about how a person may be made homeless. The link between statelessness and homelessness is not an entirely tenuous one - both concepts feature, in some way, in international human rights covenants that Australia has signed up to.

During the week, concerns have been raised about whether it should be a Government Minister, or a competent court of law, who can decide to strip a person of their Australian citizenship. It has been suggested that it's sometimes a little tricky to get hold of the evidence one might need to achieve this outcome in court, so it would be better to leave it to the Minister to make an "administrative decision". Others have said "no - that is precisely what courts are for". Their argument is that if you haven't got enough evidence to convince a court then you shouldn't have enough evidence to convince a Minister.

What happens if we apply the same kinds of argument to housing?

First, we need to acknowledge that a person renting in the private rental market can be stripped of their tenancy with little more than an administrative decision - that is, a landlord can decide to end the tenancy without a reason. But that's a different kind of administrative decision than the sort a government Minister might make, because it is not subject to judicial review. Such a decision used to be subject to review, in a way. Under the Residential Tenancies Act 1987 the tribunal had discretion not to end a tenancy if that was appropriate in the circumstances of the case. But when the Act was reviewed and rewritten in 2010, the discretion was removed. Sometimes the rule of law just doesn't go your way.

But things get a little more complicated when the landlord is the government. Tenants in public housing are subject to all kinds of administrative decisions made by workers in the department of Family and Community Services. Many of these decisions have a direct impact on a person's housing - whether they will be housed; whether they can move to another house; whether their rent will be reviewed; whether their housing assistance will be taken away from them. And where these decisions are subject to review it is by the internal processes of the department of Family and Community Services and a Ministerial committee, not by the courts.

Thankfully for tenants in public housing, when Family and Community Services decides to end a person's housing assistance - usually making them homeless - there is a final check on that decision: they issue a notice to terminate the person's tenancy, citing the grounds upon which they say it should end. If the tenant disagrees with those grounds, or has anything to say in response, the matter may go before a tribunal. The tribunal considers the evidence from each side, then determines whether or not the decision should stand.

This is the rule of law in action. But the process may be under threat.

We know that the Government is considering a range of reforms to tackle what they've referred to as 'anti-social behaviour' in public housing. We know that this could include a probationary period for long term tenancies. We don't know that probationary tenancies will not end arbitrarily, by issue of a termination notice without a reason; without regard to the tribunal, or an independent review of all the available evidence.

The rule of law has a long history. It can be traced back to the Magna Carta, the foundational document that established that English kings are not above the law. Parts of the world will celebrate the 800th anniversary of the Magna Carta in just over a week - on June 19th 2015.

For what it's worth, and in so many respects: let's hope our own celebrations are not marred by a diminished rule of law.

Proposed repeal of the Landlord and Tenant Act 1899

Last week the Minister for Innovation and Better Regulation, the Hon. Victor Dominello, introduced the Fair Trading Legislation (Repeal and Amendment) Bill 2015 into the New South Wales Legislative Assembly. Among other things, this bill will repeal the Landlord and Tenant Act 1899.

In his second reading speech, the Minister said that the 1899 Act is surplus to the State's statutory requirements. This is not right, because it plays a critical role in determining the way a property can be recovered if it is subject to a protected tenancy. It has a few other functions, too, like providing a bit of a backstop for some tenants who are excluded from the Residential Tenancies Act 2010 - such as those in the case of the lost public housing heritage tenancies.

True, the Landlord and Tenant Act 1899 is not very frequently put to work - at least not directly. And it is also true that much of the work it does is unlikely to be seen in the harsh light of day... but that doesn't make it superfluous. Getting rid of it would be like taking the headlights out of your car because you only ever drive to lunch. One day you might need to stay out a little later than usual, and it's only then that you will understand the true nature of your problem.

The Tenants' Union's full comment on the proposed repeal of the Landlord and Tenant Act 1899 can be found on our webiste.

Happy anniversary, Residential Tenancies Act

Five years ago on this day, then Fair Trading Minister Virginia Judge moved a motion to introduce the Residential Tenancies Bill 2010 into the NSW Legislative Assembly. It made its way through that House, then to the Legislative Council and back again, in just over a week. It was passed without a great deal of fuss, and received its assent on June 17th 2010.

This is important. It means it's almost time for the Act's statutory review provisions to kick in:

227 - Review of Act

(1)  The Minister is to review this Act to determine whether the policy objectives of the Act remain valid and whether the terms of the Act remain appropriate for securing those objectives. 

(2)  The review is to be undertaken as soon as possible after the period of 5 years from the date of assent to this Act.

(3)  A report on the outcome of the review is to be tabled in each House of Parliament within 12 months after the end of the period of 5 years.

A 5-year statutory review is a standard check on whether a new law is achieving what the government of the day hoped it would when it was passed, and whether it is still required.

So... we can expect Victor Dominello, Minister for Innovation and Better Regulation, will soon indicate the manner in which Fair Trading NSW will conduct its review of the Residential Tenancies Act 2010. It's a good time to reflect on your experiences as a tenant over the last 5 years, and consider if there is anything you'd like to contribute.

We certainly will be. We'll be looking at how the 2010 Act has changed the game in some ways - with a focus on what's been working well, what's been a bit of a mess, and the challenges that remain.

Of course, we've already said a bit on these things - it's what we do. For an idea of what we've been thinking, take a look at our current policy platform: Just renting - Law Reform for Housing Justice. You can check back over the pages of this blog for some of the more nerdy detail...

And if you think there's something missing that we really ought to be putting into the discussion - or if you want to talk with us about your own encounters with renting law as a tenant in New South Wales - please drop us a line.