Renting laws in review: our submission

Yesterday we published our response to Fair Trading's discussion paper as part of the statutory review of the Residential Tenancies Act 2010. You can find our submission here.

Responses to Fair Trading's discussion paper are due by the end of today, January 29 2016. If you haven't yet made a submission, we strongly encourage you to send one in now!

Making a submission couldn't be easier - all you need to do is send an email to policy@finance.nsw.gov.au saying why you think our renting laws should promote greater stability, liveability and affordability for tenants.

And while you're at it, why not drop in a line or two in support of our submission?

Cheers!

Renting laws in review: Tenants’ services

In the months following publication of Fair Trading’s discussion paper for the review of the ResidentialTenancies Act, we have endeavoured to cover some of the most critical topics for discussion. With submissions due at the end of the week, we’ve saved what is unquestionably one of the most important issues until last.

Buried all the way down at question 39, barely a half scroll from the appendix, is a brief description of the Tenants’ Advice and Advocacy Program followed by the question:

“Do the current information, advice and dispute resolution services operate effectively?”

The Tenants Advice and Advocacy Program is partly funded by the interest generated on tenants’ bond monies while deposited with the Rental Bond Board. This funding arrangement is made possible by Section 186 of the Residential Tenancies Act - with the current, triennial round of funding expiring in June 2016.

In recent years Fair Trading has also established an in-house information and voluntary dispute resolution service for both tenants and landlords - a central, statewide service operating out of a single office. 

Messrs Hoffman and Redford wonder why the program is up for discussion

The Tenants’ Union is the resourcing body for the 19 Tenants’ Advice and Advocacy Services (TAASs) operating across the State - that is, the organisations that make up the Tenants Advice and Advocacy Program. We also consult regularly will the network on a wide range of policy and legal issues. So we are well placed to say in the strongest possible terms that they offer their clients and communities so much that no one else could.

The basic statistics are impressive in their own right. In the 2013-14 financial year, TAASs provided over 22,000 advices by phone, worked on more than 4600 cases, and appeared at NSW Civil and Administrative Tribunal over 2000 times.

But the true value of the TAASs is in their quality. They are the only services in NSW that provide tailored legal advice and partisan advocacy to tenants. There are no specialised ‘tenancy lawyers’ in private legal practice at all. The network is home to unique skills, knowledge, and experience to be measured in the thousands of hours. There is simply no comparison between such personalised, expert assistance and the general information with impartial dispute resolution provided by Fair Trading.

The work of the TAASs – especially longer form casework and Tribunal appearances - is focused on the most vulnerable. This means all services are dedicated to providing for those in danger of eviction and homelessness. The inherent complexity of such work makes their advice and casework statistics more impressive still.

The TAASs are also distinguished by the manner of their work. Tenants’ advice and advocacy requires a unique approach – blending legal skills with a social worker’s approach to provide tenants with more holistic assistance. Advocates take pride in providing long-term solutions - helping tenants beyond the closure of a case file, linking them up with other groups and services as necessary.

Finally, there is the value of the TAASs as true ‘community’ organisations – local services staffed by local people. This means not just increased affinity with their clientele, but an accumulation of specialised knowledge of the needs of the local renting population. For example, depending on the demographics of the area, a service may devote time to servicing the needs of boarding house residents, international students, Local Aboriginal Land Council tenants, or those who live in residential parks. In between, they also find time to conduct community education programs to serve the needs of their communities.

All of this makes question 39 seem almost redundant. When it comes to the Tenants’ Advice and Advocacy Program, the answer to whether they are operating effectively is a resounding yes. In fact, we campaigned for increased funding for the TAAP program throughout 2015, to ensure that no tenant had to miss out on their services (more about that here).

If you are yet to make your submission to the Residential Tenancies Act review, be sure to mention the extraordinary value of Tenants’ Advice and Advocacy Services. To make a submission, email policy@finance.nsw.gov.au, or follow the instructions here.

Social housing and its bold new future

Today the NSW Liberal Government has announced a new 10 year social housing strategy, Future Directions for Social Housing. The Sydney Morning Herald has called it "an historic decision to privatise public housing in New South Wales". We call it an incentive to fix the Residential Tenancies Act 2010.

It's true that one of the main thrusts of the strategy will be the redevelopment of estates, with all the uncertainty and anxiety that brings for tenants who start to wonder whose homes will be next to go... But it will also place an ambitious degree of faith in the private rental market to more or less "rescue" tenants from social housing.

Like the discussion paper that came before it, the strategy is based around three key pillars -

• More social housing
• More opportunities, support and incentives to avoid and/or leave social housing
• A better social housing experience

Under each of these, the Land & Housing Corporation and FACS Housing will be given a series of tasks.

More social housing means:

• the Land & Housing Corporation will increase their estate renewal and redevelopment activities. This will be "in partnership with the private sector" through the Communities Plus program. We'll be keeping our ear to the ground for details as each new development is announced, and making notes on our Clearing House blog. The strategy says "FACS will work closely with communities to avoid unnecessary disruption to tenants' lives". We certainly hope so.
• ownership or management of more properties will be transferred to community housing landlords. The strategy aims to increase the proportion of social housing owned or managed by the non-government sector to 35%, and will require community housing landlords to assist with the Land & Housing Corporation's relocation needs when redeveloping estates. They'll also be required to report on tenant outcomes according to a set of targets - we'll be keeping an eye out for those.
• the Government will be relying on proposed new funding models, such as the Social and Affordable Housing Fund and Social Impact Bonds - which means attempting to bring private finance into the construction of new and renewed social housing.
• further attempts at tackling "under-occupancy".

More opportunities, support and incentives to avoid and/or leave social housing means:

• Family and Community Services will "remove work disincentives" for public housing tenants. This includes revising policies that create work disincentives, and reviewing the rent setting model and eligibility criteria. This is really the good news.
• trying to improve educational and employment opportunities for social housing tenants. They'll do this through the allocations system - providing houses for people who can work or study in areas with better access to jobs and schools. It sounds like a good idea, but it's just as likely to create further residualisation and stigma for those who miss out. They'll also try to create new employment opportunities for social housing tenants through new repairs and maintenance contracts.
• introducing "Personal Support Plans" - where a "client" agrees to "realistic goals" in exchange for tailored supports and services. The architects of the Housing First model must be scratching their heads in wonder, and we're concerned about how these plans will interact with a residential tenancy agreement. What will happen to tenants who fail to achieve their goals? Will they lose their housing, as well as their tailored supports and services?
• increasing the budget for Private Rental Assistance products, to try and convince more tenants to try and survive in the expensive and chronically insecure private rental market (which the government considers a form of "independence") where they will not need to rely on social housing assistance.
• collaboration across the Whole of Government to better coordinate assistance. The problem is, FACS have forgotten to include NSW Fair Trading in the list of agencies they'd like to work with - even though they are in the midst of a review of the Residential Tenancies Act 2010 and could work towards giving tenants greater stability, liveability and affordability in the private rental market.

A better social housing experience means:

• improving customer service and using more methods of communicating with tenants.
• implementing new repairs and maintenance contracts.
• mandatory evictions for tenants who get caught up in criminal activity.

It's a big plan - it reflects a high degree of ambition, for better or worse. It will present new opportunities as well as risk - particularly for public housing tenants, who will start to wonder just how secure their current tenancy is. But unless changes are made to the Residential Tenancies Act to give greater stability to tenants in the private rental market, the answer remains "comparatively so". Decamping to the private rental market should remain an option of last resort.

Most of all, this new strategy comes with a great big list of things to do. We'll be keeping a close eye on how FACS and the Land & Housing Corporation begin to work through its implementation, and how it progresses from here.

Renting laws in review: repairs and rents

Two of the biggest discussions to be had in the current review of our renting laws are tenants' rights when it comes to getting repairs and maintenance done, and rent increases. So, here we go...

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The basic principles of how repairs to a property work under the Residential Tenancies Act will be familiar to most. All landlords have a basic obligation to maintain the rental property in a "reasonable state of repair". When a repair issue becomes apparent, the tenant must inform the landlord, who must then carry out the necessary repairs unless the tenant has caused the need for repair themselves. This is the case even if the repair issue pre-dates the tenancy agreement.

Repair issues can be an un-holey mess for tenants

Of course, what appears straightforward from the stuffy confines of a statute book is often anything but. Perhaps the most common tenants' complaint is that the landlord is well aware of an issue but still declines - even outright refuses - to arrange for repairs. This is an issue of compliance rather than an improper division of the parties' obligations under the law, and tenants may apply to the Tribunal for a remedy where required.

But any tenant willing to bring a repairs matter before the Tribunal is also forced to wrangle with what amounts to a get out clause allowing landlords to evade responsibility. Section 65 of the Act provides that the Tribunal may only determine that a landlord is in breach of their repairs obligation if they "failed to act with reasonable diligence to have the repair carried out."

Potentially, this allows a landlord to abandon this most basic obligation where efforts to act responsibly have failed. Or, more specifically, they may avoid being found to be in breach of the repair obligation. The irony is that this is most likely to occur in cases where a repair is somewhat difficult to see to, which are also the cases where a tenant will be in need of a remedy the most. But if a landlord is able to avoid the Tribunal finding they are in breach  of the repair obligation because of the "reasonable diligence" defence, no remedy can be obtained.

Also ironically, the Tribunal has discretion over what remedy to order in repairs matters. It is open for it to order that no action must be taken after finding a landlord has failed to carry out a repair, if it finds the circumstances of the case warrant it. In such cases, tenants should be entitled to another remedy, so we say this part of section 65 needs to go.

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Rent increases, though never popular amongst those made to pay them, have been brought into sharper focus recently by the renting affordability issues affecting so many in New South Wales. The many complexities of this issue are something The Brown Couch has considered at length - most recently here and here.

But for most tenants, the law on how and when the landlord may up the rent are simple.
- No increase is allowed during a fixed term of less than two years unless it is detailed in the agreement.
- For fixed terms of more than two years, one increase every 12 months is allowed.
- A landlord may increase the rent for a periodic (i.e. 'week to week') agreement an unlimited number of times by providing the tenant with 60 days' written notice.
- A tenant can also apply to the Tribunal for an order voiding an increase, on the grounds that it is excessive.

The tenant is burdened with proving that the increase is excessive, and the Tribunal may not consider a tenant's capacity to pay the increased amount in its deliberations. Obtaining such an order is notoriously difficult and time consuming.

Are rent increases the Bane of your existence?

We think tenants deserve additional certainty, as well as protection from retaliatory or otherwise wanton rent increases - in a time of widespread rental unaffordability more than ever. Rent increases should be limited to once per 12 months for all tenancies, rather than the tiny minority of agreements with a fixed-term of more than two years.

Provisions around excessive rent increases also require reform. We would like to see the evidence burden reversed for large increases, so that when a landlord issues notice to increase the rent above the rise in the Consumer Price Index, they would be required to demonstrate that the increase is not excessive. Tenants would retain that obligation for increases below the equivalent CPI rise.

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Given their near-universality in the tenant experience, we're sure these issues will be the focus of many a submission to the Government's ongoing review of the Act. But for anybody who hasn't yet had their say, make sure you grant them a mention. Submissions can be made by email to policy@finance.nsw.gov.au, or by post to Statutory Review of Residential Tenancies Act 2010, Policy and Legislation, NSW Fair Trading, PO Box 972, Parramatta NSW 2124.

Which Optus-approved renter are you?

Of all the contributions to The Institute of Tenancy Culture Studies, a report on renting from a Telco giant was one we’d have pegged as most unlikely. And yet, somehow, here we are. On Wednesday Optus released excerpts from 'The Renter of the Future' – a survey that purports to uncover the “attitudes, behaviour and technology trends” of Australia's tenants. Its commissioning and publication are openly driven by a product launch targeting rental households, and there's certainly no shortage of cringeworthy marketing speak throughout. So it’s tempting to dismiss it as a work of highbrow advertorial. But it does make some claims relevant to more than whether you say ‘Yes’ to a new modem, and has been attracting attention, so is worth some unpacking.

'Yes' man Josh Thomas: is this the future of renting?

A central finding of the report relates to how and why tenants are in the rental market. It claims that 27% of tenants are “flexibility renters”, whose status as tenants is attributable to “[liking] the flexibility of moving when they want to”. This is in contrast to the other 73% - “stability renters” who “prefer to stay in one place for a while”.

It also contrasts markedly with our 2014 survey of the NSW rental market. When we asked “Why do you rent?” only 9% of respondents nominated ‘flexibility and mobility’. We gave respondents six options in response to this question - accounting for those priced out of the buyers’ market for now or for good, those who prefer to invest elsewhere, and those who are renting where they can’t buy. Whilst the Optus report contains no information as to the methodologies employed, it would appear that its use of a simplistic dichotomy between ‘renting for flexibility’ and ‘renting for choice’ has created a distorted picture of tenants’ motives.

The Optus study also includes a separate division of the renting population into four ‘personalities’. Only one personality, the “pragmatic homeseeker” comprising 44% of all tenants, rents due to an inability to enter the homeowners’ market. The other groupings are “pragmatic lifestylers”, “tech lifestyers”, and “tech homeseekers” - the latter categories relating to tenants' technological and digital engagement.

But accounting for tenants that cannot afford to buy, those looking to buy or build, and those saving to buy, our study found that 69% of tenants could be termed ‘pragmatic homeseekers’. We’d also note the obvious artificiality in the Optus report's division between tenants shut out of the owners’ market and those interested in the tech industry. Clearly, one can ardently desire home ownership and remain passionately interested in their smartphone. The four ‘rental personalities’ suggest mutual exclusivity where none exists. Perhaps this component of the report is merely a product of its commercial imperatives.

Finally, the Optus report does note that renters move much more frequently than owners – every 1.8 years compared to every 8 years for mortgagors and 18 years for those who own outright. But it fails to consider the disconnect between such frequent moves and the relatively low number of ‘flexibility renters’ (whether you put that figure at our 9% or Optus’ 27%). Could it have something to do with the instability forced upon tenants by our rental laws? We say it certainly could. Our study found that, of respondents who had moved in the last three years, 14% said their landlord telling them to leave was the main reason, 12% nominated a rent increase, and 4% pointed to a disagreement with their landlord. Moreover, a full 92% were worried about having to move in the future. On a national scale, a recent study from the Australian Housing and Urban Research Institute found that 27% of tenants who move house have their hand forced by eviction or unaffordability. 

So proceed with caution - it’s fair to label the key claims of the Optus report as dubious to say the least. We won't pore over its supplementary claims, though in most cases such an exercise would be better suited to an advertising blog. 

But at the very least, the mere existence of this report points to a burgeoning realisation that tenants represent an ever-growing slice of whatever market you're trying to sell into - and that perhaps we should be taking better care of them.

And yes, we also value a high-speed Internet connection as much as everybody else.

Things to look out for in 2016

Welcome back to the Brown Couch for what we expect will be another big year.

Here are some of the things we'll be watching out for in 2016...

1. The current review of the Residential Tenancies Act 2010

We spent quite a bit of time talking about this over the last half of last year - and thanks to the NSW Greens Member for Newtown, Jenny Leong, a few people spent the holiday period talking about it as well.

NSW Fair Trading's discussion paper is still open for comment, so if you haven't already put pen to paper and sent in your thoughts about renting in New South Wales, please do so soon. They'll be taking submissions until January 29th. If you're stuck for something to say, have a look at the TU's Quick Guide to the review - available here.

Fair Trading will produce a report on the Act, based on its discussion paper, for the responsible Minister to table in Parliament. This must be done before the middle of the year, so we'll know soon enough where the NSW Government stands on stability, liveability and affordability for the one-in-three of us who live in rented homes.

2. Sensible discussion about tax reform in a federal election year

Our views on tax reform are long held and oft stated - we'll be pretty disappointed if 2016 delivers an increased GST at the expense of more sensible changes to our tax regime.

NSW Opposition Leader, Labor's Luke Foley, has recently said he'd consider supporting an increase of the GST from 10% to 15% in order to fund schools and hospitals, and this puts him at odds with his Federal counterpart. If we're going to see a federal election based on tax reform - which has always looked likely - we'd like see the discussion re-focus on winding back the generous tax concessions we give to amateur landlords.

As for schools and hospitals - we'd like to see those funded, too. Perhaps the NSW Opposition Leader could take another look at our land tax proposals, rather than call for a bigger tax on consumption, while on his quest for a new source of revenue.

3. Implementation of last year's "antisocial behaviour" reforms for social housing tenancies

We spent a bit of time talking about these reforms last year, too - including our discovery that the legislative changes commenced just in time for the summer holidays.

The laws are now live - which means the Tribunal is already bound to consider them - but we're still waiting for FACS Housing and other social housing landlords to finalise the policies that will determine how and when they will use them. We're expecting FACS Housing to finalise their policies towards the end of February, but we're not sure where most of the 30 or so registered community housing landlords that might use these laws are up to. Let us know if you come across anything.

We'll be keeping a particular eye on the use of "one strike evictions" and the mandatory 28 day limit for vacant possession orders whenever a social housing tenancy is terminated in the Tribunal. The legislative provisions relating to these policies must be reviewed between December 2017 and December 2018, so we'll be keeping tabs.

4. Developments in the social housing portfolio "strategy", particularly as it relates to estate redevelopment and urban renewal

2015 ended with a spate of announcements about increasing the social housing portfolio in New South Wales. We've covered these on our Clearing House blog - with news so far concerning Macquarie Park, Glebe, and Waterloo; along with more general announcements about the way social construction is to be delivered through Communities Plus and the Social and Affordable Housing Fund (SAHF).

We're expecting further announcements about the SAHF early this year, and we're also hearing rumours that a report from the Social Housing discussion paper of late 2014 might finally be released. There's a high likelihood that this will lead to further divestment in tenancy management by the NSW Government, with more tenanted properties to be transferred from FACS Housing's watch to registered community housing landlords. We'll have to wait and see...

In any case, the growth of community housing landlords is set to continue. We'll be keeping an eye on reports from the Registrar of Community Housing's office, as the first compliance checks under the National Regulatory Code start to happen.

5. New repairs and maintenance contracts for public housing tenancies, and a Parliamentary Inquiry into their management

Late last year we mentioned that the NSW Legislative Assembly's Public Accounts Committee is conducting an inquiry into the management of public housing repairs and maintenance contracts - submissions close in early February

We also mentioned that the Land & Housing Corporation was in the process of changing the way it does business with repairs and maintenance contractors. We now understand that new contracts are ready to roll, and we expect to hear more about this soon. But there are many problems with the way public housing is maintained, and these new contracts alone won't fix everything. The Parliamentary Inquiry could produce some important insights into how this system functions, and how it could be improved.