Credit where it's due: post script

Back in early October we noted the Minister for Social Housing had taken heed of warnings against plans for rental bonds for public housing tenancies, and opened up the plans for discussion.

We said:

FACS Housing has expanded the handful of non-government housing peaks it has asked to comment on a draft operational framework, and the Minister for Social Housing himself has invited several of us to meet with him to discuss our concerns.

This, we said, was an indication that when it came down to it, Government was prepared to stop and listen to concerns about the scheme... to the Minister's credit.

Yesterday Minister Hazzard's office circulated a note, giving an update on the development of the policy. It confirms the Minister will put the rental bonds scheme on hold, "to allow for further review of the framework". This in an indication that rental bonds for public housing tenancies may yet become a reality - in keeping with the Minister's commitment - but not this time around, and not in the manner proposed. For now, at least, it's back to the old drawing board.

This is excellent news. Cheers, Minister!

Regulated real estate agents

On the weekend, Fair Trading NSW released a list of recommendations to reform the real estate and property services industry. The Minister for Innovation and Better Regulation, Victor Dominello, has called it "the most significant review in 20 years" and said "the profile of the property sector has changed considerably over that period."

"Because only one thing counts in this life: Get them to sign on the line which is dotted."
Alec Baldwin as "Blake", Glengarry Glen Ross (1992)

It certainly has. In fact, even in the last five years, the change to the sector has been pronounced. More and more people are living in rented homes for longer, and - on current housing policy settings, at least - many of us can expect to rent for life.

So we might assume an Industry Reform Paper will have a strong focus on the relationship between real estate agents and tenants, right?

Well, no, actually.

The primary role for a real estate agent is to act in the interests of their client, and that's not you. It's your landlord. But agents do play a role in shaping landlords' expectations and experience of your housing, and this informs their instructions. This in turn affects your expectations, and how you experience your housing as a tenant. So the rules that apply to real estate agents do have an impact on you, in a round-about sort of a way.

And just as there's a growing number of tenants in New South Wales, there's also an increase in landlords and the services that cater to them. So let's take a quick look at the proposed reforms to see what use they might be...

There's a strong focus on licensing and qualifications, and continuing professional development for real estate agents. This would impact agents at all levels, regardless of the work they are engaged in. From the outset, a certificate of registration would require more training than is currently the case - from 4 "units of competency" to 7. Holders of such a certificate would not be able to enter into contracts or authorise trust account transactions, so would not be able to manage tenancies without the assistance of a more qualified supervisor. At the other end of the scale a new "licensee in charge" category would be established, under which all other agents within a real estate business would need to be supervised.

On this, the Reform Paper says:

[A] training review found that, although the Property, Stock and Business Agents Act clearly requires licensees in charge to properly supervise staff, in practise such supervision is often non-existent, and certificate holders frequently work with little or no supervision or support. The review found that the unsupervised activities of certificate holders pose a risk to consumers, and recommended that the education requirements for certificate holders be increased from 4 to 7 units. The review recommended that the extra units should focus on minimising risks to consumers and improving knowledge of and compliance with relevant laws.

Thus, there is potential for real estate agents to become better equipped with knowledge and understanding of tenants' rights. But the downside of that is that tenants' rights could, in many respects, be a whole lot better... so - it's good news, really, but we won't be getting too carried away about it. We'll use it to fuel our advocacy for stronger renting laws.

There's also some focus on greater accountability for real estate agents. This would include requirements to publish and update agency fee structures - good for landlords and home-buyers - as well as improved provisions about disclosing "material facts". This means telling potential buyers about quirks and quibbles with properties they have on their sales lists - such as whether there are any known health and safety risks, whether a property has been the scene of a violent crime within the last five years, or ravaged by fire or flood.

This would make it harder for the landlord of a newly acquired property to breach their obligation to a prospective tenant under the Residential Tenancies Act, not to "knowingly conceal a material fact" of a similar kind - although currently that obligation is not enforceable. We've been given some hope on this after the review of the Residential Tenancies Act recommended a sensible change to fix this, but we're yet to see it introduced... (we've got our fingers crossed that this and some other changes will be introduced sometime in the first half of next year).

Under the rubric of "conduct and accountability" is an interesting suggestion that developers who engage in property sales off-the-plan, but who are not required to be licensed real estate agents, could be regulated by reference to the number of properties they sell in a year. Such an approach could also be applied to self-managing landlords who could be exempt from consumer claims on the basis that, as housing investors, they are not "engaged in business or commerce" and are therefore not subject to consumer claims law beyond the Residential Tenancies Act.

Finally, the proposed reforms would allow Fair Trading to temporarily suspend a real estate agent's license or certificate of registration while an investigation against their conduct is underway. If this one gets through - and we hope it does - it would give each and every real estate agent in New South Wales pause to stop and think about their behaviour before doing something very silly. That's assuming Fair Trading makes full use of their powers, of course.

All in all, the proposed reforms look sensible and sound - as far as this sort of thing goes. We're happy to give them a polite nod on their way through, and we'll keep an eye on what comes of them.

Who is the social housing landlord in this brave new world?

There has been some understandable confusion about the role of community housing providers after FACS Housing transfers large sections of its public housing stock over to them.

So, what will be the various roles of these parties in this brave new world:

• NSW Land and Housing Corporation (LAHC)
• FACS Housing NSW
• community housing landlord
• community housing tenant

Here’s what the webpages of LAHC and FACS NSW say:

• LAHC and FACS work together to achieve a unified administration of the Act
• LAHC owns and manages land, buildings and other assets within the social housing portfolio'
• Housing NSW, an agency of the NSW Department of Family and Community Services (FACS) is one of the largest providers of social housing in the world
• Housing NSW directly manages approximately 122,000 properties Housing NSW provides more than 19,000 properties through community housing providers.

The Social Housing Minister's media release talks of:

Delivering better outcomes for tenants and the community is the focus of reform which will see social housing in four areas of NSW managed by Community Housing Providers (CHPs). 

Minister for Social Housing Brad Hazzard said Family and Community Services (FACS) would transfer, on a long leasehold basis, management of approximately 18,000 properties to the community sector to ensure a better experience for tenants in social housing.

On 11 October 2016 the NSW Government introduced the Housing Legislation Amendment Bill 2016 and this was assented to on 25 October 2016. This Act amends the Housing Act 2001 with respect to the entry of concurrent leases. There is a new Section 13A:

13A (Entering into concurrent leases)  ...
(2) On entering into a concurrent lease under this section:  ... (b) the tenant is no longer renting public housing.

Discussion of 'concurrent leases' on The Brown Couch here provides some clarification:

A concurrent lease allows those property rights and interests that have not been passed on to, say, a residential tenant, to be transferred to a third party. Lawyers would think of it as a division of the "bundle of rights" that are attached to property, in a way that retains a clear hierarchy of interests and concerns - property owner > concurrent lessee/landlord > residential tenant/occupier. Rights that are tied to a residential tenancy agreement are not affected by a concurrent lease, and this is what the Minister is getting at when he suggests "tenants' lease length and lease conditions will remain the same". 

Strictly speaking, the Land & Housing Corporation (the Public Housing landlord) has been setting up concurrent leases all over the place, as it has already transferred the management of around 28,000 Public Housing properties to Community Housing landlords since about 2008. But it's not been done in such a clear-cut way before. In the past, tenants have been asked to rip up their residential tenancy agreements with the Land & Housing Corporation, and enter into a new one - perhaps with new, less favourable terms - with the Community Housing landlord. 

Concurrent leases may take some of the sting out of the coming property transfer scheme...

One view is that concurrent leases may be the most sensible way of doing tenanted transfers, given Australian social housing transfer practice has never given tenants a role in determining whether a transfer happens, nor a genuine choice as to who the new landlord will be. They avoid unnecessary confusion (about so-called ‘choice’) and give assurance (that is, that the current tenancy agreement remains on foot). South Australia used concurrent leases in its recent transfers and it appears to have made the process easier for those reasons.

However, it appears LAHC wishes to be no longer be responsible for repairs and maintenance. An 'Industry Sounding' document that was circulated and discussed amongst FACS officials and community housing landlords in early October states that the community housing provider will be responsible for maintenance, while LAHC will retain responsibility for 'structural repairs and strategic portfolio management decisions'.

But if this is a 'leasehold' arrangement, then isn't there still a landlord and tenant relationship between LAHC and the community housing provider? And, because of the broad nature of the definition of a ‘residential tenancy agreement’, wouldn't the LAHC still be responsible for repairs and maintenance under the Residential Tenancies Act 2010? We expect the answer is 'No’, because a ‘concurrent lease’ between LAHC and a community housing landlord may be exempted from the Act’s coverage. See section 156 (1) of the Residential Tenancies Act 2010:

156 Head leases involving social housing providers
(1) A residential tenancy agreement is exempted from the operation of this Act if:
(a) under the agreement, the landlord is a social housing provider (the head landlord) who lets the premises to a tenant who is a social housing provider, and
(b) the agreement is in writing and the agreement states that this section applies to the agreement.

Accordingly, the landlord and tenant relationship between LAHC and the social housing provider can be exempt from the Residential Tenancies Act 2010 by the simple insertion of a clause in their concurrent lease documents. This means that such a landlord and tenant relationship will be covered under the provisions of the Landlord and Tenant Act 1899 until such time as this last Act is repealed (slated for June 2010 (s 1D)), or common law. The specific terms of any concurrent lease will determine who takes responsibility for what. But such details may be considered 'commercial in confidence'. This prompts us to ask, will there be a level of transparency around all of this? We will have to wait and see.

So, coming back to our earlier question about the various roles of the parties ... there will be two landlord and tenant relationships:

Landlord (head-landlord):    NSW Land and Housing Corporation (LAHC)
Tenant:                                  community housing provider

Landlord (head-tenant):       community housing provider
Tenant (sub-tenant):             community housing tenant

For all practical purposes, the landlord will be the community housing provider and the tenant will be the social housing tenant who has signed a social housing tenancy agreement over the premises. The community housing provider is not like a real estate agent who just manages the premises. They will have all the responsibilities of a landlord under the Residential Tenancies Act 2010.

End of the line for justice in Gosford?

We've just heard that tenants on the Central Coast will lose their dedicated NSW Civil and Administrative Tribunal (NCAT) hearing rooms. These have been co-located with the Gosford Fair Trading Centre since 2004. They were established there when tenancy disputes were heard by NCAT's predecessor, the Consumer Trader and Tenancy Tribunal (CTTT), which was administered by Fair Trading until its amalgamation with other tribunals as NCAT in 2013. Now the Fair Trading Centre is moving and NCAT - administered by the Department of Justice - says they can't stay where they are.

It's a long way to Newcastle for tenants trying to avoid an eviction

Commencing early December, most hearings will take place in a single room at the Gosford Courthouse, two days per week. From 2017 onwards, formal hearings will be held in Newcastle or "other Central Coast locations".

This presents a number of problems. The Central Coast Tenants Advice and Advocacy Service outlined some of these in a letter to the NSW Attorney-General, not long after they were informed of the decision:

Prior to having a dedicated Tribunal Centre in Gosford, arranging hearings was a very ad hoc affair with matters heard in Woy Woy Courthouse, Wyong Council Chambers, Edogowa at East Gosford, local community centres and the like.

As with any temporary venue, there was often confusion by some or all of the concerned parties regarding the whereabouts of the available hearing room on a particular day

On occasions the staff at these locations were not notified or otherwise unaware of a scheduled hearing and this often resulted in cancellations, postponements or relocations of hearings.

Because assigned conciliation rooms were not provided in temporary facilities this resulted in a lack of mediation opportunity and therefore matters that could be potentially resolved without requiring a hearing were far less likely.

Other detrimental factors in utilising temporary facilities included a lack of close proximity to public transport, unfamiliarity with the location, lack of privacy, lack of security, lack of amenities and lack of available parking.

Clearly, dedicated hearing rooms in Gosford have meant improved access to justice for tenants on the Central Coast for more than a decade. But even if NCAT addresses each of the concerns above, the significant reduction in its capacity on the Central Coast remains a worry.

We've taken a look at some numbers. NCAT doesn't provide the quality of reports that its predecessor did, so we've had to go back to the CTTT's annual report from 2012/2013. There we can see that in that period there were 3,706 matters heard in the two Gosford hearing rooms over a total of 173 hearing days. That gives us an average of around 20 matters heard per day, at 10 per room. The numbers were similar for the preceding year, so we'll assume they paint a reliable enough picture.

As we've noted above, the current proposal is for NCAT matters to be heard in a single hearing room on the Central Coast, two days per week. Let's knock off a few weeks for Christmas and assume that gives us a maximum of 100 hearing days per year. If they can sustain the rate of 10 hearings per room per day, we can expect them to handle about 1,000 matters each year from December. NCAT is about to start running at a little more than a quarter of its current capacity on the Central Coast.

This will be a real test for their case-management strategies and systems.

About 75% of NCAT hearings are in the tenancy or social housing lists, and about 60% of those are applications made by landlords seeking to end a tenancy. The majority of tenants' trips to the Tribunal are to try and fend off an eviction - but for those who do try to take a landlord to NCAT over repairs and maintenance, expect a long wait. And if your landlord is after termination and possession orders and doesn't want to play nice, the thought of a return trip to Newcastle might prompt you to reach an agreement that's not in your interests, rather than stick to your guns and go to a formal hearing.

Tenants shouldn't be forced to make such compromises. In the interests of justice, NCAT needs to find itself a sensible, permanent venue on the Central Coast.

The Australian Dream

The following is taken from Dr Robert Mowbray's remarks when launching Professor Alan Morris’s book on Tuesday, 25th October 2016. Robert is the Project Officer, Older Tenants with the Tenants’ Union of NSW.

Professor Alan Morris with his new book - The Australian Dream

It’s good social research ...
In Alan Morris’s Preface he quotes Professor George Ritzer (Explorations in the Sociology of Consumption: Fast Foods, Credit Cards and Casinos, 2001) who said (and I paraphrase):

There is a great need for sociologists to do work that can be read by a more general audience. Sociology should be interesting and relevant ... and should inform public dialogues on a wide range of important issues.

This quote reminded me of what two prominent Australian sociologists, Colin Bell and Sol Encel (Inside the Whale, 1978) said nearly forty years ago:

Social research should be linked with the public issues of the wider world. It cannot be value-neutral. Good social research reflects social and political concerns first and techniques later, if at all.

Alan’s book is, firstly, very readable because it lets those struggling in the housing market tell their own stories ... and secondly, it meets Bell and Encel’s criterion of ‘good social research’ because it reflects social and political concerns foremost.

Recent publicity about older renters ...
Over the last month the plight of older renters has been highlighted in both newspaper and magazines. Some examples:

27 October 2016: Peter Martin writes 'We are condemning more and more Australians to retirements burdened by rent'. He continues: ‘One of the barely stated reasons why house prices have been climbing out of reach of new buyers is many of us have been becoming richer. Would-be investors poured into the market. One in every six taxpayers became a landlord. To get there and stay there they've had to outbid would-be residents.'

10,11 October 2016: Kirsten Robb writes 'Life-long renters face financial stress in retirement'... according to a paper released on Monday by Swinburne University, which found more Australians are renting in retirement and facing financial stress. The authors of this report, Dr Andrea Sharam and others, found: 'The proportion of aged persons in Australia is set to increase significantly, posing many challenges. Amongst these is the growing number of households who lack housing security in retirement. ... A very marked outcome is that to be a private renter at 45 years of age is likely to mean being a renter and highly impoverished, in retirement.’ 

4 October 2016: A great essay by Anwen Crawford who writes about 'Nowhere to go – older women and housing vulnerability': 'The number of older women who are rental tenants in Australia is growing, and these women ... are increasingly vulnerable to poverty and homelessness ... Housing affordability and security for rental tenants will only become a more pressing issue as Australia’s population continues to age.'

4 October 2016: An excellent article by Kim Arlington, entitled 'Over-55s are the forgotten homeless': In this article Ms Yeoman, Chief Executive of Mission Australia said: 'older women can face a housing crisis for the first time in later life ... previously they may have had a stable housing history but even small changes in their financial circumstances – a rise in rent or utility bills or unexpected health costs – could propel them into homelessness.'

So Alan Morris’s book is well timed ...
Quote from Elsie, private market tenant:

‘... I think when people get to 65 and they’re on a Centrelink pension and in private rental, they should be entitled to take their life if they wish ...’

Quote from Rhonda, private market tenant:

‘I hate it because you’re more or less at someone else’s mercy all the time.’

Quote from Dan, public housing tenant:

‘When you know your accommodation is right, this is especially when you’re older, you can pursue other interests. You’re more relaxed ... you’re in for a longer life.’

Quote from Marlene, home owner:

‘It [home ownership] just gives you security ... It gives you freedom of expression ... Your home is an extension of your personality.'

Alan documents how, over the last two decades, the private rental sector across Australia has once more become substantial. It presently accommodates about one in four households. A major shift is that, for many households, renting in this sector is no longer a transitional stage. And the proportion of the population aged 65 years and older, like all developed economies, has increased significantly and is continuing to do so. Many will be become trapped in the private rental sector. Indeed, for a number of reasons, many will ‘fall out’ of home-ownership. Alan’s premise is that the capacities of Australians who are dependent primarily or solely on the Age Pension for their income are shaped fundamentally by their housing tenure. He places the 'meat on the bones', with real people telling their stories.

Alan conducted 125 interviews and highlights that many of the older private renters in his study were battling to purchase everyday necessities. They fare very poorly and, indeed, they are the new face of poverty in this country.

Alan’s book is divided into chapters that, by tenure, examine the cost and standard of accommodation, consumption and living a decent life, social ties, leisure, health including dental care and pharmacist costs ... and so on.

Alan found that, for older private market renters, the cost of their accommodation and negligible security of occupancy were primary concerns ... and this fundamentally shaped their everyday lives and dispositions. For most of the private renters, the cost of their housing was a considerable burden and provoked a great deal of stress. Indeed, this contrasts to almost all of the social housing tenants who felt that their rent was reasonable and manageable and that it left them enough disposable income to live a decent, albeit frugal life. But many of the older private market renters were in a dire situation due to the high cost of their accommodation. Many were having to use more than half of their income to pay for their accommodation. The high cost of their accommodation restricted their consumption and made it difficult for them to lead a decent life. Alan concludes that extreme frugality and self-deprivation were central features of many older private market renters’ lives.

He found that many private market renters were not able to buy fruit, fish and meat regularly and were dependent on unhealthy processed food. Also, any unexpected expense was a major blow and precipitator of anxiety. And, so medical expenses were seen as a serious burden by a substantial proportion of older private market renters and it was evident that there was a tendency to avoid health services.

Alan found that mental health was a major issue, with most of the private market renters reporting that they lived in fear of being asked to vacate or being subject to an untenable rent increase. There is a constant fear and much trepidation. As a consequence, everyday life is often enormously stressful. He says minimal security of occupancy, financial stress, inadequate accommodation and inappropriate neighbourhoods contributed to many of the older private renters being plagued by these high levels of stress. This contrast to homeowners and social housing tenants.

It’s the same story on all accounts. Home owners and public housing tenants on the Age Pension fair well, but private rental market tenants on the Age Pension struggle. (The noticeable exception here is public housing tenants in Millers Point, Sydney, who are being forced to relocate.) Except for those who receive support from family members, older private renters are very much an abandoned lot!

A digression ...
Here I would like to reflect on one of the three key pillars of the NSW Government’s ‘Future Directions in Social Housing in NSW’ strategy. It talks of ‘providing more opportunities, support and incentives to household to avoid and/or leave social housing.’ It talks of a system where, in the future, 'housing assistance is seen as a pathway to independence' and, to do this, placing increased reliance on private rental assistance.

This is placing an enormous degree of faith in the private rental market. But hold on!

Firstly, from The Sun-Herald (23 October 2016) comes the story of Ankita who is forced to show savings of a year's rent in advance before her application for a tenancy is even considered. Those interviewed by Alan provide graphic accounts of the type of accommodation they have been forced to rely upon in the private rental sector … and this is the private rental market on which Future Directions relies as an alternative to expanding social housing.

Secondly, Family and Community Services’ website states that Future Directions is backed by the whole of Government – including Health, Education, Justice, Planning and Environment, Industry ... but there is no mention Fair Trading! Indeed, Fair Trading has been reviewing the very legislation that can provide all tenants with greater security of tenure, for example, by repealing ’no-grounds’ eviction provisions. The omission of a reference to Fair Trading on this website page suggests that one arm of government was not speaking to another arm of government when Future Directions was being formulated!

Further, the Federal government is a key player here. Private renting will only be a reasonable long term option when our taxation regime discourages speculation in housing by ‘mum-and-dad’ investors and encourages institutional investors. Such a change is loudly rejected by the Federal Government. Discouraging speculation is picked up in a recent editorial in The Sydney Morning Herald (25 October 2016) which reads:

Mr Morrison says the objective of his approach "is to have policies that mitigate the artificial inflation of asset prices". That artificial inflation derives from negative gearing and the CGT discount.

And again, in recent days, Lucy Turnbull, Chief Commissioner of the Greater Sydney Commission, said greater institutional investment in housing, alongside stronger legal protections for tenants, could help to make renting a more attractive option.

Alan Morris’s book is an indictment of our political masters’ failure to acknowledge the changes necessary to make private renting a more attractive option ... along with years of neglect of public housing.

Alan Morris’ skills assist public housing tenants ...
And, of course, after Alan forwarded his manuscript to the publisher, he used the same skills in pulling together Shelter NSW’s Brief entitled ‘A contemporary forced urban removal: The displacement of public housing residents from Millers Point, Dawes Point and the Sirius Building by the New South Wales Government’. The power of this document is that, again, the residents tell the story.

Let’s launch Alan Morris’s book ...
Firstly, let me acquaint you with two little known facts about Alan. He is a serial letter writer to The Sydney Morning Herald, with another letter on 25 October 2016, the day of his book launch, where he writes: ‘Social housing as a viable option for low-income households needs to be revived’.

Also, he is a veteran of forced urban removal, having worked alongside of the victims of such in Apartheid South Africa. Back in 1986 The New York Times described Alan as ‘a white activist from the Transvaal Rural Action Committee, a group that monitors forced removals.’

Alan Morris’s book is more than a contribution to the current housing debate:

• It is an affirmation that past government housing policies regarding home ownership and public housing have led to satisfied outcomes for older persons on low incomes. 
• It is a warning ... indeed a dire warning ... to present and future governments that a weakening of security of tenure in social housing (including any re-run of what has occurred in Millers Point over the last two and a half years) and a reliance on the private rental sector as it is currently constituted will led to immense hardship for older persons on low incomes in future years.

Congratulations to Alan Morris for such an easy to read and compelling publication and a big thank-you to the 125 people who shared their experiences with all of us.

You may read a review of Alan Morris’s book in the Huffington Post on 5 October 2016 and some media around the book launch here.

Bond Insurance - a gamble not worth making.

We've recently found out about BondSure, a new company offering bond insurance, as well as bond loans and contents insurance. We do not think bond insurance is worth it for most tenants, unless you are exceptionally accident prone.

This guy. This guy needs insurance.

Let's consider the kind of insurance being offered. Your rental bond is already a form of insurance - the tenant pays a lump sum up front to ensure that if there is compensation due to the landlord at the end of the tenancy, the money is already there.

For most people insurance is about peace of mind – a protection against large, unexpected costs. This is exactly what your rental bond is!

It's not too different from paying insurance on a car, except that it is refunded at the end of the tenancy if you do not need to rely on it. And during the tenancy, it's held by the Rental Bond Board and there's the opportunity for your bond to be used for good.

So would you consider paying insurance on your insurance? It may sound a little odd, but that's the logic being offered by BondSure. Perhaps this reflects a view among landlords and agents that the bond is the tenants money in name only, and really it’s just waiting to go to its rightful home with the landlord. Is it a coincidence that BondSure is managed by former real estate agents?

So, how does this insurance on your insurance work?

Let's look at the insurance on a $2000 bond. The fees are $31.58 per month on a 12 month agreement, for a total of $378.96 for the year. You pay your fees, and if you need to make a claim, you pay your excess of $300 (Excess is 15% of bond or $200, whichever is higher). Coverage extends only to the bond amount, so the maximum claim you can make is your bond amount of $2000.

Now, because you have already paid the $378.96 in premiums, and $300 in excess, your insured $2000 bond effectively only gives you a benefit of $1321.04. The insurance does not cover anything above the bond, and it only covers "accidental damage". It does not cover many of the things that bonds often pay for, like rent arrears, utilities bills, or even most cleaning bills.

We know from the Rental Bond Board that the actual numbers of people losing their bonds are very low. Once you take out the stuff that BondSure's bond insurance doesn't cover, these numbers will be even lower.

Click for full size!

In the 2014-15 financial year, there were 266,856 bonds refunded. 53% of tenants received their bond back in full. If those tenants had held bond insurance, they'd have made a $378.96 bet and lost. This is where BondSure makes its money.

Another 38% received part of their bond back. Because of the excess of $300, the claim by the landlord has to be above $678.96 before it even makes sense to claim anything. If your landlord comes to you with a bill for damage of $150 dollars, you wouldn't spend $300 dollars to fight it, would you? So a large chunk of those tenants won't make the claim on the insurance, they'll just pay the landlord directly. So they'll have made a $378.96 bet and lost, on top of whatever "small" amount the landlord has claimed. This group end up paying both BondSure as well as their landlord, without actually obtaining any benefit.

If the claim on the bond is higher than $678.96, and only for accidental damage, then it becomes worth it for the tenant to have held their BondSure policy. They will start getting a payout that puts them ahead of where they would have been if they'd just saved their money. But that's assuming they've only been paying their premium for one year.

For those playing along, that leaves just 9% of tenants who lost their bond entirely in 2014-15. We know that many claims for the whole bond occur following breaches, such as rent arrears and the like, so only some would get the benefit of bond insurance. Those tenants often also owe more than the bond to the landlord, so they will still have costs above the payout.

If you are lucky(?) enough to be one of the small percent who had accidental damage that cost you exactly what your bond would cover (and nothing more!) then you get the full benefit of the insurance, and get your bond back. Happy days!

In considering all of this we haven’t included the cost of attending the Tribunal, which a bond insurance system discourages tenants from using. If your landlord's claim is high enough the "rational" thing to do would be to accept it and take the BondSure payout, even if you know the claim is false or an overreach. Without bond insurance it is usually worth it for a tenant to dispute a bond claim because the Tribunal forces agents and landlords to provide evidence for their claim.

As with all insurance, this is basically a gamble. Only around 1 in 4 tenants will get some benefit from a BondSure bond insurance policy. Most won't, and this is why when you gamble the house always wins. The house here is BondSure, who get paid either way, and if they do pay out make a relatively small loss. Using the proportions above, if everyone had a $2000 bond covered by BondSure they would make an average of $131 per client. Tenants, on the other hand, would spend an average of $319 by taking out insurance on their insurance.

Save your money, don't use bond insurance. If you really want to cover yourself for the unexpected loss of a rental bond, you'd be better off sticking $30 a month in an old jam jar.

Tell us what you really think, Belle

Thanks, Belle Property. This charming little reminder of how some real estate agents really view us tenants was dropped in our inbox this morning.

Clearly it’s supposed to be funny. Can you imagine your landlord finding it in their letter box and having a little chortle? How hilarious that it is so easy to remove someone from their home, like changing clothes. Perhaps they even hoped for some controversy! There’s no such thing as bad publicity, right?

Hey landlords, don’t like your tenants anymore? Did they ask for repairs, or question a rent increase? Maybe you just don’t like they way they look. No worries, just get your agent to give ‘em the flick. As non-property owners they’re vermin, barely human, certainly not worthy of a home. Its rare that such a dismissive attitude is so clearly drawn out.

What’s most frustrating about these kinds of attitudes prevailing in real estate agencies is that avoiding them is easier said than done. When you’re looking down another 30 applications, eviction day is coming up fast and at least this place doesn’t have obvious mould problems, knowing your property manager thinks your vermin doesn’t rate as highly.

The thing is though property managers need tenants. Sales agents don’t, except to use our furniture to make a place look homely. But a property manager without tenants is like a mouse without cheese, scrounging around looking for some other way to make a living. We might be vermin to you, but we pay your wages.

UPDATE 20/11/2016. Belle Property has responded to this post with the following message.

"We apologise if any offense was taken as a result of these Property Management flyers, it was never the intention. We in no way believe tenants are comparable to vermin and we apologise that it has been interpreted in this way. It was intended as a fun light-hearted message, which evidently wasn’t achieved. We are happy to discuss this further offline if there are any further queries. We will cease to use this marketing material effective immediately."

Also posted as a Facebook note here on our Facebook page. Like us for all the latest from the TU!