Wednesday, December 15, 2010
Anyway, it's clear that Leo is capable of more than the occasional wild stab in the dark. Much more. Because no sooner than the postie had delivered this grand prize to Leo's door, he's popped it straight onto the plasma with pencil and notepad in hand, to look upon it with a critical eye. There wasn't even time to make popcorn.
... and so the Brown Couch welcomes Leo to the podium, to discuss "Pacific Heights". Talk us through it, Leo. What's it all about?
Leo PR: Ladies and gentlemen, thank you... What a great audience...
You know, if all the bad tenants in the US were to sharehouse together and after a couple of months were asked who amongst them was the worst tenant of all, that bad tenant would not be Carter Hayes. This isn’t because the other tenants wouldn’t have voted for him, it’s because everyone else would have left or been beaten into submission.
Michael Keaton’s portrayal is still being used by real estate agents around the world to demonstrate the pitfalls involved when choosing tenants. But it’s really more a tale of the dangerous lengths and risks people will take to own their own home.
In an apt parable of Australia’s attitudes towards renting, this malevolent force is actually an aspirational home owner and investor himself. Taking advantage of Frisco’s lack of a low-cost adjudication system he moves in to a house with the protection of supposedly tenant-friendly laws and a slow, expensive eviction system. In the words of the landlord’s attorney “the net effect of these laws is to protect any pointy-headed cretin who moves into your property and slowly drives you bankrupt and insane.” Landlords in NSW should be so lucky!
The aim of his game is to drive the landlords into bankruptcy and snap up the property at massively reduced prices.
Post-beetlejuice, mid-batman Keaton, pre-Antonio Griffiths and what-else-has-he-been-in-again Modine all do fine jobs in their roles. Keaton handles the shift between sociable and respectable yuppie and creepy psycho very well, clearly his role in Batman had honed that skill.
Modine's character is no angel himself, proving to be his own worst enemy by managing to break almost every rule in whatever book you happen to be using. With some serious anger management issues he was the perfect target for our antagonist’s plots and destroys any sympathy you might have had for him by petulantly exploding with rage any time he doesn’t get what he wants.
Melanie Griffiths provides the true victim between her tenant and live-in partner, pitching herself nicely as a young, naive but ultimately decent person. The final revenge sequence is one of the only properly well-directed sequences in the film.
The movie itself is a mishmash. I don’t know if I’ve been innured by hundreds of hours of violent video games, Marilyn Manson and the Saw movies but as a thriller the film fell flat. Perhaps you need to be a landlord to truly appreciate the scariness of that staple of yuppie horror stores... a baaaad tenant.
All told, a dated, ocassionally sloppy and amateurishly symbolic but nevertheless enjoyable argument against debt. Of course, these intrepid landlords still want to make good on their investments. They list the property at 20% more than they paid only 6 months before, and suck another young couple into a mortgage they can ill afford.
In Hollywood, as in all good fiction, the good guys always seem to win in the end.
Friday, December 3, 2010
This marks the completion of a reform process that has been many years in the making. The review of the current Residential Tenancies Act 1987 began with a discussion paper in 2005, followed by a long list of recommendations for reform in 2007. A consultation draft bill was released late in 2009. The final bill was passed through Parliament and assented in June 2010, whereupon it became an Act of Parliament.
When the new law commences next year, it will be the first big change to NSW renting laws in more than 20 years. We say "big change", because the complete rewriting of a law is nothing short of wholesale. But the expected changes are really very modest - as they're mostly aimed at tidying up and clarifying some tricky parts of the current law. That said, there are a couple of really exciting changes that we can all look forward to. For more information, see this earlier discussion from the Brown Couch.
There's a lot to do before the new laws commence, and things may become a little quiet on the Brown Couch while we get on with it all. Keep an eye on this blog and on www.tenants.org.au for updates as we make the necessary preparations.
Tuesday, November 23, 2010
Ms Cusack to move—
That this House:
(a) notes that during the period from 2005 to 2008, the Department of Housing made 46,404 applications to the Consumer Tenancy and Trader Tribunal against its own tenants,
(b) notes that in 2005 the number of applications was 9,747 but that this grew to 14,649 in the 2008 year - an astonishing increase of 55% over the four year period,
(c) notes that an examination of the Tribunal’s applications concerning public housing reveals 96% of applications are made by the Department of Housing and only 4% are made by tenants,
(d) notes that the Tribunal is substantially funded by interest earned on tenants bond money,
(e) questions the fairness of tenants cross-subsidising the Department of Housing’s relentless campaign of harassment against its own tenants, and
(f) calls on the Government to review application fees for NSW Housing and require it to fully fund the costs of these mass eviction notices being issued against its own residents.
Well put, Catherine Cusack MLC!
As Ms Cusack says, Housing NSW is a big user of the Tribunal: big relative to public housing tenants' own use of the Tribunal against Housing NSW and, we might add, big relative to other landlords.
Public housing tenancies represent about 16 per cent of all tenancies in New South Wales, but last year Housing NSW's applications in relation to 'breach' represented 58 per cent of all such applications by landlords, and its applications for termination on grounds relating to use of the premises (ie use for an illegal purpose, or nuisance and annoyance) represented 45 per cent of all such applications by landlords.
Housing NSW will say that this over-representation is because it has a distinctive clientele. That might be a factor - but community housing organisations have a similar clientele, and they are not so over-represented in the Tribunal's stats. For other factors I would point to some distinctive aspects of Housing NSW as a landlord.
First, about a third of its tenancies are in large estates, making them uniquely dense concentrations of contracts where infractions of order that might otherwise be dealt with informally (or ignored) may be dealt with as matters of contractual breach.
And secondly, Housing NSW is distinctively and intensely involved in the lives of its tenants. In some circumstances - especially where staff are overworked, or undertrained, and become cynical - this involvement can turn, as Ms Cusack says, to harassment. Certainly it is hard to view the two Payne cases as anything else.
And to this Housing NSW might say - rightly - that it tries to train its officers to work positively with their clients, and to value this sort of work over reactive, punitive action in the Tribunal. But perhaps these lessons needs to be reinforced by costs, as Ms Cusack proposes. Worth thinking about.
Tuesday, November 16, 2010
Now, the REI's third and final point. As previously, the REI's blue, we're black.
 Proper resourcing of dispute resolution facilities
REINSW appreciates the role of the Tenancy and Social Housing Divisions of the Consumer, Trader and Tenancy Tribunal in providing access to relatively efficient and cost-effective dispute resolution facilities. Such facilities are vital to the effective operation of the residential rental market in New South Wales.
Well said: the REI's appreciation of the Tribunal is appropriate and much more reflective of reality than the assertion that you hear so often from landlords that the Tribunal is inefficient or helpful only to tenants. As the REI's comment indicates, landlords are in fact a major beneficiary of the Tribunal system; in fact, they are the major beneficiary, with landlord applications to the Tribunal outnumbering those of tenants by a factor of six.
And it is quick, too: on average, the Tribunal gets applications on for hearing 24 days after lodgement, and about three-quarters of all applications are finalised at or before the first hearing.
REINSW is concerned however about some aspects of the existing dispute resolution regime.
It is likely that given the additional compliance obligations under the 2010 Act the volume of applications will increase, with the attendant danger of lengthier delays between application and determination. There is already a tacit omission [sic] in s 88(4) of the Residential Tenancies Act 2010 that current delays are hindering landlords obtaining swift outcomes in the Tribunal.
It is true that the 2010 Act does provide that tenants may apply to the Tribunal for resolution of disputes in relation to things that the 1987 Act does not: for example, where a tenant asks to sublet a spare room and the landlord unreasonably refuses consent. But we don't expect a boom in tenant applications.
On the other hand, there is the potential for a boom in landlord applications in relation to rent arrears, because of new s 88(4). Under the 1987 Act, a landlord may serve a 14 day notice of termination on the ground of rent arrears, and then apply for termination orders - once the 14 days are up. Under s 88(4) of the new Act, a landlord will not have to wait - they'll be able to apply at the same time as they serve the notice (the Tribunal, however, will have to wait until the 14 days are up before it puts on a hearing). Section 88(4) is something that the landlords and agents have been asking for. It has the potential to create an awful lot of useless work for the Tribunal in taking applications and listing matters for hearing when in fact so many matters will never go that far, because on receiving the notice the tenant will pay up.
It's a bit rich to blame any expansion in the Tribunal's workload on 'additional compliance obligations', when a provision of the agents' own asking poses a much bigger source of applications - and useless ones at that.
(Indeed, given the current housing affordability crisis it is likely that the number of applications will increase simply by virtue of the growing number of tenanted properties).
(Hmm... so it doesn't look like landlords will be fleeing the market after all.)
The Tribunal must have necessary additional personnel and other resources to meet growth in demand for its services.
The commitment of additional resources must extend to rural and regional New South Wales. Anecdotal evidence suggests that unacceptably lengthy delays exist in some parts of the State in having matters listed for determination.
More resources for the regions is something we can get behind. A particular problem in rural and regional areas is the venues. All too often the Tribunal uses the rooms of the Local Court, and many tenants, especially Aboriginal tenants, just won't go to a hearing held in a court room.
There has been some disquiet in the industry about apparent inconsistencies in decisions made by different Tribunal members on some of the more common categories of disputes. Such inconsistencies create uncertainty in the sector. One way of minimising the possibility of those uncertainties arising is for more decisions to be available online. Another would be for an increased use of Chairperson’s Directions. Still another would be to allocate tenancy matters to a specialised panel of Members with particular expertise in the area (indeed, it may be appropriate to reinstate a separate Tenancy Tribunal as was the case prior to the formation of the CTTT).
Here's a couple of other things we are happy to support. Where the Tribunal gives written reasons for a decision, it makes them available on austlii, and we'd like to see more of this. And a specialist residential tenancy tribunal is something we've always supported.
And that's it. As we said at the outset of our review, it's generally a more sober contribution to tenancy law reform than previous REI postures. Some of the arguments are flawed, and some are just not backed up by evidence or analysis, but there's also a few things on which we might agree and that initial recognition of the human right to housing is promising.
Tuesday, November 9, 2010
In our previous post, we commenced a review of the Real Estate Institute's new 'Real Tenancy Policy' (as distinct from their unreal policy of last year). We were genuinely impressed with the REI's upfront recognition of housing as a human right and as a matter of physical, psychological and social need. We were less impressed with their argument about 'impediments for investors'; indeed, the evidence shows that over the past two decades punters have been piling into the market, and borrowing up big to do so.
Now we look at point 2 (again, the REI's in blue, we're in black).
 A needlessly complex and prescriptive regulatory regime
REINSW recognises the need for a legislative and regulatory framework which appropriately protects the interests of landlords and tenants of residential property. The far-reaching changes to the Residential Tenancies Act 1987 set out in the Residential Tenancies Act 2010 (uncommenced as at October 2010) have been the subject of detailed comment by REINSW.
'Far-reaching?' We wouldn't have said that, but let's see if the REI identify any 'far-reaching changes' in their new policy.
From our point of view, the Residential Tenancies Act 2010 mostly improves on the existing law, in a fairly technical, problem-solving sort of way. It does not radically recast the balance of power between landlords and tenants. You can find our own detailed comments here and (in very much more detail) here.
It is of concern that it is considered necessary to regulate the rights and obligations of residential landlords and tenants in a statute which comprises 227 sections (with many more provisions in as yet unfinalised regulations). The Residential Tenancies Acts in both South Australia and the ACT consist of approximately 120 sections. Western Australia manages the task in under 100 sections. While some jurisdictions (for example, Victoria and Queensland) have lengthier statutes than even New South Wales, those statistics strongly suggest that the sector in New South Wales is comparatively over-regulated.
As a measure of over-regulation, the number of sections in a piece of legislation is, with respect, not very good. The Landlord and Tenant (Amendment) Act 1948 (NSW) has 113 sections, almost exactly half the number of the new Act's. Is the 1948 Act simpler and less onerous by half?
Comparing the lengths of the Acts of each State or Territory shows nothing except that their respective Offices of Parliamentary Counsel do their drafting differently. Looking just at New South Wales, it is true that the 2010 Act has stacked on a few sections. Part of the reason for this is that it now includes bond provisions previously in the Landlord and Tenant Amendment (Rental Bonds) Act 1977. Another, bigger part of the reason is that the new Act is designed so that the casual reader can find all they need in one place, rather than skipping about throughout the Act. This means there is a bit of repetition (especially in relation to what sort of remedies are available through the Tribunal), but it is in the cause of making the Act more user-friendly.
In case it is thought that somehow New South Wales real estate has some unique feature which necessitates extensive regulation, it is notable that no other category of real estate in this state bears the same compliance burden as bedevils residential tenancies. For retail leases, the governing statute comprises some 156 sections (and no Regulation); for farming leases, the relevant legislation comprises 45 sections (with a Regulation containing 8 clauses). For other commercial property, no specific legislation has been enacted.
OK, we were being polite before, but it has to be said: this is a ludicrous measure of 'compliance burden'. Comparing consumer protection legislation with commercial legislation doesn't make much sense either.
A would-be landlord confronted with a choice between owning a property where recovery of water consumption depended, on the one hand, on agreement between landlord and tenant, and on the other hand on numerous factors including not exceeding a prescribed rate of water flow from taps (with one leaking tap at the commencement of a lease disentitling recovery) may think twice about becoming a residential landlord.
The water provisions are actually a lot easier for landlords than the REI makes out. It's all in the Reg (presuming the draft Reg is implemented): if the tenant is to pay for water, make sure there's no leaking taps and that the taps run at a maximum of nine litres per minute. Pretty simple. Sorry, but if you cannot operate a tap and a stopwatch at the same time, or find someone else who can do this for you, you really should think twice before becoming a residential landlord.
To take a further example of over-regulation, it is doubtful whether requiring a separate information statement to be given to a prospective tenant prior to the tenant entering into the agreement adds anything to the transaction. The residential tenancy agreement is in a standard, prescribed form; that document should be sufficiently clear on its face to render an additional information statement redundant. If it is not sufficiently clear, it should be re-drafted to make it so.
The 'information statement' they're referring to is the Renting Guide. It's been around for years: it used to be a little yellow booklet; a few years ago it slimmed down and is now a slip of paper with some handy phone numbers and basic info on it. It's handy for tenants, utterly harmless for landlords and agents. Is the REI seriously saying that would-be property investors are baulking when they find out that landlords have to give out the Renting Guide?
It is vital that the changes to residential tenancies legislation be monitored and reviewed to ensure that the new legislation does not impede the effective operation of the sector. If that review were only to occur after five years as contemplated in the new Act the results for the rental market would be potentially disastrous. Any review must occur sooner, and must include meaningful consultation with all stakeholders.
Wait a second - is that it? The water provisions and the Renting Guide? If this is all the REI can offer in support of their argument for an early review of the new Act (lest 'disaster' result), Fair Trading might feel well-pleased with its legislation.
Fortunately, we can offer a few more reasons to keep the law under review: the completely unsatisfactory state of the law for marginal renters, such as boarders and lodgers, who are excluded from residential tenancies legislation and have common law contracts only; the need to improve standards in rental housing, especially in relation to electrical safety switches and child-safe windows; the need to give tenants greater peace of mind and security through abolition of 'no grounds' termination notices....
In the meantime, we look forward to agents doing their own bit to reduce over-regulation by dumping all the additional terms from their tenancy agreements.
Next: point 3.
Saturday, November 6, 2010
We'll review it in detail in this and subsequent posts. The Real Tenancy Policy is reproduced below in blue; our comments are in black.
REINSW seeks amendments to the existing regulatory regime for residential tenancies to strike a proper balance between the legitimate interests of residential investors and the provision of proper safeguards for residential tenants.
Fair enough. We'd like residential tenancies law to strike a balance too. Of course, you have to keep in mind that the landlord-tenant relationship is unbalanced from the get-go, with landlords having the upper hand.
After all, it's always landlords and their agents who ask to see prospective tenants' references, bank statements and payslips, and run them through tenancy databases - never the other way round. Similarly, during a tenancy, landlords can generally enforce tenants' obligations by threatening to end their tenancies; tenants, however, can rarely make such threats effectively, because of the cost they bear (financial and emotional) if they end it and move. Compared to other types of consumers, tenants find it very difficult to shop around and take their custom elsewhere, and landlords feel very little pressure to compete with other landlords.
This means tenancies law strikes a balance when it is consciously directed to strengthening the position of tenants.
The REI goes on to propose that striking a proper balance involves three things. Here's point 1.
 Removal of unnecessary impediments for residential investors
“Everyone shares the right to a decent standard of living. Essential to the achievement of this standard and therefore to the fulfillment of human life beyond simple survival is access to adequate housing. Housing fulfills physical needs by providing security and shelter from weather and climate. It fulfills psychological needs by providing a sense of personal space and privacy. It fulfills social needs by providing a gathering area and communal space for the human family, the basic unit of society. In many societies, it also fulfills economic needs by functioning as a center for commercial production.”
In New South Wales, residential accommodation plays a key role in maximising access to adequate housing. There are currently some 800,000 residential rental properties in New South Wales, of which approximately 82% are held by private landlords (as distinct from social housing). The vast majority of landlords rely on the services of licensed real estate agents to let and/or manage the property on their behalf. Just under one third of the population live in rented premises.
All true – lots of people rent.
The past two decades in particular have seen a broadening of the available opportunities for investment of capital. The advice that “the best and safest investment is bricks and mortar” is no longer followed as frequently as it was last century.
Hang on a second - let's just have a look at some measure of investment in rental 'bricks and mortar' over the past two decades (albeit Australia-wide measures, not just New South Wales). First, let's look at the number of persons making this sort of investment. As we said, lots of people rent, but over the last two decades, lots and lots of people have become landlords. Here's a graph from the ATO and Morgan Stanley, via the Unconventional Economist:
Yes - over the last two decades the number of Australian landlords has almost tripled!
And they've sunk an awful lot of money into housing. Not including whatever savings they've put into their investments, here's what they owe:
(Source: RBA Table D2 Credit Aggregates: Credit - Investor housing (non-seasonally adjusted))
Back to the policy.
Investments in shares or financial derivatives do not generate the positive financial by-product of providing accommodation for families.
Hang on here too. It's true that building a house is a productive and beneficial thing to do – much more so than speculating in the fictitious financial creations of contemporary casino capitalism. But how many of those property 'investors' actually produce houses - that is, build something new, rather than just buy something that already exists? A landlord buying an existing dwelling does not produce housing: at best it 'produces' rental housing at the expense of owner-occupied housing. The graph below shows how much money property investors borrow every month (so it's not aggregated like the graph above) and what they spend it on: whether they pay for new houses to be built (productive), or simply buy a house that already exists (non-productive).
(Source: RBA Table D6 Lending Commitments- All Lenders: Investment housing. $ million, seasonally adjusted.)
Government should, at the very least, not take steps which actively discourage availability of housing stock. The adverse effects on the availability of accommodation as a result of the changes to the tax treatment of negative gearing interest expenses between mid-1985 and September 1987 should never be forgotten.
There's a couple of things to say about this. First there's the implicit comparison of tenancy law reform to tax law reform - that is to say, the REI is suggesting that tenancy law reform, like tax reform, can affect investment and the availability of housing. This is an apples and oranges comparison. Whenever anyone has researched the investment of decisions of landlords, economic factors, such as the tax treatment of housing, dominate their decision-making. Tenancy law, by contrast, barely rates a mention.
Secondly, the implicit connection between negative gearing and housing stock doesn't stack up either - as the graph of the RBA's Table D6 shows, so much of that negatively geared investment is in houses that already exist. True, if we were to scrap negative gearing we might expect that many of the current lot of speculators might want to get out of the market - but they won't dismantle the houses when they go. And we might expect to that fewer 'investors' would be so keen to pour so much borrowed money into the market for existing dwellings, giving would-be owner-occupiers a break... there's a thought.
Thirdly, the REI implicitly invokes the rent increases that occurred when negative gearing was restricted in 1985-87. But is there actually a causal connection? Another graph from the Unconventional Economist (and the article there is an excellent short analysis of negative gearing) shows that this is not clear at all. True, Sydney's rents did go up strongly at that time (the period is indicated on the graph by the two vertical dotted lines), and so did Perth's, but not the other capitals'.
(CPI Deflated Rents Index, 1972-2008, with focus on the period of the restriction of negative gearing, 1985-87)
Probably better to say that the effects of changes to negative gearing should never be misrepresented or misunderstood.
We'll return to points 2 and 3 later.
Wednesday, November 3, 2010
Happily, the memory of this brilliant fellow continues to do good work through the Sandy Duncanson Social Justice Fund at the University of Tasmania. The fund will provide bursaries to students to help them further their studies and social justice causes. The fund is open for donations – please consider making a contribution through the University of Tasmania Foundation.
Monday, November 1, 2010
How many private market tenancies have been created under the soon-to-be-repealed Residential Tenancies Act 1987 (NSW)?
The envelope please, Dr Mowbray...
... and the answer is 5.7 million, which means Brown Couch reader Leo PR is the winner!
Leo's guess – 5.5 million – is just 3.5 per cent off the right answer (as determined by Dr Mowbray and the good people who prepare the Rent and Sales Report), which makes him both a very canny judge of the private rental market in New South Wales and a very worthy winner of our prize, a copy of the 1990 horror-story-for-landlords, Pacific Heights.
Congratulations Leo, and thanks everyone for playing.
Monday, October 25, 2010
Tenancy databases have been around for about 20 years (by contrast, we first noticed the tip-off service a few months ago). There are a few of them around – TICA, TRA, Barclays and NTD are the main ones – all of them private companies. They are separate from credit reference databases (NTD is owned by the credit reference company Veda Advantage, but the databases are separate), but they make a similar claim: that they are in the business of 'risk management'. They do this by taking listings from agents of the names and other identifying info of supposedly 'risky' tenants, and making these listings available to agents to search against when a person applies for a tenancy. If you're listed, you may have trouble getting a tenancy.
('Computer says no'. Tenancy database-style thinking.)
This is especially because there are real questions about the quality of the information stored on tenancy databases. For most of their 20 years of operation, tenancy databases were not regulated, and in that time they collected a lot of rubbishy, even abusive listings: for example, listings of tenants who had been late with rent but caught up, or who settled debts out of the bond, or who had dared to apply to the Tribunal for orders against the landlord. And listings could hang around for years – long after they were at all representative of the 'risk' posed by a person.
These problems have been somewhat tidied up by a patchwork of regulation, including the 2004 NSW Rule of Conduct under the Property, Stock and Business Agents Act, which provides that NSW agents can list only for certain reasons and in certain circumstances, and sets timeframes for listings depending on the reasons they were made. Nonetheless, TICA still claims to have 'millions' of listings, a fact that TICA boasts as if it is a strength. On the contrary, with this many listings you have to wonder how many are at all relevant for present risk assessment purposes. Also, from the copies of listings we've seen, it appears that TICA no longer includes the reason for a listing in the listing – a move that we assume is designed to exploit a loophole in the timeframe provisions (ie no reason, no applicable timeframe), but which would appear to diminish the usefulness of the listing for risk assessment purposes. Furthermore, TICA is happy to take otherwise non-compliant listings from landlords who, not being real estate agents, are not covered by the Rule of Conduct (another loophole exploited).
Anyway, that's the traditional risk-management role played by tenancy databases – notwithstanding our misgivings about how well they actually play it. The Virtual Manager tip-off service is quite different, and the surveillance it insinuates into tenants' decisions about whether to look for other places to rent derives no justification from proper risk management principles.
The new service, however, is not the first time TICA in particular has departed from the traditional role. For some years now TICA has operated, in addition to its 'Tenancy History Database', an 'Enquiry Database'. Here's how it works:
- you apply for a tenancy with an agent who is a member of TICA;
- the agent enters your name and the other info you gave in your application into the search fields of the Tenancy History Database, to see if there's a listing about you;
- zap – you're now listed on the Enquiry Database.
The Enquiry Database is, like the Tenancy History Database, searchable by TICA members, so they can see how many applications you have made, to whom, where and when. None of which is of the slightest use in a sensible assessment of the riskiness or otherwise of an applicant for a tenancy. Some time ago, the Tenants' Union complained to Fair Trading NSW that listings on the Enquiry Database were also listings in breach of the Rule of Conduct: Fair Trading's view then was that even though the listing is made when an agent enters information into the search fields, this is incidental to the search and it is actually TICA that is doing the listing – and not being an agent, TICA is not covered by the Rule of Conduct (that loophole again).
In a way, the Virtual Manager is the mutant offspring of the Enquiry Database: whereas the Enquiry Database waits passively for an agent to search its listings, the Virtual Manager actively tugs on an agent's sleeve and tells them what it knows whenever one of the agent's current tenants applies elsewhere. And to be clear, the Virtual Manager does so because the agent has set it to, by 'flagging' tenants for email alerts – and this act of 'flagging' is not incidental to anything else.
Bring on the Residential Tenancies Act 2010. In contrast to the present patchwork, its regime of tenancy database regulation will apply to agents, landlords and tenancy database operators, set clear circumstances, reasons, and timeframes for listings and – correcting the most serious deficiency on the current regime – allow disputes about listings to be heard and determined by the Tribunal.
Wednesday, October 20, 2010
This is TICA's new 'Virtual Manager' service – a bit of software that TICA is selling to real estate agents.
Here's how it works:
- An agent enters their current tenants' names and other personal info into the Virtual Manager, and 'flags' them.
- Whenever one of these tenants applies for a tenancy with another TICA agent (and the agent does a search of TICA's database), an automatic email alert is sent to the current agent. The email alert contains the location and contact details of the agent who took the application.
In other words, the Virtual Manager tips off the agent when a current tenant applies elsewhere. This is a gross invasion of a person's privacy. When a tenant decides to move out, the agent is entitled to receive a termination notice. They are not entitled to receive prior email alerts and tip-offs.
The potential consequences of the Virtual Manager tip-off service are worrying. Having received the email alert, the current agent might then contact the other agent and cruel the tenant's application, or take some other form of revenge (no repairs, bothersome inspections, etc, etc). A particularly creepy agent (or indeed, anyone who should get their hands on the service) might also use it to receive email alerts about the possible movements of ex-girlfriends, spouses, etc. But even where it is not abused like that, this service, in its ordinary operation, tells agents about things that are none of their business.
TICA boss Philip Nounnis says TICA cannot police the way agents use the Virtual Manager – nor can the Government, because the Virtual Manager is an 'internal database' for each agent who buys it, and internal databases are excluded from the current regime of tenancy database regulation and, for that matter, from the soon-to-commence Residential Tenancies Act 2010.
With due respect to Mr Nounnis, the Tenants' Union disagrees. It's not 'internal.' Each application of the Virtual Manager is intergrated with TICA's other databases. (After all, where do the email alerts come from? How does the system know to send an email alert about any particular person?)
Our view is that any NSW agent who enters a tenant in the Virtual Manager and flags them for email alerts is listing them on a tenancy database in breach of the Rule of Conduct under the Property, Stock and Business Agents Act and, when the new Residential Tenancies Act 2010 commences, in breach of that Act too. The NSW State Government should act now to make it clear to agents that using TICA's Virtual Manager in this way is unlawful.
Thursday, October 14, 2010
One of the things this Regulation will do is provide a standard form of residential tenancy agreement, so that landlords (who are responsible for preparing written agreements) don't fall prey to unscrupulous solicitors, who might charge a fee for their "agreement preparation" services...
They wont have to, because an already prepared agreement will be coming to a website near you (sheer genius!) Or so we hope.
We think this is a good idea, because we'd hate for landlords to find an excuse to put the rent up. But, because we like to be cautious, we've gone over the proposed standard form agreement with a fine tooth comb, to see if it includes anything untoward, or just plain silly.
We haven't been disappointed...
"The tenant agrees, when this agreement ends, to make sure that all the light globes on the premises are working" (cl 17.5). "The landlord agrees that all light globes on the residential premises are working on the commencement of the tenancy" (cl 18.2).
One can only assume that the agreement will come with instructions on how to repair a broken light globe. If not, perhaps the smart thing to do will be to pack up all your light globes and take them with you when you move. Chances are, you'll be needing them.
Aside from that, there's not much to report on the silly side.
... But the proposed standard form agreement could go a little way towards mitigating the damage a tricky provision of the Residential Tenancies Act 2010 might do. Section 19 of the Act prohibits some additional terms from being included in residential tenancy agreements, and it specifically mentions professional carpet cleaning. This puts into legislation a consistently held view that carpets only need to be cleaned if they were clean to start with, but they're not clean at the end of the tenancy...
There was a last minute amendment to section 19, which unfortunately didn't receive any discussion when the Act was debated in Parliament. If your landlord lets you keep an animal, they can insist that you clean the carpets when you leave. This could apply regardless of whether your animal is a goldfish, or a raging bull.
To make matters worse, it also doesn't matter where your animal sleeps, or how dirty the carpets were to begin with. It is a bizarre piece of law, representing the unholy union of two quirks - pandering as it does to the fascination some landlords have with tenants keeping pets, and an obsession many real estate agents have with steam cleaned carpets...
The standard form residential tenancy agreement represents our best opportunity to reign this provision in. To achieve this, the proposed "pets clauses" (cl 42 & 43) in the draft Regulation will need a fair bit of work. If Fair Trading NSW can find a way to limit the use of "carpet cleaning" clauses, by incorporating sensible terms in the standard form residential tenancy agreement, then they should be well and truly congratulated. We shall have to wait and see.
Monday, October 11, 2010
Q. With the new Residential Tenancies Act 2010 (NSW) to commence soon, the old Residential Tenancies Act 1987 (NSW) will be repealed. In its 21 years of operation, how many private market tenancies have been created under the 1987 Act?
Good question, Dr Mowbray!
Like all good tenant advocates, Dr Mowbray never asks a question without already knowing the answer, and he has shared the answer with the Brown Couch. We won't share it with you yet, however; first, we'd like to hear your guesses.
And in a first for the Brown Couch, there's a prize for the closest guess: a DVD of the tenurially significant 1990 landlord-tenant horror-thriller, Pacific Heights.
('They wanted a tenant in the worst way. And that's what they got.')
And so we're clear, the number we're taking as the answer is the number of rental bonds lodged over the period from the first quarter of 1990 (remember, the 1987 Act did not commence until late in 1989) to the June quarter of 2010 (or as close as we can get to the present date).
(A true pedant might object that bonds lodged does not equal tenancies commenced, because a few landlords wrongly don't lodge bonds, and a very few don't ask for them. If your guess is backed by a better method of approximation than our's, let us know.)
Wednesday, October 6, 2010
(a) stoutly refuse her entry – she's trespassing; or
(b) pull out the sofa bed – you've got a new housemate.
If you answered (a), good on you for sticking up for yourself, but legally you're wrong. The law says the correct answer, bizarrely, is (b).
(And if your landlord's estranged wife and co-owner looks like settling in for an extended stay, consider investing in a Tent Sofa – yes, they do exist.)
In a case like this, the law says each of the co-owners starts off with a right to possession of the premises (but not to the exclusion of the other), and when one of the co-owners enters into a residential tenancy agreement, that co-owner's right is passed to the tenant – and the other co-owner's right remains with that co-owner. Under the terms of the residential tenancy agreement, the tenant's right is exclusive of the co-owner who granted it, but it is not exclusive of the third party co-owner (it wasn't exclusive in the first place – that is, when it was in the hands of the first co-owner – and it cannot be now).
The third party co-owner's right is not exclusive of the tenant either; but they don't owe the tenant any obligations as far as the tenant's quiet enjoyment of the premises are concerned. Not being a party to the residential tenancy agreement, the third party co-owner cannot terminate it either (nor, for that matter, are they entitled to any of the rent paid by the tenant – that goes just to the co-owner who granted their own right to occupy to the tenant).
This pop quiz scenario has actually occurred once that we know of: the strange, sad case of Catanzariti v Whitehouse, where a landlord's estranged wife and co-owner really did move in with a tenant. (As the Federal Court records, 'initially against [the tenant's] will.' However, the tenant, 'being uncertain of his legal position, agreed to allow her to return to the house and occupy one of its rooms. She made certain re-arrangements to the disposition of the furniture and other chattels in the premises to enable her to do this.) The case ended up in court when these 're-arrangements' went as far as the tenants' sheets and crockery being thrown into the backyard, where the dog got at them. And the Court held: the estranged wife had a right to occupy the premises, and she owed no obligation to the tenant in relation to his quiet enjoyment. (The tenant was awarded some compensation for the damage to his linen and crockery as a matter of tort law – not anything to do with his tenancy).
This sort of thing, it must be said, would be a very rare occurrence, but the precipitating circumstances – that is, a co-owner getting left off an agreement – are probably a lot more common, so the potential for a Catanzariti v Whitehouse-style showdown may be quite widespread. To reduce this potential, the Tenants' Union is asking, in its submission on the draft Residential Tenancies Regulation 2010, recently circulated by Fair Trading NSW, for a requirement that landlords disclose all third party interests in rental premises. We expect that this would not actually result in very many third party co-owners being disclosed – rather, the effect would be that landlords would take greater care to ensure that all the co-owners are included in the tenancy agreement.
The TU will be commenting on more besides that – and to make your own comment, click on that link.
Tuesday, October 5, 2010
International Tenants Day was first declared in 1986 by the International Union of Tenants, which itself has roots in the 1920s.
Thursday, September 30, 2010
But when one of our spies at the Tribunal whispered this report to us, we just had to dish, dish, DISH!
Who is the dapper-dressing officer from Housing NSW who attended the Tribunal recently wearing a three-piece, pin-striped, lilac suit, complete with fob-chain and matching hat?*
Debate rages between the Brown Couch's style mavens as to precisely what look this brave soul is attempting to rock. Is he going for 'preppy', after Gossip Girl's own trust-fund bad-boy Chuck Bass?
Or is it the 'Wildean dandy' look?
Or zoot-suited Cab Calloway's 'high-steppin' pimp' look?
Or 'insane criminal genius'?
We await further sightings with bated breath.
In the meantime, this does raise a slightly more serious question: what to wear to the Tribunal?
This is a question that has vexed all sides: tenants, tenant advocates, landlords and landlords' representatives. Your correspondent used to appear regularly in the Tribunal as a tenant advocate and took care to wear a suit and tie (a confession: I even had a 'conciliation tie', in calming tones of blue, green and pink, and a 'hearing tie' of striking gold and red bars); however, for one of my colleagues (a very able advocate on the north coast), getting dressed up for the Tribunal meant putting on a pair of shoes.
I am aware of one instance of the Tribunal rebuking a Housing NSW officer for appearing without a tie; the officer retorted that he considered a tie to be an occupational health and safety hazard – a tenant might strangle him with it, the officer said. Perhaps a self-fulfilling prophesy. I also know of a tenant who proposed to wear to the Tribunal her Sydney Olympics volunteer uniform. For her, the volunteer uniform was a stronger statement of civic engagement than the traditional business suit, and so was appropriate attire as she engaged with the processes of law and justice as represented by the Tribunal.
The Tribunal's own enabling legislation provides that the proceedings before the Tribunal are to be 'determined in an informal, expeditious and inexpensive manner' (Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), s 3(c)). This is not really meant as a style tip, but it does indicate that expensive, formal attire is not necessary. Our advice is: neat and tidy.
* This is a rhetorical question. We know full well the identity of the officer and it will not be disclosed here.
Tuesday, September 28, 2010
For instance, about 3000 government managed properties are being transferred from HNSW into the hands of various Community Housing Providers (CHPs). In some cases even ownership of properties is being handed over, allowing some CHPs to do their own wheeling and dealing (as long as it's done in accordance with recent amendments to the Housing Act). This is great news for the sector, because it increases management portfolios and gives providers access to finance ... and potential for independent development and growth. Well, so goes the theory.
Of course it would be a disaster for the Government if, after handing over a whole bunch of their properties, the community housing sector fell apart. Given the rate of growth and the additional responsibilities some providers are expected to take on, that's not so far fetched. Thankfully, our clever politicians have already thought about this, and have devised a cunning plan. To make sure it doesn't all end in tears, a new 'Regulatory Code for Community Housing Providers' now applies to all CHP who receive Government assistance (such as funding or housing stock). To make sure all CHPs religiously follow the Code, the Government has created the office of Registrar of Community Housing, to keep an eye on things.
Established in May 2009, the Registrar was given two years to make sure all affected CHPs are properly registered. In order to register (and hang on to their government assistance), CHPs are required to meet the Code's 8 performance criteria - these are mostly about sound money management and good corporate governance, but 'fairness and resident satisfaction' also gets a mention. Once registered, CHPs must continue to meet these expected standards. If they don't, the Registrar can cancel their registration and force them to give back government funding and/or housing stock.
The two-year registration phase will soon be up, so the focus is now shifting to compliance. In fact, the Registrar has just released a draft 'Compliance Framework' for consultation. It outlines a risk based approach to compliance, suggesting a scheme of regular and ad hoc compliance reviews, with a range of triggers for an unscheduled review. To have your say on the proposed Compliance Framework, you'll need to get your comments to the Registrar by November 10th 2010. Download the document for more information.
Monday, September 27, 2010
This post is just to bring together some links:
- Here's the CBA document in question (download);
- Here's Money Morning's Kris Stace on the problems with the CBA's evidence;
- Here's David Llewellyn-Smith (co-author, with Ross Garnaut, of The Great Crash of 2008) on the problems with the argument;
- Here's the ABC with an overview of the controversy, a defence of the CBA by its own Craig James, and some further criticism of the evidence and arguments courtesy of Morgan Stanley's Gerard Minack (whose own recent piece on house prices and affordability makes a good deal more sense than the CBA's).
Wednesday, September 22, 2010
Further to our recent post on Housing NSW eyeing off that $30 increase in the pension: the Brown Couch's colleagues at the Older Persons Tenants Service have received advice from Housing NSW that the NSW State Government is reconsidering whether it will include the $30 increase in rent rebate calculations. They'll let us know what the Government decides.
Pensioners and others in private rental, keep shelling out as usual.
Friday, September 17, 2010
Some media report that a smoke alarm in the house was broken and awaiting repair by the family's landlord, Housing NSW.
We make no comment on the accuracy of those reports, or on the actions of the parties involved. For the rest of us, it may be an opportune time to be reminded of the rules about smoke alarms.
1. Smoke alarms - you've got to have them. All residential premises (indeed, all buildings in which persons sleep) must have smoke alarms installed. It's the law. If you're a tenant, it's also a term of your tenancy agreement: ie the landlord will have smoke alarms installed and maintained. You need smoke alarms on each storey of the premises, and they need to be near the bedrooms.
2. If a smoke alarm is broken, get it fixed. If you're a tenant, tell the landlord to fix it. If they won't, or won't do it urgently, get a tradesperson yourself to fix it (as an urgent repair) and tell the landlord to reimburse you. Or apply to the Tribunal for an order directing the landlord to fix it.
If a smoke alarm has a flat battery, it's your responsibility to replace it. If you physically cannot replace it, it's then the landlord's responsibility to replace it - tell them to do so.
3. If a smoke alarm is not broken, don't break it. Disabling a smoke alarm (eg taking out the battery), except in the course of doing repairs to it, is an offence. It is also very stupid.
For more details, go to NSW Fire Brigades' web pages, or the TU's factsheet.
Tuesday, September 14, 2010
Congratulations to Senator Mark Arbib on his appointment as Minister for Social Housing.
However – and no disrespect to the new Minister – it is disappointing that neither he nor another of his colleagues is 'Minister for Housing'.
This portfolio, which was reinstated by the previous government and held by Tanya Plibersek after its long absence under the Howard government, has once again gone missing. After this afternoon's swearing in, Jenny Macklin will remain Minister for Families, Housing, Community Services and Indigenous Affairs, as she was in the previous government, and Tanya Plibersek will be Minister for Social Inclusion and Minister for Human Services. Senator Arbib takes the new, narrower portfolio of Social Housing and Homelessness, along with Sport and Indigenous Employment.
I hope this isn't a sign that the new Federal Government intends to abandon the wide view of housing policy represented by the previous Minister's more widely-defined portfolio, which encompassed homelessness, social housing, housing affordability and even the landlord-tenant legal relationship. I hope it isn't a sign that social housing policy will once again be cut off from wider housing policy, or that social housing providers will have to retract from their only-just-emerging role in the wider provision of housing.
Let's try to be optimistic. Here's hoping the newly reappointed Prime Minister and Treasurer each see themselves as Housing Ministers, and begin to reset the policy levers at their command – those of tax policy – from their present pro-speculation, pro-inflation settings, to instead make housing more affordable for renters and would-be owner-occupiers.
Thursday, September 9, 2010
When you do check it out, don't miss Mike Darcy's excellent defence of public housing and critique of 'social exclusion', which is linked in the main article (to make sure you don't miss it, here's the link directly).
And while you're there, have a look too at a slightly older report by 4 Corners, 'The Last Chance Motel'. This report aired this time last year, and it's a brilliant, if searing, illustration of one of the points made by Mike Darcy: that getting into social housing saves many households from much worse poverty, dislocation and 'exclusion', and that we really need so much more of it.
Saturday, September 4, 2010
In its first season, public housing was front and centre in the storylines of Good Times: indeed, the very first pilot episode introduces us to the Evans family as they are about to be evicted for rent arrears. When we meet them, family matriarch Florida has only just gotten back to work after an operation, and her husband, James Snr, has been misled by a bumbling housing official as to the state of their rent account. The welfare office won't help: hardworking James Snr doesn't earn enough to cover the arrears, but he does earn just too much to qualify for assistance. The Evans children, James Jr ('JJ'), Thelma and Michael, consider raising the required funds by illicit means – Florida puts a stop to that – and James Snr sees nothing else for it but to pick up his pool-cue and do a little hustling. He comes through, the arrears are paid and the tenancy is saved; righteous Florida accepts this with equanimity.
In subsequent episodes, the Evanses would contend with broken down elevators and heating, pompous, ignorant housing administrators and, in the episode 'Springtime in the Ghetto', with the peculiar institution of a public housing 'best kept apartment' competition. In that episode, Florida is torn between the imperative to impress the judges with her tasteful furnishings, and Michael's attempts to rehabilitate Ned the Wino, the neighbourhood alcoholic – a metaphor, perhaps, for the tensions in public housing's own historical missions of maintaining orderly appearances and rehabilitating disorganised, disorderly subject populations.
As the series went on, Good Times changed rather a lot (like another tenurially significant American sitcom), with James Snr, then Florida, leaving the show, then the remaining family members moving out of the public housing project altogether, and catch-phrases eclipsing commentary. But those early episodes were significant – especially considering their timing.
As we saw in a previous tenancy culture study, through the 1960s and 1970s a new movement of social scientific investigation had uncovered the persistence of poverty amidst the prosperity of the postwar period. The first response was to call for this to be addressed by extensions to government programs of social security and urban renewal. By the early 1970s, however, this investigative attention had turned to focus on the role of those very programs of government in the production of hardship and strife amongst poor households. So, for example, Lee Rainwater's classic 1970 study of the infamous Pruitt-Igoe public housing project in St Louis, Missouri, Behind Ghetto Walls – pointedly subtitled 'black families in a federal slum' – described the project's grim towers as 'condensing into one 57 acre tract all the problems and difficulties that arise from race and poverty and all of the impotence, indifference and hostility with which our society has so far dealt with these problems'.
These sorts of criticisms came from a radical progressive perspective but, in the seismic shifts in economics and politics in the 1970s and 1980s, these arguments were also taken up by the new Right and the ground beneath a range of social programs, not least public housing, shifted too. In 1972, Pruitt-Igoe was demolished; in 1973, President Nixon instituted a one-year moratorium on public housing; construction resumed modestly towards the end of the decade, but fell away again in the 1980s. Between 1995-2004, 115 000 units of public housing in the United States were demolished, including most of the Cabrini-Green project.
None of this account is meant as a recrimination against those early investigators and activists; rather, my point is to highlight how admirably Good Times encompasses both a critical position against the ways in which public housing was designed and administered, and a respectful acknowledgment of the place of public housing in the lives of many households. The Evanses make a home of their apartment, and it helps hold them together; James Snr and Florida also remember that mid-twentieth century private rental often meant a flat without hot water or its own bathroom. The title 'Good Times' is partly ironic, but only partly.
Wednesday, September 1, 2010
Housing NSW is about to do one of its regular reviews of tenants' incomes, and this time round it has got its eyes on that $30 per week increase in the pension that the Federal Government bestowed last year. At that time, after a campaign by pensioners and some indications by the Federal Treasurer of strong annoyance at the prospect of State Governments getting their hands on a slice of the largesse, the $30 was quarantined from inclusion in the assessment of households' incomes for the purposes of calculating rent subsidies.
But not anymore. So, from next month, a quarter of that $30, plus a couple of cost-of-living increases on top of it, will go to Housing NSW in rent – an additional $9 per week or so, for a single pensioner.
Ah well. It is easy to give Housing NSW a hard time about this, but we should spare a thought for pensioners in private rental housing. On my back-of-an-envelope calculation (based on a 'low-income' median rent in the September 09 quarter of $248 per week, and the rents component of the CPI increasing 3.1 per cent in the nine months since then), these renters' landlords have already taken their quarter of the $30 increase.
In 2007-08 there were about 117 000 private renter households across Australia whose income came solely from government payments, and who were paying more than 30 per cent of their incomes in rent. Forty-two thousand of them were paying more than 50 per cent.
UPDATE 22/9/10: Public housing pensioners, hang on to your pocketbooks. The Brown Couch's colleagues at the Older Persons Tenants Service have received advice from Housing NSW that the NSW State Government is reconsidering whether it will include the $30 increase in rent rebate calculations. They'll let us know what the Government decides.
Pensioners and others in private rental, keep shelling out as usual.