Submission: Residential Tenancies Bill 2009
Submission: Residential Tenancies Bill 2009
The Tenants' Union of NSW (TU) welcomes the opportunity to make this submission on the draft Residential Tenancies Bill 2009 (the draft Bill).
We make this submission as the peak non-government organisation for tenants in New South Wales and the State's specialist tenancy community legal centre, and on behalf of the State-wide network of Tenants Advice and Advocacy Services.
In this submission we have taken a practical, technical perspective on the draft Bill. By this we mean that we accept that at this late stage in the long-running review of the State's residential tenancies laws, the State Government has a more or less settled view of what it wants to achieve with the passage of the draft Bill.
Our comments, therefore, are mostly directed at those provisions of the draft Bill that will have unintended consequences, or that are unclear or inconsistent, or that will not work. Not all of our comments, however, are critical: we also note where the draft Bill would fix defects in the current law. Indeed, our overall assessment of the draft Bill is that most of the changes it would make are improvements on the current law.
From this practical, technical perspective, we submit that the following provisions of the draft Bill most need to be changed:
- Access in the event of sale (clauses 53, 55 and 58). The Government intends that landlords, agents and tenants will make agreements about schedules of access, but this intention is undermined by provisions that would allow landlords and agents to access premises far too readily and threaten tenants with fines if they object.
- Goods left behind (clause 130). The provisions would allow landlords to take former tenants' goods, or dispose of them without regard to their value, after 14 days. Goods of value should be sold for fair value and the proceeds accounted to the former tenant.
- Tenancy databases (Part 11). Provisions relating to tenancy databases are very welcome and their objectives are sound; in numerous respects, however, these provisions need tightening up.
If you have any queries about any of the matters raised in this submission, please do not hesitate to contact Chris Martin, Senior Policy Officer, and Ned Cutcher, Policy Officer, by phone on 8117 3712, or by email at email@example.com.
Part 1: Preliminary
For practical purposes, the most important provisions in Part 1 of the draft Bill are those relating to the question of which persons, premises and agreements are excluded from the legislation. The draft Bill would exclude almost all those excluded from the current Act, and creates several new exclusions too. This makes all the more urgent the need for legislation that provides for occupancy agreements covering all residential renters who are otherwise excluded from residential tenancies legislation.
Part 1: Preliminary
For practical purposes, the most important provisions in Part 1 of the draft Bill are those relating to the question of which persons, premises and agreements are excluded from the legislation. The draft Bill would exclude almost all those excluded from the current Act, and creates several new exclusions too. This makes all the more urgent the need for legislation that provides for occupancy agreements covering all residential renters who are otherwise excluded from residential tenancies legislation.
We note the inclusion of a definition of 'tenancy', which distinguishes the right of occupation (that is, the tenancy) from the agreement under which the right is granted. This distinction is quite correct, but we do not think it is very useful or necessary for most purposes of the draft Bill, and it may lead to some unnecessarily difficult formulations: see, in particular, our comments on Part 5 of the draft Bill.
We submit that it may be useful to include here a definition of 'transfer', per our submissions in relation to clause 74 and, in particular, the question of the transferor's liability. We also submit that those words defined elsewhere in the draft Bill (for example, at clause 80) could usefully be included at clause 3.
7 Premises to which Act does not apply
We note the new exclusion of serviced apartments (clause 7(1)(c)); backpackers' hostels (clause 7(1)(e)); and premises where the predominant use is for purposes of trade, profession, business, agriculture (clause 7(1)(h)).
8 Agreements to which Act does not apply
- Clause 8(1)(c) rewords the exclusion of boarders and lodgers at s 6 of the current Act; we consider that the new wording is consistent with the common law definition.
- Clause 8(1)(d) excludes 'refuge or crisis accommodation'. We submit that this exclusion should refer specifically to refuge or crisis accommodation provided under the Supported Accommodation Assistance Program. A private landlord who lets premises to a person or household because they would otherwise be homeless should be covered by the Act. (And, similarly, accommodation that is provided by SAAP services and that is not refuge and crisis accommodation should be covered by the Act; some SAAP services provide medium-term self-contained accommodation that is in most respects little different from a mainstream residential tenancy, except that there are some additional support services available.)
- Clause 8(1)(h) extends the period of the holiday purpose exclusion from two to three months, so old-fashioned holiday-makers who take a house for the season would be excluded. We think this is appropriate, and that the relevant period should certainly not be any longer than three months. We note the draft Bill omits the unsatisfactory exclusion relating to premises 'ordinarily used for holiday purposes' (s 6(2)(c)) – a worthwhile reform.
- Clause 8(1)(j): the exclusion of leases for a term 'that exceeds 99 years' should be reworded to refer to a term 'of 99 years or more.'
- Clause 8(2) is clear enough insofar as it excludes 'residential tenancy agreements to which the Residential Parks Act 1998 applies', but the meaning of the subsequent clause, 'or to any moveable dwelling for which such an agreement is required', is unclear. We are advised by Fair Trading NSW that it does not intend to change the current law in relation to the coverage of moveable dwellings. Consistent with this intention, we submit that the second part of the clause should be deleted.
9 Employee and caretaker arrangements
This would usefully make clear that caretaker agreements, and agreements for labour instead of money, would be covered by the Act.
10 Application of Act to residents in shared households
This would specifically exclude residents of 'shared households' (that is, premises that are subject to a written agreement but which are occupied by persons who are not named in the agreement: clause 10), except in certain circumstances set out at clause 10(a) and (b). We note with concern that amongst those who would benefit from this exclusion are some of the very worst landlords: that is, persons who headlease premises and sublet them to numerous others – particularly international students with little understanding of the law and market conditions – on exploitative terms, often sleeping several to a room. We submit that this provisions should not be implemented until such time as there is established a legislated regime of occupancy agreements for persons otherwise excluded from residential tenancies legislation.
11 Declarations by Tribunal
This would be a useful provision, albeit in a minor way.
Part 2: Residential tenancy agreements
Many of the provisions in this part of the draft Bill would represent improvements on the current law. They would more clearly and directly articulate the definition of a residential tenancy agreement, and strengthen the position of tenants who are not provided with written agreements (except, as previously noted, those in shared households). They would provide a clear process for obtaining a written agreement by allowing tenants to apply to the Tribunal for an order that their landlord provide one. They would clarify and strengthen the law such that certain terms cannot be written into residential tenancy agreements.
Division 2 contemplates the establishment of 20-year residential tenancy agreements, and allows for certain mandatory terms to be excluded from such agreements. We do not support the exclusion of mandatory terms from residential tenancy agreements, and are doubtful that these provisions will encourage the establishment of long-term fixed term tenancies. However, we do not envisage any technical difficulties with these provisions as they appear in the draft.
14 Landlord's obligation to ensure written residential tenancy agreements
This clause will clarify and strengthen a landlord's obligation to provide a written residential tenancy agreement. Under clause 14(3) an oral agreement is presumed to be for a fixed term of six months. We support this development.
16 Written residential tenancy agreements – Tribunal orders
This clause provides tenants with the right to apply the Tribunal for an order that the landlord prepare and enter into a written agreement. We support this development.
18 Fixed term agreements to continue after end of term
This clause is a restatement of section 14 of the Residential Tenancies Act 1987, although it is reworded in such a way as to create potential difficulties with interpretation. We suggest these could be avoided if the clause were reworded as follows:
If a residential tenancy agreement for a fixed term is not terminated on or before the end of the fixed term, the residential tenancy agreement becomes a continuing agreement and continues on the same terms as immediately before the end of the fixed term.
Note that we have not used the phrase 'periodic tenancy', as in clause 18(b); we submit that because residential tenancies legislation prescribes periods for notices of rent increase and termination, the 'period' of tenancies under continuing agreements is irrelevant.
19 Prohibited terms
We support the prohibition of each of the terms in this clause, and the provision for further terms to be prohibited by Regulation.
Part: 3 Rights and obligations of lanldords and tenants
For the most part, the proposed provisions of Part 3 represent sensible improvements to the law. We are pleased to see proposals that will give greater certainty to tenants and landlords when entering into, continuing and concluding residential tenancy agreements – particularly in those areas that the current law does not address particularly well: holding fees; method of rental payment; water and utility charges; rent increases; recovery of overpaid rent; liability of landlords who enter premises without the tenant's consent; recovery of costs for urgent repairs; alterations and fixtures; and locks and security.
However, Part 3 also includes some of the most disappointing proposals to appear in the draft Bill. We are concerned about the implications of provisions relating to a landlord's right of access, particularly those around the sale of premises. Under the proposed changes to the law, landlords and tenants will be encouraged to reach agreement as to 'periodical' access; but at the same time landlords will be entitled to enter with no more than 24 hours notice, and tenants may be guilty of an offence for not allowing access.
We understand from discussion with Fair Trading NSW that the intention is to provide for two types of access: periodic access – for the purposes of regular 'open home' inspections at pre-arranged times; and ad-hoc access, for those occasions where a prospective purchaser wishes to inspect a property at another time. We do not believe the proposals, in their current form, make this intention clear. We also consider the intention to be significantly undermined by allowing unrestricted ad-hoc access with a mere 24 hours notice, coupled with the inclusion of a penalty provision for tenants who 'refuse' access. Landlords will have no need to seek agreement, and tenants will be discouraged from attempting to negotiate, if the ability to threaten tenants with a $2 200 fine is handed to landlords and real estate agents as a bargaining chip.
Division 1 Pre-agreement matters
This Division will introduce new obligations onto landlords prior to entering into a residential tenancy agreement. We support these provisions. We suggest some amendments to ensure the proposals are given their intended effect, and to avoid the removal of rights and obligations that exist under the current law.
23 Limit on amounts payable by tenant before agreement
Clause 23(1)(d) will allow a landlord to require the cost of registering a residential tenancy agreement under the Real Property Act 1900. This clause should make it expressly clear that residential tenancy agreements with fixed-terms of less than three-years do not require registration, and that tenants are not compelled to register a residential tenancy agreement that is for a fixed-term of less than three years.
24 Holding fees
This clause represents a general improvement on the current law of 'reservation fees', with one exception. It would allow a landlord to retain the whole of a holding fee if the prospective tenant elects not to enter into a residential tenancy agreement. This is a departure from the current law, which ensures a tenant will be refunded a proportional amount depending on when they inform the landlord of their decision not to proceed (capped at seven days). The proposal in the draft Bill will result in windfalls for landlords. The clause should be reworded to reflect clause 12(1)(d)(iv) of the Residential Tenancies Regulation 2006.
We note also that the clause does not limit the amount that can be required as a holding fee. We suggest a holding fee should not exceed one week's rent.
26 Disclosure of information to tenants
This clause will be a welcome inclusion to the law.
- We support the principles of clause 26(1), and the balance it will bring to negotiation between landlords and tenants when entering into residential tenancy agreements. We note the clause will rely on regulation for much of its substance, and look forward to the opportunity to comment on any proposed regulations.
- Clause 26(2)(a) will require landlords to disclose to tenants if they have prepared a contract for sale of the premises, prior to entering into a residential tenancy agreement. The proposal is worded in such a way that the obligation to disclose an existing intention to sell the premises will be easy to avoid, by ensuring a residential tenancy agreement has commenced before preparing any contract for sale. However, such circumstances will be caught by clauses 53(1) and 102(1)(c) of the draft Bill, which we will discuss later. These clauses will combine to allow tenants to end the tenancy without compensation to the landlord if the landlord proposes to sell the premises. We suggest, then, that the benefit of clause 26(2)(a) will be in letting tenants make informed decisions about whether to enter residential tenancy agreements, knowing they may be disrupted by the landlord's attempts to sell the rented premises. Given that the only remedy for the landlord's non-disclosure of a proposal to sell the premises is that the tenant may move out, we suggest this clause should be a term of every agreement. This would enable tenants to seek compensation for their unanticipated relocation costs if the obligation is not met, and ensure landlords will comply more readily with the obligation.
- Clause 26(2)(b) will require landlords to disclose that their mortgagee is 'taking action for possession of the premises', where the mortgagee has commenced proceedings to enforce the mortgage. While this represents a substantial improvement to the current law, it will be of no assistance where a landlord suspects or knows that such action is imminent, although proceedings are not yet commenced. We suggest the inclusion of the words 'or if the mortgagee has made any demands in relation to non-performance of the mortgage agreement in the preceding six months' would adequately address this.
We also suggest the inclusion of an additional subclause requiring a landlord to disclose, in a more general way, any third-party interests in the property, such as should appear on a property register. This would include, for example, details of a mortgagee, any easements, or where the landlord shares ownership with a tenant-in-common or joint tenant. In relation to mortgages and easements, disclosure would help ensure that the tenant is aware of possible activities by the holders of these interests, and so help avoid disputes. In relation to tenants in common and joint tenants, the requirement of disclosure would in most cases prompt the landlord to go back and ensure that these persons are included as parties to the residential tenancy agreement, and so avoid the legal complications that arise when these persons are not parties. (We refer to the discussion of third party tenants in common and joint tenants in New South Wales v Koumdjiev  NSWCA 247, where the Court of Appeal indicated that where there is a third party tenant in common, this person retains their right to occupy the premises, and may not be excluded by the tenant under the residential tenancy agreement; and where there is a third party joint tenant, the grant of the tenancy under the residential tenancy agreement fails altogether.)
27 Names and addresses to be provided
This clause will improve the current law in that it simplifies existing provisions of the Residential Tenancies Act 1987, requiring landlords to provide tenants with a contact address. But while the provisions in clause 27(1) will remain unenforceable, those in clause 27(2) will be a term of every agreement and subject to a penalty. It makes little sense to impose penalties on the failure to ensure information is up to date, when there is no penalty for neglecting to provide the information in the first place. The proposed enforcement provisions should be applied to this clause in its entirety.
28 Tenant entitled to copy of residential tenancy agreement
We note there is no remedy available to a tenant who is not provided with a copy of their residential tenancy agreement. We suggest clause 28(1) should be a term of every agreement.
30 Condition report evidence of condition of premises
This clause may present a problem for the Tribunal in interpreting the meaning of the word 'evidence'. The clause should clarify that a condition report is 'mere evidence', or that it is 'evidence unless shown to be unreliable', to clarify that such a report does not always provide conclusive evidence of the state of repair or general condition of the residential premises at the commencement of a residential tenancy agreement. A condition report, which often creates confusion and misunderstanding as to its significance, should not be made the sole consideration for the Tribunal in determining so crucial a question as liability for cleaning or repairs at the conclusion of a tenancy, where other genuine sources of evidence are available.
31 Disputes about condition reports
We support the principle of inviting the Tribunal to intervene and resolve disputes about condition reports. However, the proposed provision at clause 31 does not restrict or limit the application an aggrieved party might make to the Tribunal, or guide the Tribunal as to what orders it can make if asked to do so. Such information is also absent from Part 9 of the draft Bill (Powers of Tribunal).
Division 2 Application of the Act
This Division will provide certainty on payment, collection, receipting and recording of rent. It will also clarify the law regarding payments of money other than rent, such as water usage charges. In general, we support these provisions. We suggest some amendments.
33 Payment of rent by tenant
- Clause 33(2) will be a welcome inclusion in the law. It will clarify that a tenant must not be required to pay more than two weeks rent in advance, or make advance payments of rent before the next payment falls due.
- Clause 33(3) will ensure that landlords cannot use rent money for any other purpose (such as for payment of water usage charges). This restriction on use of rent money already applies – the clause will simply bring an existing provision of the Landlord and Tenant (Rental Bonds) Act 1977 into the Residential Tenancies Act. This is a sensible inclusion.
34 Acceptance of rent by landlord
This clause will ensure that a landlord cannot refuse to accept the rent of a tenant who overstays a notice of termination. The clause will operate in conjunction with clause 89 (Termination and repossession on ground of non-payment of rent), which restricts a landlord's right to enforce termination of a tenancy on the basis of rent-arrears once the arrears are paid, or a payment plan is agreed to. Clauses 34 and 89 will be welcome improvements to the law.
35 Manner of payment of rent
We are particularly pleased to see the proposal of clause 35(2), which will ensure that tenants are always provided with a no-cost method of paying their rent. However, we are concerned that this may be undermined by clause 35(3), which may be exploited by landlords and real estate agents attempting to include 'agreement to change manner of payment' clauses in written residential tenancy agreements. In this way, tenants may unwittingly sign away their right to a free method of rent payment. The inclusion of the words 'subject to this section' at clause 35(3) could prevent this.
36 Rent receipts
Clause 36(3) presents a workable list of information to be included in a rent receipt. However, many landlords and real estate agents use the term 'in-hand' to reflect rent that is paid in advance but which is not enough to cover a full payment period (or, for that matter, any conveniently measurable period). This tends to complicate rental records and creates confusion – sometimes even conflict – when disputes about rent arrears arise. We suggest that, as a means of reducing this confusing and divisive practise, the list should include 'the date to which rent is paid' in place of 'the period for which rent is paid'.
We note also that no remedy is available to tenants who are not issued with proper rent receipts. We suggest that clause 36 should be a term of every agreement.
37 Rent records
We support this clause, as it will ensure the keeping of proper rent records is retained as a legal requirement for landlords. We note that the proposal provides no timeframe for the keeping of records – by implication landlords will be required to retain rent records indefinitely. We suggest a minimum timeframe of three years would be adequate.
We are particularly pleased to see the proposal at clauses 37(3) and 37(5), which will ensure that tenants are able to obtain copies of their records of payment or apply to the Tribunal for orders that one be provided. These will be welcome inclusions in the law.
38 Utility charges payable by tenant; 40 Payment of rates, taxes and certain utility charges by landlord
These two clauses operate together to clarify who is liable for various charges relating to use of the premises, other than rent and water usage. When read together, the proposals seem to ensure that tenants will be responsible for ongoing costs for the supply of services and utilities to the premises, while landlords will be required to provide and maintain the infrastructure necessary for supply. However, if each clause is read in isolation, they are apt to confuse. In particular, the wording of clauses 38(1)(a) and (b) refers to 'all charges ...', which is only later clarified by clauses 40(1)(b) – (d) to exclude charges other than charges for supply. The problem may simply be the order in which these two clauses appear in the draft Bill, and can be easily resolved by reversing their order. We suggest clause 40 should appear as clause 38, with current clauses 38 and 39 being renumbered to 39 and 40 respectively.
Further problems may arise from clauses 38(1)(c) and 40(1)(g), which refer to costs associated with the maintenance of septic systems:
- When the need for pumping out a septic system arises from a failure to maintain the system, it will be by breach of the landlord's obligations under Division 5 of Part 3 of the draft Bill (Repairs to premises). A tenant should not bear the cost of the landlord's breach, and we suggest clause 38(1)(c) have the words 'where the need does not arise from the landlord's breach', added for clarity.
- Some local government authorities may include pump-out services for septic tanks in their rates scheme. It should be made clear that, in such cases, the tenant is not required to contribute to the landlord's payment of council rates for this purpose.
We also note that, under the proposed regime, tenants would be required to pay for pumping out a full septic system regardless of when (and by whom) it was filled. To address this, landlords should bear an express responsibility to ensure that septic systems are pumped out prior to the commencement of any new tenancy, as part of their obligation at clause 52(1). This will generally be the departing former occupant's liability in any case, and the landlord's obligation would merely be one of oversight.
39 Water usage charges payable by tenant
Clause 39 makes a number of very worthwhile improvements to the current law. In particular, the requirement for premises to include water efficient appliances before water usage charges can be claimed, and the three-month limitation period for landlords to claim these charges (as well as a general tidy-up of the process for making a claim), will be especially welcome.
However, we note that similar problems could arise for tenancies where 'water is delivered to the premises by vehicle' as those with septic systems requiring pump-out services (although in reverse): tenants will lose the benefit of any stored water supplies if they are required to vacate before their water is consumed. This could be dealt with in two ways: an express obligation on landlords to ensure water tanks are full at the commencement of any new tenancy (in similar terms to that proposed for ensuring septic system pump-outs occur); or an express obligation to measure quantities of stored water at the commencement and termination of any residential tenancy agreement (to be recorded on the condition reports).
While clause 39(6) will ensure tenants can obtain any benefits available to their landlord with respect to water usage charges, it makes no attempt to enable tenants to claim discounts or benefits they themselves may be entitled to from a water supplier. This is disappointing.
41 Rent increases
This clause will be an improvement on the current law in that it will make certain, at clause 41(4), that a tenant is entitled to 60 days written notice of a rent increase even when terms of the increase are previously stipulated in the residential tenancy agreement.
We anticipate problems for those interpreting parts of this clause. It is unclear how the 12-month limitation period for applications to the Tribunal at clause 41(8) – for orders that a rent increase is not payable – will interact with clause 41(2), which says that a rent increase is not payable unless it complies with the section or is ordered by the Tribunal.
We note that the Tribunal is not specifically empowered to make any orders in the nature of those contemplated at clause 41(8). We also suggest the subclause could be reworded, so as to rely on fewer double negatives.
42 Rent increases under fixed term agreements
It is sensible to retain the requirement for landlords to set out the terms of any rent increase proposed to occur during the currency of a fixed term agreement. We support the innovation of simultaneously allowing and limiting rent increases for fixed term agreements exceeding two years, however we anticipate such agreements will continue to be rare.
43 Rent reductions
Clause 43 will retain and add certainty to the law relating to a tenant's right to reduced rent in particular circumstances.
We note clause 43(3) will encourage parties to agree to rent reductions where the landlord seeks regular access to show prospective purchasers through the premises. The subclause will add very little to the law, as it will not require anything of landlords or tenants, and will not be enforceable. It may give parties the impression that tenants may assign a value to, and trade away their right to privacy, in exchange for a reduced rent – a proposal that we would be pleased to discuss with the drafters of the Bill in more detail. However, later provisions in the draft Bill do not support such an impression. We suggest, in any event, it should be made clear that an agreed rent reduction should not in any way limit the tenant's rights under the residential tenancy agreement, regardless of the reason for agreement.
44 Tenant's remedies for excessive rent
The proposed provisions at clause 44 will marginally improve the law relating to disputes about rents and rent increases.
- We note that applications relating to withdrawal of goods and services are not subject to any limitation period, in the same way that applications following notice of increase are at clause 44(2).
- Clause 44(2) will not resolve the current issue for tenants who do not receive a proper notice of rent increase, and commence paying an increased rent. It is also unclear how this provision will work with the proposals at clause 41(2) and 41(8), discussed above.
- We note that, in contrast to clauses 43(1), 44(1)(b) and 44(3), which refer to 'goods, services and facilities provided with the residential premises', clause 44(4) makes reference to 'goods and fittings in, or connected with, a tenant's occupation of the residential premises'. We see no good reason for this sudden change in language, although we suspect it may in fact be of benefit to some tenants. However, we anticipate it will cause problems for those interpreting the provision.
- Clause 44(5) will make it clear that the Tribunal may consider a broad range of factors when determining questions of excessive rent, and will not be limited to the 'general market level of rent' test. We support this clarification.
- We suggest that a clause 44(6)(c) should be inserted, to include the words 'in the case of an order that a rent increase is excessive, sets the rental amount payable, unless and until it is increased in accordance with this section', to clarify that a successfully disputed rent increase does not automatically increase on the expiry of the Tribunal's order.
45 Remedies for reduction of rent on frustration of residential tenancy agreement
Clause 45(2) will give the Tribunal an express power to order the repayment of overpaid rent to a tenant, if the Tribunal has found that the rent should have been abated. We support this development.
46 Contravention of rent orders
Clause 46 will bring into the law some new penalties for landlords who contravene Tribunal orders relating to rent increases and excessive rent. We support this development.
47 Tenant's remedies for repayment of rent excess charges
A provision enabling tenants to apply to the Tribunal to recover overpaid rent and other charges is long overdue. Clause 47 will provide this. We support this development.
We note the clause does not extend so far as to allow the Tribunal to declare an amount of money not due and payable, or that a rent increase is not payable. We suggest these would be worthwhile inclusions for tenants, and should be considered.
48 Landlord may recover certain rent expenses
- Clause 48(1)(a) will enable landlords to claim the cost of replacing rent books or payment cards, if tenants lose them. On balance, we think this is fair enough. However, this provision is inequitable in that no account is taken of the age and projected life span of the item to be replaced.
- Similarly, clause 48(1)(b) will entitle landlords to recover amounts such as dishonour fees accrued through attempts to clear funds from a tenant's bank account. We think this provision should include the words 'on the day it falls due for payment', and expressly limit the number and frequency of occasions that attempts to clear funds can be made.
Division 3 Occupation and use of residential premises
This Division represents a significant reworking of various parts of the Residential Tenancies Act 1987. It provides a number of notable amendments to the existing law, but is predominantly concerned with altering the form of the current Act and making it more 'user friendly'. It presents as being easy-to-follow, and should be seen as a general improvement on the current law. However, there are some minor issues that need to be addressed.
50 Tenant's right to quiet enjoyment
We note at clause 50(3) the proposed expansion of the law to include a landlord's obligation to take reasonable steps to ensure that other tenants of the same landlord do not interfere with a tenant's peace, comfort and privacy. We understand this reflects the decision in the Ingram decision (Department of Housing v Consumer, Trader and Tenancy Tribunal and Anor  NSWSC 150), but we suggest that 'the landlord's other tenants' is too broad a definition for what is essentially a 'neighbour': we suggest 'the landlord's neighbouring tenants' instead. For a more detailed discussion on this point, please refer to our later comments concerning clause 90(5).
51 Use of premises by tenant
Clause 51 of the draft Bill generally restates the existing law relating to use of premises by a tenant, with one significant amendment: there are two new obligations at clauses 51(3)(c) and (d). According to these provisions, tenants will be required to 'leave the residential premises in a reasonable state of cleanliness' and 'remove or arrange for the removal from the residential premises of all rubbish' at the end of a tenancy.
Ideally, these obligations would already be covered by clause 51(3)(b) – which requires tenants to 'leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, as set out in any condition report applicable to the premises when the agreement was entered into', however it is not always the case that tenants take possession of 'reasonably clean' and 'rubbish free' premises.
We do not support these increased burdens on tenants, without an expressly stated reciprocal obligation on landlords to ensure that premises are 'reasonably clean' and 'rubbish free' prior to the commencement of any new tenancy. This could be very easily dealt with by tightening up clause 52(1), which we note does include an obligation on landlords to provide premises in a 'reasonable state of cleanliness', but does not require the removal of rubbish.
As with our earlier comments regarding septic system pump-out services, the landlord's obligation will generally be one of oversight only, and should be far from onerous. On the other hand, the failure of a landlord to oversee an outgoing occupant's obligation to leave the premises reasonably clean and rubbish free could leave an incoming tenant with two sets of costs – one at each end of their tenancy.
We note also that clause 52(1)(e) will prevent tenants from housing additional occupants that are not already contemplated by the residential tenancy agreement. We suggest this should be subject to a 'reasonableness' test – such as the capacity of the premises to accommodate the extra occupant/s – and should expressly allow for things like the introduction (or reintroduction) of children into the family unit. The TU occasionally hears from tenants whose joy on discovering that they are to have a baby has been a little diminished when they have realised that their residential tenancy agreement makes no provision for any occupants other than the tenants themselves.
52 Landlord's general obligations for residential premises
As discussed in our earlier comments regarding clauses 38, 39 and 51, we suggest clause 51(1) should be expanded to include the following provisions:
- An obligation that the premises be provided free of rubbish, or that arrangements have been made for the prompt collection of rubbish prior to the commencement of any new tenancy;
- An obligation to ensure that where premises have a septic system, the septic system has been pumped out, or arrangements have been made for the prompt pumping out of the septic system, prior to the commencement of any new tenancy;
- An obligation to ensure that, where premises have a stored water supply, either the water supply is restored to full capacity (or arrangements made to promptly restore supply to full capacity), or the amount of stored water is properly measured and recorded, prior to the commencement of any new tenancy.
We are pleased to see the very sensible proposal at clause 52(3), which could be used to cover health and safety obligations other than the provision of smoke detectors in rented premises, without any further need to amend the law. We suggest that it may be useful to provide an easily accessible summary of statutory obligations relating to the health or safety of residential premises on the Fair Trading NSW website.
53 Sale of residential premises
There are two new initiatives proposed by clause 53: an obligation on landlords to notify tenants of an intention to sell the residential premises (at clause 53(1)); and a direction that parties must reach 'reasonable' agreement as to when homes should be available for open inspections by prospective purchasers (at clauses 53(2) and (3)).
Clause 53(1) will require landlords to give tenants written notice of an 'intention to sell the residential premises before preparing a contract for the sale of the premises'. We support this development, but we are concerned that on the current wording of the provision it will be too easy to manipulate. Without including any kind of limitation period, landlords and real estate agents may simply insert standard 'intention to sell' clauses into residential tenancy agreements.
This would undermine the later proposal (at clause 102(1)(c)) to allow tenants to end a residential tenancy agreement if the landlord proposes to sell but did not disclose this prior to commencing the agreement. In order to avoid this, it will be necessary to clarify that a notice of intention to sell should not be provided to a tenant unless the landlord has a genuine intention to sell the premises, and is in the process of initiating a sale. Inserting the words 'no earlier than fourteen days' between 'sell the residential premises' and 'before preparing a contract for the sale' would adequately address this issue.
We note that of the three proposed provisions relating to the sale of the premises, only clause 53(1) refers to the landlord's 'intention' to sell. Clauses 26(2)(a) and 102(1)(c) refer instead to a 'proposal' or 'proposes' to sell. We suggest, for the sake of clarity, it should be made clear that a 'notice of intention to sell' under clause 53(1) amounts to a 'proposal to sell the residential premises' for the purposes of clause 102(1)(c).
While we do not support the proposed statutory right of 'open home inspections' that clauses 53(2) and (3) will bring into the law, we note that one major concern relating to such inspections – being the question of liability for theft or damage to property during open home inspections – will be partially mitigated by the proposal at clause 61(2). Regardless, we would prefer it if tenants were able to refuse to make premises 'periodically available for inspection by prospective purchasers' as we believe it is fundamentally unreasonable to require tenants to open their homes up to strangers in this way.
Tenants generally obtain no benefit from the sale of their homes, whereas landlords continue to obtain the benefit of rental income if tenants remain in place during the sale of their premises. The law will provide Landlords with adequate opportunities to sell their assets quickly and efficiently, without requiring such unnecessary disruption to tenants. We suggest, of course, that nothing in the law should prevent parties from reaching agreement as to open home inspections if they so choose, as long as tenants have an ultimate right of veto.
We note that there is no proposal at clause 55(1) to accommodate 'periodic access', such as is contemplated by clauses 53(2) and (3). We support this omission, as it ensures parties must reach agreement, and that access is not to be obtained without the tenant's consent. On the other hand, the Tribunal will be empowered by clause 60(1)(b) to authorise a landlord to obtain such access, and thus the requirement for consent is undermined.
Division 4 Landlord's rights to enter residential premises
This Division amends the current law in relation to a landlord's right to access rented premises. The provisions for landlords accessing premises to show them to prospective purchasers are probably the most disappointing and troublesome of the draft Bill. It envisages landlords and tenants making agreements as to the days and times for access but then undermines any negotiations by giving landlords everything they could possibly want: access on 24 hours' notice, without limit as to the number of visits, plus fines of up $2 200 for tenants who refuse to give reasonable access. Agreements as to access will only happen when landlords' rights of access are restricted and they have a reason to negotiate for more. Apart from this major concern, the draft Bill restates and clarifies the current law, with some amendments. There are some issues that need to be addressed.
55 Access generally to residential premises without consent
Clause 55 is predominantly a restatement of section 24 of the Residential Tenancies Act 1987, with the inclusion of some new provisions for access without a tenant's consent. There are three main concerns with this clause.
- Subclause (1)(f) will entitle the landlord to enter residential premises simply 'to value the property'. We submit that access for this purpose should be covered by subclause (1)(c), and (1)(f) should be deleted. Alternatively, if it is to be kept as a separate head the provision clearly requires some restriction and limitation: we suggest not more than once in any 12-month period, and with seven days notice. We also suggest that the subclause be reworded 'for the purpose of valuation of the property'.
- Subclause (1)(g) will entitle the landlord to enter residential premises if they have 'reasonable cause for serious concern about the health or safety of the tenant or any other person' on the property. We suggest that most landlords and real estate agents will be ill-equipped to make this kind of assessment, and the provision could result in detriment to both landlords and tenants. We view the provision as unnecessary, as the landlord will already be entitled to enter the premises 'in an emergency' (at clause 55(1)(a)).
- Subclause (1)(i) will entitle the landlord to enter the premises with a mere 24 hours notice, in order to show the premises to prospective purchasers or mortgagees. This proposal will undermine any provisions that are intended to encourage agreement between the parties as to access for the purpose of sale (see comments in relation to clauses 43(3) and 53(2) and (3), and we do not support it.
We remain of the view we put in our submission to the Government's 2007 proposals: that genuine negotiation as to access can happen only if a landlord's statutory right of access is limited; in other words, make access a scarce resource and let the parties bargain over whether there will be any additional access and rent reductions.
We suggest the following alternatives to the present provisions of the draft Bill:
- Allow access on 24 hours' notice only where there is an agreement between the landlord and the tenant as to the days and times when access may be required; or
- Provide that the rent abates to zero each day where a landlord or agent accesses the premises on 24 hours' notice; or
- Retain the access provisions from the current Act (access on 'reasonable' notice, on a reasonable number of occasions) – these provisions are less than satisfactory but, unfortunately, are preferable to those in the draft Bill.
58 Duty of tenant to give access to residential premises
Clause 58 is perhaps the most disappointing proposal to appear in the draft Bill. Should it be retained, its mere presence in the law will seriously undermine any intention to encourage parties to reach sensible agreements about access. We understand that the provision will, in reality, be somewhat restricted. But, regardless of this, we anticipate landlords seeking to impose unfavourable access regimes onto tenants will use it with great effect, to frighten them into submission.
We suggest it would be better to leave it to the Tribunal to give a remedy to landlords who are unable to obtain entry to their premises for a purpose sanctioned by this Division, following which penalties for failing to comply with Tribunal orders may apply.
59 Landlord must only enter premises in accordance with Division
Conversely, we are in strong support of clause 59, which proposes penalties for landlords who access premises unlawfully. Tenants are, in general, in a much weaker position when it comes to arguments about access, and this proposal will help to achieve some balance.
60 Landlord's remedies relating to access to premises
There are two concerns with the proposals at clause 60.
- Subclause (1)(b) will allow the Tribunal to authorise the landlord's entry onto premises for a purposes not contemplated by this Division, and for which a tenant's consent should be required. We do not support this development. For a more detailed discussion on this point, please refer to our comments about clauses 53(2) and (3).
- Subclause (1)(c) will allow the Tribunal to authorise the landlord's entry onto premises for the purpose of 'determining whether the tenant has breached a term of the residential tenancy agreement' – but the proposal does not appear to be supported by any direction to the Tribunal as to the inquiries it must undertake before making such an order. Quite aside from the issue of a landlord being put in a position to 'determine' whether or not a breach has occurred (a task that should of course be left up to the Tribunal), we do not support this provision. It would allow landlords to play detective, and is wide open to abuse by landlords.
If this proposal is retained beyond the draft Bill, we suggest the word 'determining' should be replaced with the word 'ascertaining'.
61 Tenant's remedies relating to access to premises
This clause will be a welcome improvement to the law. It will enable tenants to make proactive applications to the Tribunal for orders relating to the landlord's access to the premises without consent (at clause 61(1)). It will also go part of the way to resolving the question of liability for loss or damage to property when the landlord accesses premises without a tenant's consent (at clause 61(2)) – but it falls well short of offering a final solution. We suggest the proposal should include loss of the tenant's goods, and should also stipulate that tenants are not liable for damage to the landlord's property if caused by a party lawfully gaining entry without the tenant's consent.
Division 5 Repairs to premises
This Division makes some simple, yet significant improvements to the current law regarding repairs to premises. While the substance of the law is relatively unchanged, the inclusion of provisions relating to a landlord's general obligation, and giving clarification to tenants seeking reimbursement for urgent repair costs, is a welcome development. However, we are concerned that subtenants will not be entitled to 'urgent repairs'.
Clause 62 defines urgent repairs to specifically exclude work needed to repair premises not owned by the landlord. This will be bad for social housing tenants whose landlord head-leases properties, as well as subtenants generally. We do not support this exclusion.
63 Landlord's general obligation
- Clause 63(2) makes clear that landlords cannot avoid doing repairs simply because they let the premises in a state of disrepair to begin with. This reflects the current law, but making it express is worthwhile.
- Clause 63(3) would allow a landlord to refuse to do repairs where the disrepair is caused by the tenant. We submit that this provision does not serve the interests of tenants or landlords, because it may result in the state of repair of damaged premises deteriorating further and becoming more dangerous. We submit that the clause should provide that a landlord's obligation to provide and maintain premises in a reasonable state of repair extends to damage that was caused by the tenant's breach of the residential tenancy agreement, and that in such cases the tenant is liable to compensate the landlord for their reasonable repair costs.
65 Tenants remedies for repairs
We submit that clause 65(3)(a) is not consistent with the obligation on a landlord to repair defects and, as a result, is inappropriately restrictive of the Tribunal power to order that the landlord do repairs consistent with the landlord's obligation. A landlord is obliged to repair defects of which they know or ought to have known (Jones v Bartlett HCA 56 per Gummow and Hayne JJ, at par 173, emphasis added). We submit that that subclause 3(a) should be reworded to 'the landlord knew, or ought to have known, of the need for repair'.
Division 6 Alterations and additions to residential premises
This Division makes a sensible improvement to the current law, by allowing tenants to make minor or cosmetic alterations to rented premises, and clarifying the rights of both tenants and landlords when dealing with the removal of fixtures. We support these developments.
66 Tenant must not make alterations to premises without consent
Clause 66(1) stipulates that a tenant will require written permission before any alterations can be made to premises under this Division. We suggest that where a landlord gives consent, they should be required to do so in writing, but that oral consent will nonetheless be valid consent.
67 Removal of fixtures installed by tenant
Clause 66(2) will prevent a landlord from unreasonably refusing to consent to a minor or cosmetic alteration. We support this development, and suggest it could be usefully broadened to expressly include any alteration aimed at improving the energy and/or water efficiency of the residential premises.
Division 7 Security and safety of residential premises
This Division makes a sensible improvement to the current law by clarifying the rights and obligations of tenants and landlords regarding locks and security in a range of circumstances. This includes allowing locks to be changed after a co-tenant has vacated premises, or a final apprehended violence order prohibits a tenant or occupant from accessing premises. We support these developments.
70 Locks and other security devices
Clause 70(2) will limit the giving of keys/opening devices etc to named tenants only, with clause 70(3) requiring tenants to pay for additional copies. We suggest that, where a tenancy agreement allows a number of occupants that is greater than the number of named tenants (see clause 49(1)(e)) they should be entitled to free copies for all occupants who are not also named as tenants.
Part 4: Changes of landlord and tenant
This Part of the Bill would make a number of changes to the current law, the most significant being in relation to where a tenant seeks to transfer or sub-let their tenancy; where a co-tenant dies; and where a co-tenant is excluded from premises by an apprehended violence order.
74 Transfer of tenancy or subletting by tenant
We submit that this clause is sound, as far as it goes, but it should also provide more detail as to the form and effect of a transfer. In particular, we submit that the clause should provide that a transferor is required to put the transfer in writing and give copies to the transferee and the landlord, but also that where a transferor fails to do so the transfer is still effective.
We also submit that the clause should provide that where a transfer is effected, the landlord may not recover from transferor for liabilities arising after the transfer. Such a provision is necessary because at common law the transferor's liability to the landlord does not end upon the transfer: so, for example, if a tenant transfers their tenancy and the transferee breaches the obligation to pay rent, the landlord may sue the original tenant (the landlord may, alternatively sue the transferee and, if they do not recover all the rent owed, then sue the transferor for the remainder) (see the cases and discussion at Butt (2006) Land Law, fifth edition, LBC, Sydney: [15140-15141].)
75 Consent to transfer of tenancy or sub-letting
- Clause 75(1) would allow landlords to unreasonably refuse a transfer or subletting of the whole of a tenancy. We submit that there is no good reason for allowing landlords to behave unreasonably, and that the subclause should be deleted.
- Clause 75(2) prohibits landlords from unreasonably refusing a transfer or subletting of part of a tenancy. This is a sound provision.
- Clause 75(3) provides that it is reasonable for a landlord may refuse consent if they would not have accepted the proposed tenant for a new tenancy agreement. In so doing, it admits a contradiction to the clause, because a landlord may unreasonably refuse an applicant for a new tenancy agreement – a landlord is quite entitled to refuse a tenancy because they do not like the colour of the applicant's socks. We submit that this subclause should be deleted.
78 Death of a co-tenant
We welcome these provisions, which would help solve problems that may arise upon the death of a tenant, by ending the liability of the deceased co-tenant (clause 78(2)) and giving the remaining co-tenants the option of giving a notice of termination (clause 78(1), (3)). We see no technical problems with the provisions.
79 Change of tenants after AVO
The TU especially welcomes these provisions, which would assist victims of domestic violence in rental housing by providing that where a co-tenant is excluded from the premises by a final AVO, the co-tenant's tenancy is terminated, and a remaining occupant may be recognised as a tenant.
We submit that for complete clarity, clause 79(2) should expressly allow an occupant to be recognised as a tenant where 'a tenant or former tenant' is subject to a final AVO that excludes them from the premises; to that end, clause 79(2) should refer after the word 'if' to 'a tenant or former tenant, a co-tenant or former co-tenant, or another occupant or former occupant'.
Part 5: Termination of residential tenancy agreements
This Part of the draft Bill makes numerous significant changes to the current law, particularly in relation to landlords' terminations without grounds, terminations on the ground of rent arrears, new grounds for termination by tenants, termination of co-tenants' liabilities, and the introduction of a 'break fee'.
The TU is disappointed, but accepts, that the State Government has at this time decided not to abolish 'without grounds' notices by landlords. All the more disappointing, however, is that the draft Bill has not taken the opportunity for a preliminary reform – that is, expanding the prescribed grounds for termination to include the following:
- landlord or member of landlord's family is to reside in the premises
- premises to be changed to a non-residential use
- premises to be demolished
- premises to be repaired or renovated such that vacant possession is required.
The draft Bill could provide for termination notices on those new grounds as well as retaining 'without grounds' termination notices. Alternatively, it could replace 'without grounds' termination notices with 'any other ground' termination notices: that is, the draft Bill could require landlords to state the ground for termination in the termination notice, but do not limit the grounds to those prescribed in the Act. Neither of these approaches entails any disadvantage to landlords, but either would be a welcome step towards a fairer and more secure rental housing system.
We also note a problem in the terminology of this Part of the draft Bill. There are a number of puzzling formulations around the word 'tenancy', and one instance of 'tenancy' being used being incorrectly. The puzzling formulations uses include clause 86(3) ('the currency of the tenancy'); clause 87(3) ('the tenancy of a fixed term agreement'); clause 90(4) ('the term of the tenancy of the residential tenancy agreement'); clause 91(5) ('any term of the tenancy of the residential tenancy agreement'); and clause 94(3) ('the currency of the term of the tenancy of a residential tenancy agreement'). The incorrect use is at clause 84(1): 'the end of the tenancy' – this should be 'the end of the fixed term.' It appears to us that these puzzling and erroneous uses have arisen from unnecessary preoccupations with the common law concept of a lease as an interest in land for a term, and the distinction at clause 3 between the 'tenancy', being the right to occupy, and the residential tenancy agreement, being the agreement under which the right is granted.
We submit that it is not necessary or useful to insist that all tenancies under residential tenancies legislation are 'for a term'; and, at least in relation to the provisions in Part 5, it is wholly unnecessary to refer in each instance to the tenancy and to the residential tenancy agreement as distinct entities. It is sufficient, and much clearer, to refer to the residential tenancy agreement only, and where appropriate to distinguish between residential tenancy agreements for a fixed term and continuing residential tenancy agreements.
The definition of 'termination date' – particularly 'the day on which the residential tenancy agreement is terminated' – is inconsistent with clause 81 and may cause confusion (especially in old solicitors who assume that termination notices, like common law notices to quit, are sufficient to terminate tenancy contracts). We submit that the definition should read 'the day by which vacant possession of the residential premises is to be given such as to terminate the residential tenancy agreement.' As in our discussion of clause 3, we submit that all definitions found throughout the draft Bill should also be consolidated at clause 3.
81 Circumstances of termination of residential tenancies
We submit that clause 81(4)(e), which refers to termination with the landlord's consent, should include the proviso from current s 53(g), 'whether or not that consent is subsequently withdrawn'.
82 Termination notices
We submit that in addition to the elements at clause 82(1)(a)-(d), a termination notice should also be required to include a statement as to where the tenant can find further information about their rights and, where the termination notice is given on the ground of breach, particulars of the breach.
We also submit that clause 81(1)(b) should be reworded per our comment on the definition at clause 80.
83 Termination orders
We submit that this clause should provide, in addition to its current provisions, that the effect of a termination order is suspended for the period to the date for possession. This would settle the uncertainty under the current Act as to the rights and obligations of a former tenant holding over after a termination order.
For example, say the Tribunal makes a termination order and sets the date for possession some three months hence, and during that period a serious roof leak develops. If the effect of termination order were not suspended for the three-month period, the tenant, on the one hand, might not inform the landlord of the worsening defect, and the landlord, on the other hand, might leave the defect unrepaired. If the effect of the termination order were suspended, however, the tenant would be obliged to inform the landlord of the defect; the landlord would be obliged to repair it; and if the landlord did not do so urgently, the tenant would have the urgent repair provisions at their disposal.
Providing for the automatic suspension of the effect of a termination order to the date for possession is in the interest of both landlords and tenants.
84 End of residential tenancy agreement at end of fixed term tenancy; 85 Termination of periodic tenancy
These two clauses are the draft Bill's provisions for 'without grounds' terminations by landlords. Each would increase, relative to the current Act, the amount of notice required from 14 to 30 days (in the case of fixed term agreements) and 60 to 90 days (in the case of continuing agreements). These increased notice periods are significant improvements for tenants. They must, however, be weighed against the draft Bill's restrictions on the Tribunal's discretion in proceedings for termination without grounds; on balance, these provisions of the draft Bill do not improve tenants' security.
Under the current Act, the Tribunal has a discretion as to whether it will order the termination of a tenancy (this discretion is very rarely exercised in favour of tenants, but we think it probably helps discourage landlords from taking termination proceedings for unfair reasons); under the draft Bill, the Tribunal would have no option but to terminate the tenancy, and its discretion would be limited to determining how much time to give the tenant to move out.
This would make a 'without grounds' termination notice a trump card, so to speak, for the landlord. (There is, we note, an exception to this: where the tenant has been in occupation for 20 years, the landlord may not give a termination notice without grounds, but must instead apply directly to the Tribunal for termination orders, and the Tribunal retains its discretion in relation to the termination order: clause 94.) This makes termination notices without grounds more attractive to landlords, whereas we believe that the law should instead discourage, if not prohibit, their use.
There are some further technical problems with these clauses:
- Clause 84(1), (2): we believe the intention here is to allow landlords to give a 30 day notice for the termination of fixed term agreements either at the end of the fixed term, or shortly thereafter (that is, within 30 days of the end of the fixed term). However, on its current wording this provision may be interpreted as allowing a landlord to give a 30-day notice for the termination of any residential tenancy agreement that had had a fixed term, long after the fixed term has expired. The problem lies in the use of the words 'at any time'. We suggest inserting after 'at any time' the words 'before the end of the fixed term of the agreement'.
- Clause 84(1): we further submit that 'the end of the tenancy' should be reworded to 'the end of the fixed term.'
- Clause 84(4): to ensure that the Tribunal takes into account the circumstances of the case, the permissive 'may' should be replaced by the mandatory 'must'.
- Clause 85(1): we submit that 'a residential tenancy agreement for a periodic tenancy' should be reworded 'a continuing residential tenancy agreement.'
- Clause 85(4): the permissive 'may' should be replaced by the mandatory 'must'.
86 Sale of premises
We submit that 'the currency of a tenancy of a fixed term agreement' (clause 86(3)) should be reworded to 'the fixed term of a residential tenancy agreement'.
87 Breach of agreement
We submit that 'the end of the tenancy of a fixed term agreement' (clause 87(3)) should be reworded to 'the end of the fixed term of a residential tenancy agreement.'
89 Termination and repossession on the ground of non-payment of rent
The draft Bill would allow landlords to commence termination proceedings in relation to rent arrears more quickly, but would also entrench the principle that paying arrears, either in full or according to a repayment plan, will save a tenancy. Taken as a whole, the draft Bill's provisions are welcome, though in some respects further clarification is required. Termination proceedings would be quickened by allowing landlords to make applications to the Tribunal before the end of the period of the termination notice (clause 88(4)). We note that this may result in inefficiency at the Tribunal, because the Tribunal would have to list many applications that will not actually proceed.
Quickened proceedings may also mean the termination of tenancies that would otherwise be viable, which would be to the detriment of tenants and landlords. We consider that this concern is addressed by the clause 89(2) of the draft Bill, which provides that payment of the arrears in full or according to an agreed repayment plan causes the termination and, if one has been issued, the warrant for possession, to have no effect. This would mean, in other words, that even after proceedings in the Tribunal have been determined, tenants may still have some small amount of time to get their finances in order and save their tenancy.
The TU supports the intention that compliance with an agreed repayment plan should stop the termination of a tenancy, but it appears to us that clarification is required as to the consequences of failing to fully comply. We understand from discussions with Fair Trading NSW officers that the intention is that when a landlord and tenant enter into a repayment agreement, the landlord's proceedings should stop, and that if subsequently the tenant fails to comply with the plan, the proceedings may start again from the point at which they stopped.
So, for example, if parties enter into a repayment agreement after the service of a termination notice but before any application to the Tribunal, the landlord must not apply to the Tribunal so long as the tenant complies with the agreement, but should the tenant fail to comply, at that point the landlord may apply to the Tribunal – without serving another termination notice. Similarly, if parties enter into a repayment plan after the Tribunal has made a termination order, the landlord must not enforce the order so long as the tenant complies, but should the tenant fail to comply the landlord may then apply to for a warrant of possession.
The draft Bill does not make clear that proceedings may stop and start again in this way; we submit that it should. We also submit that there should be a time limit on proceedings starting again without a fresh termination notice: specifically, where the tenant's failure to comply comes more than three months after the repayment agreement is entered into, the landlord should start again with a new termination notice.
90 Serious damage or injury
We consider that this clause, like its counterpart s 68 in the current Act, would allow the Tribunal discretion as to whether to make the termination order. We submit that it would be helpful if the clause also included some guidance as to how that discretion might be exercised: specifically, by considering the circumstances of the case.
- Clause 90(4): we submit that the words 'whether or not the term of the tenancy of the residential tenancy agreement has ended' should be deleted and preplaced by 'including where the residential tenancy agreement is for a fixed term'.
- Clause 90(5) provides a definition of 'neighbouring property', which is helpful, but the scope of the definition, particularly as provided by clause 90(5)(b) – 'property owned by the landlord (wherever situated)' – is too great. This is especially so in relation to public housing tenancies, because the NSW Land and Housing Corporation owns a great deal of property throughout New South Wales. This definition would mean, for example, that a park on a public housing estate in Wagga Wagga is considered to be the 'neighbouring property' of a public housing dwelling in inner Sydney; it would also mean that an inner Sydney tenant could have their tenancy terminated immediately by the Tribunal because their son has committed an act of vandalism in the park in Wagga. This is far too tenuous a connection and defies the ordinary meaning of 'neighbouring'. We submit that clause 90(5)(b) should be deleted.
91 Use of premises for illegal purpose
We submit that there are a number of problems with the clause in its present form.
- Clause 91(1)(a) should include some express guidance as to how the Tribunal is to exercise its discretion: we suggest inserting before the final 'or' the words 'and that the use is sufficient to justify the termination', as in clause 91(1)(b).
- Clause 91(3) should be qualified by the proviso, at s 64(6) of the current Act, 'unless the Tribunal considers that it would be unjust to do so'.
- Clause 91(4) allows landlords to apply for termination orders on the ground of illegal use without first serving a termination notice. This is inconsistent with the other breach provisions in this Part of the draft Bill, and there is no good reason taking such a different approach. A termination notice may result in the tenant remedying the breach (such as by ceasing the use, or by expelling the occupant who is using the premises for an illegal purpose). We submit that a termination notice, giving 14 days notice and particulars of the breach, should be required.
- Clause 91(5): we submit that the words 'whether or not any term of the tenancy of the residential tenancy agreement has ended' should be deleted and preplaced by 'including where the residential tenancy agreement is for a fixed term'.
92 Tribunal may terminate residential tenancy agreement for threat, abuse, intimidation or harassment
This clause incorporates s 68A from the current Act, but unlike s 68A these proceedings would be available to all landlords, not just Housing NSW. We submit that s 68A already goes too far – we note that according to the explanatory memorandum that accompanied its introduction in 2004, 'harassment' was intended to include repeated phone calls – and that the availability of these excessive provisions should not be expanded in the draft Bill.
We also submit that clause 92 should include some guidance as to how the Tribunal is to exercise its discretion in these proceedings, particularly by requiring the Tribunal to consider the circumstances of the case.
Clause 92(4): we submit that the words 'whether or not any term of the tenancy of the residential tenancy agreement has ended' should be deleted and preplaced by 'including where the residential tenancy agreement is for a fixed term'.
95 Hardship to landlord
As with the previous two clauses, we submit that the words 'whether or not any term of the tenancy of the residential tenancy agreement has ended' (clause 95(5)) should be deleted and preplaced by 'including where the residential tenancy agreement is for a fixed term'.
94 Termination of long term tenancies
As indicated in our general comments on this Part of the draft Bill, this clause preserves the Tribunal's discretion in termination proceedings under s 64 of the current Act, but only where the tenancy has been on foot for 20 years or more. In the TU's experience, there are very few tenancies in the private market that have lasted 20 years or more, and we submit that a tenancy of 10 years or more should be regarded as a long term tenancy for the purposes of the clause.
We note that this clause provides for applications directly to the Tribunal without the landlord first serving a termination notice. We understand that this is intended to be a safeguard for long-term tenants, because termination proceedings in relation to these tenants would always attract the oversight of the Tribunal.
- Clause 94(3): we submit that 'the currency of the term of the tenancy of a residential tenancy agreement' should be reworded 'the fixed term of a residential tenancy agreement'.
- Clause 94(4)(a): the permissive 'may' should be replaced by the mandatory 'must'.
96 Landlord's remedies on abandonment
Clause 96(1): we submit that this clause should be reworded to clarify that the occupation fee (clause 96(1)(b)) is payable only if the landlord stores the tenants uncollected goods at the premises for longer than the period covered by the break fee (clause 96(1)(a)). On its present wording, this clause would allow a landlord to claim both a break fee and an occupation fee for the period following a tenant's abandonment, which is effectively double-dipping.
For example, say a tenant abandons their tenancy in the second half of the fixed term, and leaves their goods uncollected at the premises (to be disposed of by the landlord per clause 130). This would mean that two weeks after the abandonment, the landlord would be able to claim a total of six weeks' rent under clause 96(1) as it is currently worded, as well as having the premises vacant and available to for immediate reletting. This is excessive.
Clause 96(1)(b) has a further problem: on a strict reading, it appears to provide for a daily occupation fee that is fourteen times the daily rent (so, to use again the example above, two weeks after abandonment the landlord could claim a break fee of four weeks' rent plus an occupation fee of 196 days' rent – 32 weeks' rent in total!) We submit that the clause should be reworded to make clear that the occupation fee is equivalent to the rent, calculated on a daily basis, and is limited to 14 days.
97 Occupants remaining in residential premises
This is a new provision, which would allow landlords to give a 14-day notice of termination to non-tenant occupants of premises where the tenant no longer resides at the premises (for example, where the tenant has died, or where the premises are a sharehouse from which the original tenant has moved out.) We note that under the current Act, the proper course for the landlord is to give a notice of termination addressed to the tenant or (if the tenant is dead) their representative; depending on the manner of the tenant's departure, it may be a notice 60-day termination notice, or a 14-day termination notice on the ground of breach (subletting without permission).
In practice, however, many landlords treat the tenancy as already ended and warn the occupants off. On balance, therefore, the clause is an improvement on the current law because it sets out a single clear procedure to be followed, and requires the notice to go to the occupants, not the departed tenant. We submit, however, that it may be useful to clarify that clause 97 does not apply where the tenant has transferred their tenancy to an occupant.
98 End of fixed term agreement at or before end of term of tenancy
The TU considers the draft Bill's introduction of a 'break fee' to be a very worthwhile reform that would simplify the settlement of a tenant's liabilities where they have to end a tenancy early.
There are, however, a number of problems with the draft Bill's provisions. The first is the way in which clause 98 combines provisions relating to the termination of tenancy at the end of the fixed term with termination during the fixed term. The latter is a breach that may cause losses to the landlord for which the tenant may be liable; the former is not a breach and there is no question of loss or liability. We submit that it would be clearer to separate the provisions in relation to terminations at the end of a fixed term from those in relation to terminations during a fixed term.
We also submit that the requirement that of a 14-day notice of termination (clause 98(1) and (2) should apply only in relation to terminations at the end of the fixed term. Conversely, there should be no requirement that a tenant give a notice of termination where they are terminating the tenancy early: this unnecessarily complicates the process for terminating early that the break fee otherwise helps to simplify. In particular, the requirement to give notice (clause 99(3)) adds to the expense of the break fee (clause 99(4)), so a tenant who seeks to terminate their agreement early will be liable to pay a total of six or eight weeks' rent (depending on how much of the fixed term has elapsed), which will likely be more than if the tenant simply abandoned the premises (clause 96).
It also raises the question of what happens if the tenant does not give the required period of notice, but otherwise returns vacant possession with the landlord's knowledge: is this abandonment, or a third category of early termination? We submit that the draft Bill should instead provide that where a tenant returns vacant possession to the premises to the landlord during the fixed term of their agreement, the tenant is liable to pay a break fee.
As to the amount of the break fee, we submit that six weeks' rent is excessive (clause 98(4)(a)), and that it should instead be calculated at a flat rate of four weeks' rent.
100 Breach of agreement – termination notice by tenant
We interpret clause 100(4) to mean that a landlord may not make an application to revoke a tenant's termination notice after the termination date: it may be useful to clarify this in the clause. If so, this would appropriately address the risk, faced by a tenant under the current Act, that after they have vacated the landlord will assert that there was no breach and that the tenant's vacating was in fact abandonment, and that the tenant is liable for the landlord's loss of rent.
101 Rent increases during long-term fixed term leases – termination notice by tenant
This new ground for termination is appropriate to the draft Bill's treatment of agreements with fixed terms of two years or more.
102 Early termination without compensation to the landlord
- Clause 102(1)(a), (b) and (d): we welcome these new grounds for termination. They will especially assist vulnerable tenants in difficult circumstances.
- Clause 102(1)(c): this new ground for termination is too narrow, and it may be rendered a dead letter if landlords and agents disclose in every residential tenancy agreement that the premises may be sold. We submit that the qualification relating to prior disclosure should be removed, so that new the ground would be 'that the landlord proposes to sell the premises'. This would not prevent a landlord from deciding to sell their property, but it would mean that the tenant would have a choice as to whether to live with all the consequences of the landlord's decision.
103 Termination by co-tenant of own tenancy
We strongly welcome this provision, which would allow departing co-tenants to end their liability in a straightforward, fair and orderly way. We see no technical difficulties with the clause.
104 Termination of agreement or co-tenancies by Tribunal
We submit that it may be necessary to provide at this clause, or in Part 6 of the draft Bill, that the Tribunal may issue a warrant for possession, to be enforced by the Sheriff, so as to exclude a co-tenant whose tenancy has been terminated from occupation of the premises.
- Clause 104(2): we submit that consideration of the 'special circumstances of the case' gives appropriate guidance to the Tribunal in exercising its power under this new provision.
- Clause 104(4): we submit that it should be made clear that the break fee is to be credited to the rent account (rather than to paid to the landlord in addition to the rent that the remaining co-tenants are liable to pay).
105 Breach of agreement – termination by Tribunal
- Clause 105(1)(b) directs the Tribunal to consider 'the circumstances of the case', rather than 'the special circumstances of the case' as in s 70 of the current Act. This is a worthwhile improvement on the current Act, which is too restrictive of termination.
- Clause 105(5) should be reworded. We suggest deleting the words 'term of the tenancy' and inserting instead 'fixed term'.
108 Death of tenant
We welcome these provisions, which would deal appropriately with events about which the current Act is silent and which occasionally cause confusion. We note that 'legal personal representative' has a specific meaning in the law of wills and may be too narrow, and that it may be more appropriate to refer instead the tenant's 'representative.'
109 Agreement frustrated
We note that clause 109(3), on its present wording, is inconsistent with clause 81. We submit that it should be reworded to provide that the termination date may be the same date as the date of service of the notice.
110 Tenant may vacate at any time before the end of termination notice given by landlord
We strongly welcome these provisions, especially the provision at clause 110(2). Under the current Act, tenants who cannot afford to pay rent on two premises have to restrict their search for alternative accommodation to the last moment of the notice period; clause 110(2) would make all of the notice period useful to the tenant in their search for alternative accommodation. This would also help ensure that the landlord gets possession of the premises in a timely way.
111 Disputes about termination
This would be a worthwhile, if fairly minor, reform.
112 Withdrawal of termination notices
The current Act is silent on the withdrawal or revocation of termination notices. Clause 112 would deal with the matter appropriately.
113 Defects in termination notices
Allowing defects in termination notices to be cured too readily may undermine the notice provisions of residential tenancies legislation. It is not hard to get notices right, and we submit that landlords and agents in particular should be expected to do so. The Tribunal should be able to cure defects such as spelling mistakes in the tenant's name or address, but not defects as to the notice period. Where the latter sort of mistake is held to invalidate a notice, the landlord or agent will learn not to repeat it.
- Clause 113(a) allows defects in termination notices to be cured far too readily. We submit that the 'special circumstances of the case', rather than merely the 'circumstances of the case', would be a more appropriate guide to the Tribunal's exercise of its discretion.
- Clause 113(b): the meaning of subclause (b) is unclear, and the words in parenthesis are a particular problem. We submit that the subclause should instead refer to where the defect in the notice does not result in a detriment to the person served.
114 Suspension of possession orders
We submit that if the operation of termination orders – being orders for termination and possession – were rationalised per our submission on clause 83, it may be desirable amend clause 114 so that it would no longer provide for the suspension of possession orders, but instead merely guide the Tribunal's discretion as to the date for possession (that is, consideration of the parties' relative hardship) and provide for orders for the payment of an occupation fee for the period to the date for possession. As indicated in our discussion at clause 83, it is really the effect of the termination order that needs to be suspended, not the possession order standing alone.
115 Retaliatory evictions
This clause makes two worthwhile, but minor, improvements to the current law: we discuss these at the second and third points below. We also submit that in order to discourage landlords from giving retaliatory termination notices, the clause should do more than merely allow the Tribunal to declare the notice ineffective; in particular, there should be a penalty for a landlord who is found to have given a retaliatory termination. Retaliatory termination notices can greatly distress tenants and undermine the objectives of residential tenancies legislation: it is appropriate that such serious effects should attract a penalty of 20 penalty units.
- Clause 115(1) would provide, like the current Act, that the Tribunal 'may' refuse to terminate a tenancy where the landlord's proceedings are retaliatory. We submit that the permissive 'may' should be replaced with the mandatory 'must'.
- Clause 115(2) would improve the current law by providing that a termination notice may be retaliatory where the tenant has taken, or proposed to take, action to enforce a right under 'any other law.' We submit that this is appropriate: we are aware of one instance where a tenant received a termination notice in retaliation for the tenant seeking an AVO to prevent the landlord's son from attending the premises and harassing the tenant.
- Clause 115(3) would allow, but not require, a tenant to apply to the Tribunal for a declaration that termination notice has no effect because it is retaliatory. This is a worthwhile reform.
Part 6: Recovery of possession of premises
The most significant changes to the current law made by this Part of the draft Bill are in Division 2, which relates to goods left on premises. Some of the changes are good and would fix flaws and omissions in the current Act; others, however, are bad and would too readily allow for the destruction and disposal of tenants' personal property. Division 2 is also, strangely, entirely without penalty provisions. We suspect this is an oversight, because these provisions really do need to have some teeth.
121 Enforcement of orders for possession
- Clause 121(1) refers to 'a condition of suspension of the order' for possession, but there is no prior mention in the draft Bill (in particular, there no mention at clause 114) of conditional suspension of possession orders. We submit that the words 'or a condition of suspension of the order' be deleted. We also submit that it may be useful to clarify that 'a person in whose favour an order for possession was made' may include a co-tenant, per clause 104.
- Clause 121(2) provides a time limit of 30 days for an application for a warrant of possession. This is a worthwhile reform and an appropriate time limit.
- Clause 121(3): we submit that applications for warrants outside the time limit should be determined by the Tribunal after a hearing, not by the Registrar.
122 Mortgagee repossessions of rented properties
- Clause 122(1): we submit that the words 'by order of the Supreme Court' be inserted after 'becomes entitled to possession of the premises'. This would remove a source of occasional confusion. We also note that this subclause, and new s 7A of the Sheriff Act 2005, provides that the notice to vacate will be given by the Sheriff. This is a worthwhile reform that will help ensure that tenants receive the appropriate notice.
- Clause 122(2)(a): we submit that the words 'of 30 days' should be deleted; after all, the mortgagee's notice may be for a period longer than 30 days.
127 Disposal notices
We submit that landlords and agents should be required to include in a disposal notice the address at which the goods are stored. We are also concerned that disposal notices posted in a prominent position on the residential premises (clause 127(3)) might have the effect of advertising that the premises are unoccupied and that the goods may to be stolen with relative ease.
We also submit that failure to give a notice as required should attract a penalty of 20 penalty units.
130 Disposal of non-perishable goods (other than personal documents)
The TU submits that there are very serious defects in this clause, as discussed below. We also submit that landlords and agents who dispose of goods in contravention of the clause should be liable to a penalty of 50 penalty units.
- Clause 130(1) would allow a tenant only 14 days to collect their goods before the goods may be disposed of. We submit that this is too short a period. In our experience, when goods are left behind it is often because the tenant is in crisis; they may be hospitalised, or in gaol, or simply not coping, and it may take time before the tenant or, as is often the case, their family, friends or support workers can organise to collect the goods. The current Act allows collection within 30 days; we submit 21 days is an appropriate compromise.
- Clause 130(2)(b) would allow a landlord to dispose of goods left behind by donation or 'any other lawful manner (including sale) that the landlord thinks fit'. This appears to leave open the possibility that a landlord may dispose of the tenant's goods by giving them away (perhaps to the landlord's spouse, or another relative or friend). There would be no requirement that the landlord dispose of valuable goods by sale, so as to realise their value (nor would the landlord be required to account to the tenant the proceeds of a sale, except where the tenant gets an order from the Tribunal to that effect: clause 134(1)(d)). This subclause is so permissive that it would in effect allow for tenants' goods to be legally looted by landlords. To use an example from the caselaw, in Bowden v Lo NSW Supreme Court 216 the goods left behind by the tenant included an MG car, a coin collection featuring a 1930 Australian penny, and several bottles of champagne. It appears to us that if the provisions of the draft Bill applied to that case, all those valuable goods could be disposed of at an op-shop or the tip or, more likely, distributed to associates of the landlord, and the tenant would receive nothing from their disposal.
We note that the Uncollected Goods Act 1995 requires that uncollected goods with a value of $100 or more must be disposed of by public auction or private sale for fair value. We submit that such a requirement is appropriate to goods left behind after the termination of a tenancy. Clause 130 should provide that goods of value in excess of $100 must be disposed of by public auction or private sale for fair value, and that the proceeds should be accounted to the tenant, less the cost of storage and sale.
131 Disposal of personal documents
The TU welcomes this clause. We note that personal documents are easily stored, so the obligation to keep them for a longer period is not very burdensome for landlords. We also submit that breach of the obligation should attract a penalty of 50 penalty units.
132 Collection of goods by former tenants or persons entitled to goods
Clause 132(4) is afflicted with the same troublesome wording as clause 96(1)(b): it appears to provide for an occupation fee equal to 14 times the rent. It should be reworded. We also submit that a landlord or agent who refuses to deliver up goods as required should be liable to a penalty of 20 penalty units.
134 Orders by Tribunal relating to goods
We welcome clauses 134(1)(a) and (b), which would allow a tenant to apply for a compensation order where the landlord unlawfully deals with the tenant's goods. This would fix a deficiency in the current Act.
Part 7: Social housing tenancy agreements
The draft Bill incorporates these provisions almost unchanged from the current Act. Some of them were introduced into the current Act to support a set of experiments in public housing policy that Housing NSW has since discontinued; and another was introduced as the result of a legal misconception. The TU submits that the draft Bill should remove these provisions.
The draft Bill omits one provision from the current Act that should be included: the grandfather clause at Schedule 4 clause 13. This clause prevents a tenant who has continuously been a tenant of social housing since before July 2005 from being given a termination notice on the ground that the tenant is not eligible for social housing. This reflects a commitment given by the NSW State Government to existing social housing tenants in 2005 when it introduced a new policy for reviewing tenants' eligibility and terminating agreements on the ground that the tenant is not eligible.
We note that the definition of 'social housing tenancy agreement' would include agreements entered into by community housing providers and organisations registered under Part 5 of the Aboriginal Housing Act 2001. This is a change, because clause 5 of the Residential Tenancies Regulation 2006 presently excludes the agreements of these types of organisations from the definition of 'social housing tenancy agreement.' We submit that only after proper consultation with tenants and their representatives should these types of organisations be allowed to enter into 'social housing tenancy agreements', with all the special provisions and powers they entail, and that the draft Bill should, like the current Act, provide that exclusions from the definition may be made by Regulation.
138 Acceptable behaviour agreements for tenants; 153 Termination notice – acceptable behaviour agreements; 154 Termination by Tribunal on behaviour ground
Introduced into current Act in 2004, these provisions were the legal basis for 'acceptable behaviour agreements' (ABAs), one of a number of experimental measures for governing anti-social behaviour in public housing that were to be the subject of a pilot study conducted Housing NSW (other measures included new specialist staff, new documentary resources for housing officers, and new forms of interagency co-operation and case conferencing). As part of the pilot study, Housing NSW developed a draft operational policy for the use of ABAs. The pilot study was conducted in Newcastle and Wagga Wagga and was completed in 2006.
Over the course of the pilot study, Housing NSW did not enter into any ABAs, nor has it entered into any ABAs since then. On completion of the pilot study, Housing NSW declined to adopt the draft operational policy from the pilot study, and has it not adopted any other operational policy for the use of ABAs. The TU consulted with Housing NSW as it conducted the pilot study and understands that over the course of the study Housing NSW came to focus on developing its staffing, interagency and case conferencing measures, and since completion of the study has sought to address problems of misconduct through strengthened interagency work and taking proceedings for breach of the nuisance and illegal use terms of tenants' residential tenancy agreements. The ABA provisions, therefore, are unused relics of a long-completed pilot study and can now be deleted without any effect on Housing NSW's current practice.
If they are to be retained, the clauses should be reworded so that they apply, as in the current Act, to 'public housing tenancy agreements', not 'social housing tenancy agreements'.
142 Extension of social housing tenancies
This provision was introduced into the current Act on the basis of a misconception. In 2002, Housing NSW introduced a policy of periodically reviewing tenants' tenancies and, where a tenant's conduct was found to be unsatisfactory, giving the tenant a termination notice without grounds. Previously, public housing tenants signed up to continuing agreements and were not subject to review.
Housing NSW believed that in order to give effect to the new policy, tenants would have to have fixed term agreements because – and this is the misconception – Housing NSW could not legally give a termination notice without grounds where the tenant had a continuing agreement, but could legally give a termination notice without grounds at the end of a fixed term. For this misconceived reason, Housing NSW started signing up new tenants to fixed term agreements and, when tenants passed their reviews towards the end of their fixed terms, offering them new fixed term agreements, which would in turn be reviewed.
Housing NSW also worried – needlessly – that if a tenant should fail or refuse to enter into a new fixed term agreement, their agreement would become a continuing agreement and the tenant would slip out of the regime of periodic reviews. As a result, when the Act was next amended in 2004 (by the Residential Tenancies Amendment (Public Housing) Act 2004), the power to declare a new fixed term was inserted at s 14A.
In 2005, Housing NSW changed its policy: it would continue to sign up tenants to fixed term agreements, but it would no longer review tenancies according to tenants' conduct; instead, it would review them according to tenants' continuing eligibility for public housing. The Act was amended (by the Residential Tenancies Amendment (Social Housing) Act 2005) to include, amongst other things, a prescribed process for the review of a tenant's eligibility for social housing and a new ground for termination where the tenant is found to be not eligible.
As a result, Housing NSW's regime of review does not use termination notices without grounds to terminate tenancies at the end of the fixed term. And this in turn means that Housing NSW's power to declare a new fixed term, which was unnecessary to begin with, is now doubly so. The power is, and always has been, offensive to the principles of fair trading (imagine if any other landlord, or any other service provider were allowed to declare that their contracts were subject to a new fixed term). It should be removed.
Part 8: Rental bonds
The draft Bill incorporates these provisions, with some changes, from the Landlord and Tenant (Rental Bonds) Act 1977.
159 Payment of bonds
Clause 159(1) limits the amount of bond to four weeks rent, without exceptions. We support this reform.
161 One rental bond for each agreement
Clause 161(2) makes clear that landlords and agents must not top up bonds by requesting tenants to pay additional amounts. We support this reform.
165 Notice to tenants of claims against tenants
We welcome this provision, which would require a landlord or agent to provide the tenant with evidence in support of their claim on the bond. This would help discourage landlords and agents from making fraudulent or unsustainable claims, and may also result in parties settling disputes about claims without proceeding to the Tribunal.
174 Repayment of bond to former co-tenant
We support the intention of this clause, which would help provide for a fair resolution of liabilities when a co-tenant moves out, but there is a problem with its present construction. Clause 174(2) requires the remaining co-tenant to pay all of a former co-tenant's share of the bond to the former co-tenant; while clause 174(4) allows the remaining co-tenant to refuse payment if the former co-tenant's liability exceeds their share. This makes repayment of the bond an 'all or nothing' proposition. We submit that provision should be made for the remaining co-tenant to pay an amount equal to the rental bond paid by the former co-tenant, less any liabilities of the former co-tenant.
We also note clause 174(3): this is a very welcome provision, because the prospect of repaying a bond might otherwise discourage victims of domestic violence from seeking AVOs against violent co-tenants.
Part 9: Powers of Tribunal
This Part incorporates, with minor changes, some of the current provisions of the Residential Tenancies Act 1987 into one part. It provides the Tribunal with sufficient powers to make orders for resolving tenancy disputes, by allowing it to make any orders it may make under the proposed Act. As noted in our discussion of Part 3 of the draft Bill, two provisions in that Part do not provide adequate details as to the orders that can be made on certain applications, and may not be caught by this Part. These are:
- Clause 31 – disputes about condition reports. An application may be made for an order in relation to a dispute about a condition report, but no guidance is given to the Tribunal as to what orders it might make; and
- Clause 41(8) – rent increases. At subclause 41(8) the Bill refers to an 'order that a rent increase is not payable' because the section has not been complied with, but there is no enabling provision allowing the Tribunal to make such an order.
Please refer to our specific comments on each of these provisions for details of our concerns. Quibbles arising from these provisions aside, we do not anticipate any problems with the operation of Part 9.
We note the absence of provisions currently provided by ss 16(1A), 16(1B) and 16(1C) of the Residential Tenancies Act 1987, allowing parties to apply to the Tenancy Commissioner for assistance to resolve disputes that would otherwise fall outside of the powers of the Tribunal. We suggest similar provisions should be included in this Part of any new residential tenancies legislation.
187 Orders that may be made by the Tribunal
Clause 187(1) provides an extensive list of orders the Tribunal is empowered to make, covering most of the orders specifically referred to throughout the draft Bill. It is a redraft of the existing s 16 of the Residential Tenancies Act 1987.
We note the absence of any specific power to make orders relating to rent setting, access to premises, rental bonds and residential tenancy databases. However, the inclusions at clause 187(1)(h) of 'an order directing a landlord, landlord's agent or tenant to comply with a requirement of this Act or the regulations' and clause 188(a) of 'an order that the Tribunal may make under this Act' should be sufficient to ensure the Tribunal has broad powers to make such orders as are appropriate to any situation, subject to the Act.
We suggest the words 'or any other person' should be included at clause 187(1)(h) to ensure that residential tenancy database operators are also covered by the provision. Further to our earlier discussion on the relationship between a termination order and a possession order, we suggest the power conferred by clause 187(1)(i) should be reworded to 'a termination order and an order for the possession of premises', to avoid confusion.
Clause 187(2)(a) refers to compensation for loss of rent – an anachronism that should have no place in a law where break fees are provided for. We suggest that the subclause be deleted.
188 General order-making power of the Tribunal
This clause is a redraft of the existing section 85 of the Residential Tenancies Act 1987. We note the omission of the words 'or any other Act' from clause 188(a), which will prevent the Tribunal from making various orders available under other legislation (say, the Fair Trading Act 1987) for applications made in the Tenancy Division of the Tribunal – an option that is available under the current law. We suggest these words continue to be included in the new law.
189 Application of provisions relating to Tribunal; 190 Applications relating to breaches of residential tenancy agreements
We support these provisions. They clarify that the termination of a residential tenancy agreement does not preclude, in every circumstance, the application to the Tribunal for an order in respect of a dispute under the agreement.
191 Matters for consideration by Tribunal in applications relating to security breaches
We are pleased to see the inclusion in the draft Bill of guidelines around what makes premises 'reasonably secure'. We support this provision.
We note clause 191(3) codifies, to an extent, the parties' duties to mitigate loss when premises are not reasonably secure. We do not believe such codification is strictly necessary and suggest the deletion of this subclause.
195 Intervention by Director-General
This clause is poorly worded, and should be redrafted in plain English.
Part 10: Enforcement
This Part of the draft Bill includes a range of provisions adapted from the Residential Tenancies Act 1987, Fair Trading Act 1987 and the Residential Parks Act 1998. It will make expressly clear, in the one piece of legislation, the powers available to investigators in ensuring compliance with renting laws. Many of these powers are already in place by the operation of other fair-trading and consumer protection legislation, but the draft Bill contemplates some new powers specific to renting, too.
We especially welcome Division 3, which will empower the Director-General to direct a wayward landlord to appoint a real estate agent; and Division 4, which will discourage landlords from commencing proceedings in a venue other than the Tribunal – by making them pay the tenant's legal costs if they do.
We have no significant concerns about any aspect of Part 10.
206 Appointment of landlord's agents
We note clause 206(4) enables the Director-General to direct a landlord to appoint an agent in restricted circumstances, being 'that the landlord has engaged in persistent or serious breaches of this Act or residential tenancy agreements'. We suggest that persistent or serious breaches of the regulations should also be included.
Clause 206(5) will prevent the Director-General from giving such a direction if the landlord has already appointed an agent. While we accept there may be sound reasoning behind this clause, we are concerned that it will allow particularly bad landlords to evade the intention of the law by appointing similarly bad agents. We suggest the clause should be deleted, to allow the Director-General the discretion to give directions based on the merit of each case.
Part 11: Tenancy databases
The inclusion in the draft Bill of provisions relating to tenancy databases is very welcome. We note that previous attempts at regulating tenancy databases have shown that at least one tenancy database operator is unable to resist exploiting any loopholes it finds; it is important, therefore, that the new provisions should be as tight as possible.
It appears to us that the basic objectives of the scheme of regulation proposed in the draft Bill are that persons should know if they are, or are to be, listed; that there should be rules as to how a person may be listed; that there should be rules as to how a person may get their listing amended or removed; that all tenancy database users and operators – not just agents – should be subject to the rules; and that the Tribunal should have the power to resolve disputes.
These basic objectives are sound. We are concerned, however, that the scheme of Part 11 – that is, how it sets the rules that give effect to its objectives – is somewhat obscure. For example, consider the rule, currently in the rules of conduct at sch 6A of the Property, Stock and Business Agents Regulation 2003, that a person who pays a debt within three months of it being due should not remain listed because of the debt. This rule can be expressed straightforwardly and it should be a simple matter to state it in a single clause or subclause, but if we look for it in the draft Bill, we find bits of it in clause 209 (the definition of 'out-of-date') and clause 214 (landlords' and agents' obligations in relation to out-of-date information); from clause 214 we might also look to clause 215 (tenancy database operators' obligations), but here we find no mention of out-of-date information. In this particular example, the obscurity of the scheme of Part 11 appears to have thwarted the implementation of the rule.
We submit that the following represents, in outline, a more straightforward and effective scheme of regulation:
Notice. A landlord or agent must inform a person applying for a tenancy as to the name and contact details of any tenancy database used to consider their application, and as to any information about the person found on a tenancy database.
Copies of information listed. A person is entitled to receive, free of charge and within seven days of requesting it, a copy of any information about the person listed on a tenancy database.
Restrictions on listings. A person's information must not be listed on a tenancy database except in the following circumstances:
- the person was a tenant; and
- the tenancy has ended; and
- either the person has not complied with a Tribunal order to pay an amount of money and the amount owed is more than the rental bond, or the tenancy was terminated by the Tribunal because of a breach by the tenant; and
- either the lister has notified the person of the proposed listing and given the person a reasonable opportunity to respond, or the lister has made reasonable efforts to notify to person of the proposed listing
Content. A person's information listed on a tenancy database must be accurate, complete and up-to-date, and include the reason for the listing and, if the reason is that the person has not complied with an order to pay an amount of money, the amount owed (inclusive of any repayments made after listing)
Removal of listings. A person's information must be removed from a tenancy database if:
- the reason for the listing is that the person has not complied with a Tribunal order to pay an amount of money, and the person has paid the amount within three months of the due date; or
- the reason for the listing is that the Tribunal ordered the termination because of breach, and either the order has not been given effect or the parties have entered into a new agreement; or
- the information has been listed on the tenancy database for a period of three years, or such shorter period as may be required under the national privacy principles; or
- the information has been listed on the tenancy database for a period of one year, and the reason for the listing is that the person has not complied with a Tribunal order to pay an amount of money, and the person has paid the amount later than three months of the due date; or
- either the lister or the tenancy database operator becomes aware that the listing does not comply with the Act and it cannot be amended such that it will comply; or
- the lister requests its removal; or
- the Tribunal orders its removal
Amendment of listings. A person's information must be amended if:
- the reason for the listing is that the person has not complied with a Tribunal order to pay an amount of money, and the person has paid the amount later than three months after the due date; or
- either the lister or the tenancy database operator becomes aware that the listing does not comply with the Act and it can be amended such that it will comply; or
- the Tribunal order the amendment.
Dispute resolution. The Tribunal may order:
- that information proposed to be listed must not be listed because it does not comply with the Act; or
- that information listed on a tenancy database be amended such that will comply with the Act; or
- that information listed on a tenancy database be removed because it does not comply with the Act, or because it may cause an undue hardship to the person; or
- that a person be compensated for losses arising from the failure of a landlord, agent or tenant database operator to comply with the Act.
The Tribunal may order a tenancy database operator amend or remove a listing, including where the tenancy database operator has not participated in, or been notified of, the proceedings.
Application to existing listings. To clarify: all persons' information on tenancy databases, including information listed prior to commencement of the Act, is subject to the Act from commencement.
We submit that if the whole scheme of Part 11 is not redesigned as above, its various component clauses must be amended. Our detailed comments below indicate their present shortcomings and how best to amend them.
We are concerned about the following definitions:
list: it appears to us that this definition would not include circumstances where an agent or landlord gives personal information to a tenancy database operator for a purpose other than entry into the database (for example, the information is given in order to check it against the database), and the tenancy database operator enters the information on that or another database. For example, the tenancy database operator TICA currently does this to compile its 'Enquiry Database', which is a tenancy database, searchable by TICA subscribers, of all persons checked against TICA's main database.
We submit that the definition should be expressed so as to include giving information to a tenancy database operator such that the information will be entered on a database, whether or not such entry was the purpose of the giving of the information.
out-of-date: we submit the present definition is too narrow, particularly as it relates to listings for money owing. The narrow definition presents problems in relation to clauses 214 and 215. Such a listing should be considered out-of-date where the money is paid, regardless of when it is paid. The special treatment of listings for money owed where the money is paid within three months should be dealt with specifically in clause 215.
We also submit that 'incomplete' information should be defined to include information that does not refer to the reason for the listing.
210 Application of Part
We submit that this clause should also make clear that clauses 209 and 214-218 apply in relation to information on a tenancy database that was listed prior to the commencement of the Act. We note that this would not give the Part retrospective effect: the effect would be prospective from the date of commencement.
211 Notice of database and listing
In addition to the provisions presently in this clause, we submit that it should also provide that a person's information may not be listed any later than one month after the reason for the listing (per clause 212(c)) arises. Listings that are not made in a timely way undermine the risk management function of tenancy databases.
212 Listing can be made only for particular breaches by particular persons
This clause would prohibit a landlord or agent from listing information except in the circumstances prescribed by the clause. The prohibition would not apply to tenancy database operators: this is a serious flaw and we expect it would be exploited. We are aware of instances where an agent has provided personal information to TICA and TICA has entered the information on its main database and held itself out as the lister of the information. Listings on TICA's 'Enquiry Database', as mentioned above, might also be regarded as listings made by a tenancy database operator.
We submit that the prohibition should apply generally: that is, the clause should be reworded to read 'personal information must not be listed on a tenancy database unless....' We further submit that there should be a penalty of 20 penalty units for listing persons' information other than in accordance with the clause.
One of the reasons for listings at clause 212(c) – 'that the person owes the landlord an amount that is more than the rental bond' – may be interpreted such that the landlord need not have proved in Tribunal proceedings that the tenant owes the money. We submit that the words 'the person owes the landlord' should be replaced by 'the person has not complied with an order to pay the landlord.' This would give the reason for a listing the rigor of independent scrutiny, and provide certainty as to the date the amount was due.
214 Ensuring quality of listing – landlord's and agent's obligation; 215 Ensuring quality of listing – database operator's obligation
We have already referred to these clauses in our general comments; there are a number of problems with them.
First, the clauses operate on the basis that only tenancy database operators can actually amend or remove information listed on a tenancy database, and that all landlords and agents can do is notify the operators of any defects. We understand from discussions with Fair Trading NSW officers that one tenant database operator claims to work on a different basis: that is, they allow landlords and agents to amend (and possibly remove) listings themselves. The separation and differentiation of obligations for landlords and agents, on the one hand, and tenancy database operators, on the other, may not reflect current or future tenancy database practices.
Secondly, as noted above, clause 214(2)(a) requires a landlord or agent to notify a tenant database operator if they become aware that listed information is 'inaccurate, incomplete, ambiguous or out-of-date'. However, clause 214(2)(b), which deals with what directions the landlord or agent must give the tenancy database operator as to what is to be done about the information, is defective in two ways: it does not require a landlord or agent to direct that the information must be removed (only amended); and it does not require a landlord or agent to make any directions at all where the information is out-of-date (if 'out-of-date' is taken to be a quality distinct from 'inaccurate, incomplete or ambiguous').
Clause 215 is also silent as to what tenancy database operators are to do if they are notified that information is out-of-date. Read strictly, these clauses would require a landlord or agent to notify a tenancy database operator about where there is a defect in a listing, but they do not require the landlord or agent to ever direct that the information should be removed, as distinct from merely amended; and in the case of out-of-date information, the landlord or agent is required to notify, but need not give any direction as to what is to be done about the information, and there is no specific obligation on the tenancy database operator to do anything either. In particular, where a tenancy database operator is notified that a listing is out-of-date because an amount of money owing has been paid within three months, it would be open to the tenancy database operator to not remove the listing, and they might instead merely amend it, or they might do nothing at all.
A further problem: as indicated in our discussion of the definitions, the draft Bill narrowly defines 'out-of-date' narrowly to refer to a listing for an amount of money owed where the amount is paid within three months of becoming due. This means that clause 214 may be interpreted as not requiring a landlord or agent to notify the tenancy database operator that money has been paid where it is paid later than three months after the due date.
Finally, there is no penalty for landlords and agents who breach their obligations at clause 214.
We submit that these defects should be addressed by replacing the draft Bill's separate and different obligations for landlords and agents, on the one hand, and tenancy database operators, on the other, with a single global obligation. This obligation should be that where a landlord, agent or tenancy database operator becomes aware that information listed is inaccurate, incomplete, ambiguous or out-of-date, or was listed in contravention of the Act, that person will cause the information to be amended (if amendment will result in the information complying with the Act) or removed.
This global obligation might be supplemented with more specific provisions, such as a direction to database operators to comply with the instructions of landlords and agents, and the requirement at clause 214(3) that a landlord or agent keep a copy of their instructions.
Alternatively, if the separation and differentiation of obligations is to be maintained, we submit the following changes should be made to clause 214 and 215:
- widen the definition of 'out-of-date' at clause 209; and
- provide specifically at clause 214 that where the information is out-of-date because:
- it relates to an amount of money owed and the amount is paid within three months of it becoming due; or
- it relates to a termination order for breach and the order has not been given effect or the parties have entered into a new agreement;
- provide specifically at clause 215 that where the information is out-of-date because:
- it relates to an amount of money owed and the amount is paid within three months of it becoming due; or
- it relates to a termination order for breach and the order has not been given effect or the parties have entered into a new agreement;
- provide that clause 214(2) and (3) are penalty provisions (20 penalty units).
216 Provision of copies listed personal information
We submit that clause 216 should require tenancy database operators to provide copies of listed information without charge. Alternatively, the clause could allow tenancy database operators to charge for copies, provided that they also provide at least one means of access that does not involve a charge. Alternatively again, the amount of the charge could be limited by Regulation.
We also submit that the copy should be provided within seven days, not 14; this would better reflect the urgency that often attends requests for access to tenancy database listings, and the reality that copies can be generated almost instantly (tenancy databases make this information available to landlords and agents, after all, at the click of a mouse).
We also submit that clause 216(4) should be deleted. There should be no reason why a person listed on a tenancy database cannot find out what information about them is listed.
217 Disputes about listings
We are concerned that the matters about which persons would be able to make applications to the Tribunal for determination (clause 217(1)(a) and (b)) are too narrow. Persons should be able to have disputes about the following additional matters determined by the Tribunal:
- proposed listings; and
- listings made contrary to the Act (for example, information listed without notice to the person as required at clause 213); and
- information listed longer than the timeframes provided by the Act or the National Privacy Principles (clause 218); and
- listings that cause undue hardship; and
- listings made prior to commencement that do not comply with the Act. (Note that such a provision is not retrospective in operation; it operates prospectively to allow existing listings to be removed where they do not meet the Act's requirements.)
We also submit that clause 217 should expressly provide that the Tribunal may make an order directing another person without that other person having notice of, or participating in, the proceedings. Despite the Tribunal's general obligation to conduct its proceedings according to the rules of procedural fairness, it should not be necessary for a person to have to apply against a tenancy database operator, or to seek to have a tenancy database operator joined in proceedings against a landlord or agent.
We also note clause 217(3) would allow the Tribunal to make an order directing an 'other person' (this would include a tenancy database operator) to 'amend a residential tenancy database.'
We submit that the words 'or remove personal information on' should be inserted after 'amend'.
218 Limit on period of listing
- Clause 218(1) should be backed by a penalty of 50 penalty units.
- Clause 218(1)(b) provides that listed information will remain on a tenant database for three years, or such shorter period as the National Privacy Principles may provide. We submit that this provision is generally appropriate to the risk management function of tenancy database, and that certainly no longer period of listing should be allowed. Indeed, we submit that the subclause should provide for a shorter period of one year where the information was listed because the person owed an amount of money and the amount was paid later than three months after the amount was due. Such a provision would also be appropriate to the risk management function of tenancy databases. Longer timeframes would allow old information that does not reflect a person's current risk to remain on a database to the detriment of a person's prospect of housing: for example, a small debt incurred while living in a sharehouse in one's late teens would say little or nothing about the risk posed by the same person renting on their own or as part of a couple in their mid- or late-twenties.
- lause 218(2): the meaning of this subclause is unclear. We submit that it should be clarified to provide that where a person's information is listed for a second, subsequent reason, the information relating to the second reason need not be removed until it has been listed for three years (or such shorter period as may apply).
Part 12: Miscellaneous
As its title suggests, Part 12 contains a number of administrative provisions that will apply generally to all Parts of the Act. The majority of these provisions are merely carried over from the corresponding Part of the Residential Tenancies Act 1987, without amendment. However, significant changes to the law – as it relates to service of documents, and appointment of tenants' agents – are incorporated into this Part. Additionally, many provisions covered in the corresponding Part of the current Act do not appear in this part of the draft Bill, as they have been incorporated into other Parts, or abandoned.
219 Contracting out prohibited
This provision currently appears word-for-word at section 120 of the Residential Tenancies Act 1987. It is written in a very convoluted manner, and could do with redrafting in plain English. It is an important provision, and any redraft should ensure that its specific meaning is adequately retained.
221 Tenants' agents
This clause expands a currently existing right that has restricted availability, and applies it to all tenants generally. We have no particular concerns about this provision.
223 Service of notices or other documents
This clause proposes to significantly alter the law as it relates to the service of documents. Currently, a notice must be served by: hand-delivering it to an appropriate and relevant person; sending it through the post or by facsimile; or by delivering it in a manner approved by the Tribunal. There is also recognition that notices of termination from landlords to tenants must be more cautiously served, to ensure their safe delivery, by excluding the option of delivering such notices by facsimile. Clause 223(1)(a) will remove this exclusion.
The proposal at clause 223(1)(a)(i) also includes a new method of service: 'delivering [a notice] to the person or the mailbox at the person's residential or business address personally'. We do not support this inclusion, as we anticipate an increase in disputes about service of documents, with minimal evidence required to prove service has occurred even where documents are not received.
However, if the proposal at clause 223(1)(a)(i) is to be retained beyond this draft, we suggest it be reworded. Delivery of notices in such a manner should require, at the very least, that documents be placed in a properly addressed envelope, and clearly marked with the date of service, prior to delivery. Where there is more than one landlord or tenant, clause 223(3) will give effect to service of documents on all of them, if delivery to only one of them actually occurs. This should be a rebuttable presumption, as it will not always be the case that co-landlords and co-tenants communicate with each other constructively.
Clause 224(2) will provide that regulations can be made in respect of a standard form of residential tenancy agreement, and a standard form of condition report. We suggest a standard form of termination notice and a standard form of transfer should also be included in the subclause.