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Tenancy law reform for ‘secure occupancy’

Posted by on February 8th, 2016 · Government, Law, Tenancy


New South Wales tenancy laws are under review, and City Futures has made a submission drawing on our research into how well Australia and other countries provide for ‘secure occupancy’ in rental housing.

The research, conducted in collaboration with Swinburne University for AHURI, sought to capture the extent to which households in rental housing can make a home and stay there for reasonable periods, provided they meet their tenancy obligations. The concept of ‘secure occupancy’ was developed specifically to have a wider scope than ‘security of tenure’, which connotes legal rights and protections against termination and eviction, and to encompass the ways in which market conditions, government subsidies, ownership structures, management practices, support programs and cultural norms also affect the ability of households to make a home in rental housing. The research team investigated these factors in eight jurisdictions in Europe and North America, through reports of a panel of international housing experts, and in Australia, with a focus on New South Wales and Victoria.

The research shows that there is no one single model for ensuring secure occupancy: for example, Austria, The Netherlands and Germany provide well for secure occupancy, the first two through large social housing sectors, and the last through an almost entirely privately-owned rental sector. The research also shows that it is the combination and interaction of legal, economic, social policy and cultural factors that affect secure occupancy: for example, the relatively secure occupancy of German private rental housing is delivered not by long fixed terms, but by limited grounds for termination by landlords, permissive terms regarding tenants’ use of their dwellings, a system of tenure-neutral housing subsidies that avoids speculative dealing, and a wide cultural acceptance of rental housing. Finally, the research shows that by comparison with other case study countries, Australia (particularly New South Wales and Victoria, which were the local focus of the research) did badly in many aspects of secure occupancy, especially as regards the termination of tenancies and regulation of rents: New South Wales is an international outlier in its combination of short fixed terms, provision for ‘no grounds’ terminations by landlords and lack of limits on rent increases.

One implication of the research is that reforms for secure occupancy can and should be pursued in an integrated way across policy areas. Unfortunately, neither the Australian Government nor the NSW State Government has an overarching housing policy that sets out such an agenda. In its absence, we’ve proposed a number of reforms to the Residential Tenancies Act that advance secure occupancy in ways that work within the limitations of present market conditions, subsidies, ownership structures and those other factors. In particular:

  • Reasonable grounds for termination. We’ve recommended that the Act be amended to provide a comprehensive set of prescribed grounds for termination by landlords, and to remove the current provisions for termination without grounds. Doing so would cause no disadvantage to landlords who seek possession for sound reasons; only those landlords who use or threaten no-grounds notices for bad reasons, such as retaliation or discrimination, would be disadvantaged. It would also give all tenants greater peace of mind and encouragement to assert the various contractual rights afforded them by the law.
  • Fairer provisions about rent increases. We’ve recommended that the Act be amended to regulate rent increases to support market rent setting and give tenants greater certainty to their housing costs. In particular, the current provisions allowing tenants to dispute excessive rent increases in the Tribunal should be enhanced by providing that where the rate of a rent increase is greater than the change in the Consumer Price Index for the relevant period, the increase is prima facie excessive, and the landlord bears the onus of proving that it is not excessive. (On the other hand, where the rate of increase is less than the change in CPI, the tenant would bear the onus of proving that it is excessive.) This would make the provisions easier for tenants to use where there is a reasonable, objective indication that an increase may be excessive, and discourage landlords from abusing the special disadvantage that tenants face as consumers (ie the high cost of moving inhibits sitting tenants from ‘shopping around’) to extract above-market rents. Also, the frequency of rent increases should be limited to not more than once per year. This would accommodate the many landlords who currently, as a matter of practice, review their rents annually, but would give all tenants who receive a rent increase notice the assurance that their rent will not increase again for a year.
  • Greater freedom to keep companion animals. An important aspect of ‘making a home’ is autonomy in the use of the premises in which one lives. In our research, whether tenants could choose to keep a companion animal was something of a touchstone for autonomy and secure occupancy; for many persons, keeping a companion animal is an important part of their home life, and restrictions on their ability to do so are felt keenly. We’ve recommended that the Act be amended to allow tenants to keep a companion animal, subject to such restrictions as may apply under other laws, and to their general obligations under the Act.
  • Occupancy principles for all marginal renters. There are numerous classes of renters – for example, boarders and lodgers, residents of crisis accommodation, and residents of educational institutions – who are currently excluded from the Act and, as a result, have few legal rights, insufficient access to justice and little experience of ‘secure occupancy’. We’ve recommended that the basic ‘occupancy principles’ and dispute resolution provisions set out in the Boarding Houses Act 2012 (NSW) should be extended to all renters otherwise excluded from tenancy laws.

We’ve also made recommendations that address some of the implications for tenants of the recent strata reforms, particularly to give tenants a right to know that redevelopment is pending, and to allow them to leave without loss when a redevelopment happens.

You can read the whole submission here.

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