NSW Fair Trading starts a new Tenancy Dispute Service

OFT-logo

NSW Fair Trading has started a tenancy dispute service. The free voluntary service is said to provide a convenient alternative to having residential tenancy matters heard by the Consumer, Trader and Tenancy Tribunal (CTTT).

The service starts on 1 December 2013 and NSW tenants, landlords and property managers can use the service to resolve selected residential tenancy disputes.

According to Fair Trading the service can be used to assist in resolving disputes to do with:

  • repairs and maintenance
  • non-urgent health and safety issues
  • alterations and additions
  • access to the premises including inspections
  • non-compliance with the tenancy agreement
  • water saving devices and smoke alarms
  • provisions of correct notices
  • ending a tenancy
  • breaking a lease, and
  • condition reports.

If the parties cannot agree to a resolution to a dispute, either party may lodge a claim with the CTTT.  All other residential tenancy matters not dealt with by Fair Trading will continue to be heard by the CTTT.

For more information about the free dispute resolution service, go to the Residential tenancy dispute page on the Fair Trading website or contact the Fair Trading hotline on 13 32 20.

Important changes to NSW Residential Tenancies Legislation

Statute Law (Miscellaneous Provisions) Act 2011

NSW State Parliament recently passed the Statute Law (Miscellaneous Provisions) Act 2011. The Statute Law Revision program enables minor amendments and corrections to various Acts without the need to prepare separate amendment Bills. The amendments in Schedule 1 in part contain amendments that deal with residential tenancies legislation.

The changes in brief

1.8 Residential Tenancies Act 2010 No 42 (the Act)
Items [1] and [2] refer to sections 22 and 33 respectively and insert the words “or landlord’s agent” which extends the offence to also apply to the agent.

Item [3] refers to section 36 and creates an exemption for New South Wales Land and Housing Corporation and the Aboriginal Housing Office from the requirements relating to rent receipts.

Item [4] refers to section 42 and relates to rent increases under fixed term agreements. The provision has changed so that it now applies to an agreement for a fixed term of less than 2 years (originally applied for a term of 2 years or less). This means the rent may be increased where the term is exactly two years. Note that there is no change to section 99, which is a related provision. We understand this section will be amended at some time in the future.

In addition, the requirement to specify, in an agreement for a fixed term of less than 2 years, the amount of a proposed increase in rent is replaced with a requirement to specify the increased rent (this ensures consistency between sections 41 and 42 of the Act).

Item [5] renames section 89 and adds a new subsection (6). It clarifies that if the Tribunal makes a termination order because it is satisfied that a tenant has frequently failed to pay rent owing, in accordance with section 89(5), a warrant for possession may be issued, even if the tenant has paid all the rent owing or complied with a repayment plan.

Items [6] and [7] refer to section 102 and make it clear that an order made by the Tribunal to terminate the tenancy of a co-tenant is taken to be an order for the possession of the premises in favour of the remaining tenant or co-tenants. Accordingly, a warrant for possession may be issued in favour of the remaining tenant or co-tenants.

Item [8] refers to section 110 and it transfers to the Act a provision originally in the Residential Tenancies Regulation 2010. The provision makes it clear that a tenant under a fixed term agreement who vacates the premises before the end of a fixed term can be liable to pay rent for the balance of the fixed term.

1.9 Residential Tenancies Regulation 2010

Clause 13 Effect of early vacation of residential premises is omitted, now not needed because of item [8] above.

Click on Statute Law (Miscellaneous Provisions) Act 2011 No 27 and then select Schedule 1 for more information.

Update – Draft Residential Tenancies Regulation 2010

The draft Regulation as previously advised was released for public consultation and EAC is currently preparing a submission to Government. The outcomes of this submission will not be known until the end of October at the earliest. A start date is therefore unlikely to be before mid December.
Below is a summary of key elements contained in the draft regulation, of which a number have also been identified for comment in our submission.
EAC will be delivering comprehensive training on the changes. In order to ensure the maximum benefit to agents, the training dates will be advised when the consultation outcomes are known. Do not compromise with early training.
Disclosure to prospective tenants
Prospective tenants must be told of any serious crime committed at the premises, if the property is being sold, if there is legal action pending to repossess the property or any serious health or safety risks at the premises, such as lead paint or asbestos.
Tenancy agreements and contact details and changes
The landlord’s contact details to be provided to the tenant even if the landlord has an agent.
Breaking a lease early
The residential tenancy agreement includes an optional term – ‘Break Fee’ that provides for the early termination of the fixed-term.
Additional term – Pets
The residential tenancy agreement includes an optional term that if the landlord consents to pets then the tenant agrees to have the carpet professionally cleaned at the end of the tenancy.
Water efficiency
  • water efficiency measures required in order to charge tenant water usage
  • landlords have 12 months to carry out work for existing tenancies (if they wish to continue to charge the tenant for water usage).
The prescribed standards are as follows:
  • internal cold water taps and single mixer taps with a maximum flow rate of nine litres per minute;
  • showerhead(s) with maximum flow rate of nine litres per minute; and
  • no leaking taps at the start of tenancy.
The draft condition report includes an appendix if the tenant is to pay water usage charges.
Ending a tenancy
If a termination notice is given by a landlord, on grounds other that ending a fixed term, the tenant is not liable to pay rent for any period after the tenant vacates and before the termination date.
Monetary limit of jurisdiction of Tribunal
The amount prescribed for compensation is $15,000 or $30,000 in relation to a bond.

Residential Tenancies Act 2010 Update

What are the main reforms in the Act?

Residential Tenancies Act 2010 was passed by Parliament on 10 June 2010. The Act will not come into effect immediately. A new Regulation will need to be developed, which will include standard tenancy agreements and condition reports.

It is expected that the new Act and Regulation will come into effect later this year. Once written the Regulation will be released for further community consultation.

In the meantime, EAC will continue to raise matters of concern including possible drafting errors and lack of clarity that in our opinion require attention in the drafting of specific sections.

The following overview explains some of the key changes; a detailed assessment is not possible until the release of the Regulation.

The key changes in the Act are explained below.

Pre-tenancy

Holding fees

The Act will permit holding fees to be charged only after an application for a tenancy has been approved. This assumes that applications are approved on the spot. This may present procedural problems for both tenants and landlords and needs to be considered through the consultation process for the regulations.

Once accepted the holding fee keeps the premises off the market for up to 7 days with no provision for any refund to the applicant if they decide not to enter into an agreement. The 1987 Act (current position), provides that the landlord may retain a fee equivalent to only the amount of rent that would have been paid for the period reserved and refund the remainder (if any) to the applicant.

Information to be provided and material facts

Section 27 (1) compels a landlord to provide a tenant with their telephone number or other contact details even if they have an agent.

The Act requires the disclosure of material facts to prospective tenants; such as if the landlord has drawn up a contract to sell the property or if a mortgagee has taken court action to recover possession.

Selling of property

The landlord must give a minimum of 14 days written notice prior to commencement of marketing. It obliges the selling agent to make reasonable efforts to agree with the tenant on the days and times the premises will be available for inspection. A limit of 2 inspections per week are provided in the Act, and the parties can negotiate if more access is required. If the landlord and tenant fail to agree, the landlord can access twice per week without consent (section 55) provided 48 hours notice is given to the tenant on each occasion.

Limit on amounts payable by tenant before agreement

The tenant can no longer be charged the $15.00 contribution towards the lease preparation fee.

Limit on Bonds payable by tenant

Under section 159 bonds are limited to the equivalent of 4 weeks rent for both furnished and unfurnished premises – current position is 6 weeks rent for furnished premises. Under section 161 (2) bonds can no longer be topped up in an ongoing tenancy.

Urgent repairs

Under section 62 (j) definitions of urgent work and repairs now includes the addition of cooling.

Breaking a lease early

The Act will enable tenants to break a lease early without penalty in certain situations, such as when they accept an offer of public housing or need to move to a nursing home. The Act also introduces the concept of an optional ‘break fee’, fixing the penalty payable in other cases where a tenant breaks a lease early. A break fee is invoked only if the agreement provides for the early termination of the fixed-term. The break fee for a fixed term agreement for a fixed term of not more than 3 years is an amount equal to 6 weeks rent if less than half of the fixed term had expired or an amount equal to 4 weeks rent in any other case.

Where there is no break fee term in the agreement the current position remains that the defaulting tenant is liable for compensation to the landlord for any loss (including rent) to the end of the fixed term and the landlord has an obligation to mitigate the tenant’s loss.

Termination notices

Periodic agreement (continuing)

The Act increases the “no grounds” notice given to tenants who are no longer in a fixed term lease from 60 days to 90 days. A tenant may give 21 days notice – no change from current position.

Fixed term

A landlord may end a fixed term agreement at any time before the end of the fixed term to take effect not earlier than 30 days after the day on which the notice is given – current position is 14 days. The tenant may end a fixed term by giving 14 days notice – no change from current position.

The Tribunal’s discretion has been removed whether to end a lease ‘without grounds’ where the landlord has given proper notice and we are advised there will greater certainty of possession through the Tribunal where a tenant does not move out in accordance with a ‘no grounds’ notice. However, section 114 (1) provides that the Tribunal may suspend the operation of an order for possession of the premises for a specified period if it is satisfied that it is desirable to do so, having regard to the relative hardship likely to be caused to the parties by the suspension. The interrelationship between these two sections is not yet clear and its effect, if any, on the level of certainty for possession.

Rent arrears evictions

We are advised that the time taken for a landlord to get their application heard by the Tribunal where the tenant is behind in rent will be shortened. Section 88 (4) provides that a landlord may apply to the Tribunal for a termination order before the termination date specified in a non-payment termination notice, however the Tribunal must not consider such application until after the termination date.

The Act also gives a guarantee to tenants that their tenancy can continue if their rent arrears are paid or if they follow an agreed repayment plan. However, this guarantee may not apply if the landlord makes an application to the tribunal for a termination order and the tribunal is satisfied that the tenant has frequently failed to pay their rent on time.

The notice must inform the tenant that the tenant is NOT required to vacate the premises if the tenant pays all the rent owing or enters into, and fully complies with a repayment plan agreed with the landlord. Any warrant for possession issued as a result of any order for possession, cease to have effect if the tenant pays all the rent owing or enters into, and fully complies with a repayment plan agreed with the landlord and the tenant has not vacated the premises.

If a tenant repays all the rent or enters into, and fully complies with, a repayment plan the landlord must notify the Tribunal if the landlord has applied for a termination order and the application has not been finally dealt with or the Sheriff if a termination order has been made and a warrant for possession has been issued but has not been enforced.

Alterations

The Act gives tenants greater flexibility to make minor alterations at their own expense, provided they obtain the landlord’s written consent. Where the parties fail to agree the tribunal may adjudicate. Landlords will be able to reasonably refuse requests involving internal or external painting or work not reasonably capable of rectification, repair or removal. The Act also clarifies the rights of landlords to seek compensation where the work is not done to a satisfactory standard or will impact on the ability of the premises to be rented in the future.

At this time, it is unclear whether there is increased risk of landlord liability for personal injuries as a result of work performed or what process a landlord should follow to control the alteration. The development of the supporting regulations may add clarity to this provision.

Rent payments

The Act will require all tenants be given at least one free and easy option to pay their rent. Tenants will be required to pay the landlord’s costs for any dishonour fees.

Sub-letting

The Act gives tenants greater flexibility to sub-let part of the premises or bring in an extra co-tenant, provided they obtain the landlord’s written consent. Landlords will be able to reasonably refuse such requests, on the grounds of the person is listed on a tenancy database; the number of occupants will exceed the number permitted under the agreement or lead to overcrowding. Other potential grounds such as a lack of references; income; history of violence that could influence a landlord’s consent have not been defined in the Act.

Under section 75 (1) the Landlord may withhold consent to a transfer or sub-letting relating to the whole tenancy or residential premises whether or not it is reasonable to do so.

The landlord must not charge for giving consent to a transfer or sub-letting, other than for the reasonable expenses of giving consent. There is no catch-all to protect a landlord’s right to decide whom he or she must contract with.

Goods left behind

The Act will streamline procedures currently in place but in summary the tenant must be given notice that the goods will be disposed of after 14 days or 90 days in the case of personal documents. Method of notice includes by post and orally and failing these options by posting a notice in a prominent position on the premises for 2 days. The ability to remove perishables remains unchanged. The landlord may require a former tenant or person who claims the goods to pay an occupation fee for each day the goods are left on the premises or stored if the quantity of goods left on the premises is sufficient to prevent the renting of the premises. The occupation fee must not exceed the amount of rent for 14 days.

Water efficiency

The Act will require rented premises to be water efficient if tenants of separately metered premises are to pay for water. The standards for water efficiency will be determined when the regulations are made later this year. Landlords have 12 months in which to carry out any required work if they wish to continue to directly recover the cost of water usage from tenants.

Co-tenant disputes

The Act introduces new measures to resolve disputes between co-tenants or shared households, including domestic violence situations. Victims of domestic violence living in a rented property will have the right to change the locks and seek to take over the tenancy if their name is not already on the agreement.

Tenant may vacate before end of termination notice period

The tenant’s obligation to give 21 days notice after they have received a termination notice from the landlord has been removed – they are able to leave prior to the notice period.

Defects in termination notices

The Tribunal has power to fix minor procedural defects and not have to send the parties back to the start.

EAC comments on the Draft Residential Tenancies Bill

As you may be aware, the NSW Government recently released for community consultation a draft Bill to reform tenancy laws. The Bill is not law at this time and changes may be made to it as a result of this consultation before it is introduced to Parliament early in the new year. The Office of Fair Trading advises that it is unlikely that this new legislation will commence before July 2010.
EAC identified areas of concern and proposed changes that if implemented could create difficulties for agents and create a shortage of rental accommodation by driving investors to other more easily managed investment alternatives.
Matters of concern include the following:
  • Scope of premises to which the Act will apply
  • Abolition of tenant’s contribution to lease preparation cost
  • Condition Reports
  • Rent Receipts
  • Water efficient premises and tenant usage charges
  • Alterations by tenants to premises
  • ‘No grounds’ termination notices
  • Rent arrears evictions
  • Reduction in bond for furnished premises
When Parliament passes the Bill, it will not come into effect immediately. The existing Regulations, including a revised standard lease and condition report, will need to be re-made and this will involve further public consultation. Given the expected changes to some documents, agents should carry lower levels of stock.
Agents will have ample time to implement changes when they become law and should be cautious of any specific advice given before this occurs.
It may well be several months before the exact detail on the new laws is available.
Be assured EAC will participate in the next consultation phase and keep you fully informed.