Fighting the System: My toaster has more rights!

Matt was a frustrated and fed-up tenant. Matt and his family moved into a rental property in Victoria. Be warned if this property is still being rented out. The address is 20 Orange Grove of Bayswater.

They realised after they moved in that the property needed serious repairs. Some of the problems made their lives absolutely ‘miserable’. Water from leaking gutters splashed into the rooms during heavy rains and damaged the wooden floors. They had to put newspaper and clothes under the doormat to absorb the water. This is a serious problem. We’re talking Melbourne here. The city of four seasons in one day.

There were several leaking points under the eaves. The stove had three defect burners and they had to use a match to light the oven every time they used it. From what I understand, the automatic ignition was broken. As anyone would, Matt and his family found this pretty annoying. The fly screen nets in the lounge room didn’t fit properly which meant they couldn’t keep the mosquitoes out. Matt couldn’t sleep because the little bastards kept biting him.

Then there was the three taps dripping throughout the night. Drip, drip, drip!!! The taps could not tighten properly so Matt would get up in the night and tighten them again. Matt and his family used containers to catch the drops. Then there was the bedroom doors which could not be closed, a heater which did not work, faulty power points, missing outside light switch and broken kitchen light switch, as well as defective and missing florescent garage lamps.

Matt did what anyone would do in his situation. He emailed the property manager, Danielle Hunter, and informed her that the property had a number of faults. This was at the end of November 2011. He then filled out a repair form listing each fault. This was at the beginning of December 2011. And Ms Hunter responded shortly after. She flat out said, ‘In regards to the gutters, these will not be repaired or replaced. You took the property as inspected. We are willing to fix issues that affect you living in the property but the guttering does not’.

My mouth dropped when I saw this. Ms Hunter is a Senior Property Manager at Wantirna Professionals and agent of Dawne Hedges. Is she not aware that a landlord is responsible for maintaining rented premises in good repair under section 68 of the Residential Tenancies Act 1997 (Vic)?

Ms Hunter actually refers to the historical concept of caveat emptor or ‘let the buyer beware’ when she says, ‘You took the property as inspected’. But this an out-dated concept. And I don’t see how an ordinary person could possibly notice the need for gutter repairs at a property inspection on a sunny day...unless of course you’re super-psychic or superman.
In the olden days, buyers did not have recourse against sellers for faulty products unfit for ordinary purposes. The prevailing theory of laissez faire was that market forces of supply and demand would regulate the quality of goods in a fair way. The government intervened in the 19th century and introduced consumer legislation because the free market economy produced unfair outcomes.

This history lesson comes with a point. To illustrate, I will use a simple toaster. Today, if I buy a toaster and it doesn’t work, I can take it back to the store tomorrow and get a refund or exchange. This is simple and easy in most cases. And if doesn’t work, you call Consumer Affairs Victoria, and they hassle the business. But if you rent a house, and it turns out to be faulty, then it’s a lot more complicated, and significantly different to the purchase of a product. A renter has expended money, time and effort moving into a house. It’s not that simple and easy to get a refund or exchange.

So I think we have the situation where the government has intervened with residential tenancies legislation to prevent unfair outcomes. But I think it’s a failed experiment. The current construct does not work. The market forces of supply and demand still operate. In most cases, if a renter moves into a house and it is unliveable they simply move out, find another place, hope for the best, and incur additional costs. A consumer with a broken toaster has more rights than a renter.

 

Matt actually responded to this letter more politely than what I would have. He pointed out that the leaking gutter affected his living because the rain splashed into the lounge room and the water needed to be mopped up constantly. So basically, Ms Hunter’s attitude is about two centuries out. I almost feel guilty picking on poor Ms Hunter. Actually no, I’m just joking. But I am very concerned about the attitudes of some property managers.

 

In Australia, consumers have more rights than tenants under the law. This must change.

 

 

 

 

Threats and Intimidation: Fail!

Surprise, surprise...tenants are failed again. Threats, intimidation, and harassment can occur in tenancy disputes. But you wouldn’t know it looking at housing laws.

 

Daniela is an amazing young woman. Highly educated, highly motivated, and hard-working. She moved into a new place in Sydney under an arrangement with the head tenant. The head tenant was so abusive Daniela stayed in her room and could not use the kitchen or lounge room. If Daniela left a toilet roll in the toilet, the head tenant would send her abusive text messages. Daniela was so scared of the head tenant she let her have her underground car space. The head tenant screamed abuse at her if she accidentally splashed water on the glass shelf. The head tenant decided to evict Daniela giving her only 14 days notice. The head tenant should have given her 60 days notice.

The head tenant also withheld Daniela’s bond because she didn’t wash the bedroom window and the toilet seat was broken. Even though Daniela was scared of this woman, she offered to pay for the toilet seat and clean the window. This offer was refused. The head tenant did not lodge Daniela’s bond with the Rental Bond Board. So Daniela lost her rental bond of $450. I don’t see how the two claimed items add up to this amount. Daniela was so anxious she decided to move out a week early. So she lost $250 in rent. The landlord said Daniela could talk to him about the situation, but Daniela just wanted to move on. For this reason, Daniela did not access other remedies available to her under the Residential Tenancies Act 2010. All up, Daniela lost $700. In my view, Daniela has been subjected to a kind of economic violence.

If you don’t think tenancy disputes arouse heated emotions, check out this video from the United States. This landlord crashed his Hummer into his own rental property when his tenant got behind in rent.

In Australia, people can obtain protection orders from local courts. They are also known as apprehended violence, intervention, or restraining orders. Protection orders are designed to prevent actual or feared personal violence. They can cover physical, sexual and psychological abuse. Protection orders can address things like threats, stalking, intimidation, harassment, property damage, and assault. Protection orders are pretty flexible and usually tailored for specific situations. They can prohibit a person from approaching, contacting or otherwise acting inappropriately. But specific guidelines tailored for tenancy situations are not available to tribunals and courts. People like Daniela, probably leave and don’t take further action.

The only specific coverage I could find is contained in section 70 of the Residential Tenancies Act 2010 (NSW). The provision does not have broad-ranging application and only deals with domestic spousal violence. If a protection order is made preventing access to residential premises, a victim of violence can change the locks and take over the lease agreement. No other kind of violence is addressed in the context of tenancy. The only other section you could use is section 206, where a tribunal can appoint a property manager if a landlord has seriously or persistently violated the Act. Obviously, one could only use this mechanism in extreme cases.

The state should intervene to protect tenants in situations of violence, harassment and intimidation. State and territory governments need to consider the relationship between residential tenancy laws and other laws. If a protection order is necessary, it should take into account the unique relationship of a landlord and tenant.

If a tenant wants to leave, they should be able to vacate the residential property without notice without paying rent for that period or other financial penalty. They should be compensated for costs incurred in moving and relocating to safety, and should be provided with a reference so their prospects of renting again are not jeopardised. If they don't want to leave, a property manager should be appointed to handle the tenancy and mediate with the landlord. Landlord should be prevented from using existing law to further harass and intimidate, such as, baseless referrals to blacklisting databases. Tenants should be protected from retaliatory evictions and repeat appearances defending such applications.

Tenants in vulnerable and potentially volatile situations need practical protection. No one should live in fear. And that’s why I say...fail.

 

The Invisible Problem

If so much inequity exists in tenancy regimes, why don’t we hear more about it? My educated guess puts it down to implicit and systemised coercion. This is just a bunch of fancy words that means a landlord can do what they like with little impunity.

Everyone who rents knows landlords and real estate agencies can impact on future prospects of renting in the private market. Landlords and real estate agencies do not have to provide rental references and can actually give bad references. Landlords and real estate agencies can refer tenants to blacklisting databases. This power is particularly important at the moment given the current state of the housing market. The end result is no home.

Say we have a situation where a good tenant has a bad landlord. The landlord refuses to undertake and pay for repairs. Let’s look at the options open to a tenant. A tenant can do nothing and just put up with it. A tenant can organise and pay for repairs. Or the tenant can take the landlord to tribunal. It’s a safe bet that a landlord won’t give the tenant a good rental reference. If the landlord is particularly nasty, the tenant can be referred to a blacklisting database. So the lesson is tenants can end up in situations where they are penalised for fighting for their rights. We can’t assume that all tenants are skilled in dispute resolution. Tenants are just ordinary people – cleaners, labourers, teachers, etc. I think many tenants adopt the ‘don’t rock the boat’ approach.

Landlords and agencies can exploit existing mechanisms. They can delay bond payments which may be needed for the next rental property. They can make unreasonable but successful claims against bond moneys. Claims can be difficult to dispute in situations like when a tenant moves interstate or overseas. A tenant may not be aware of a claim if the bond authority is not given their forwarding address. A centralised system should be electronic and online. In this computer age, and given the mobility of tenants, email should be the primary mode of communication, and online deposits rather than cheques should automatically be the method of payment. To my mind, this is just common sense. Come on, guys! So tenants know without being told or threatened, landlords and real estate agencies can make things very difficult for them. In the real world, it is usually better to maintain positive working relationships with landlords and property managers.

We see the occasional shock story on shows like Current Affairs and Today Tonight. Frank Cassar was Australia’s slum lord from hell. He was a multi-millionaire property owner and developer in Melbourne. He did not repay rental bonds, failed to perform essential repairs, entered premises unlawfully, and threatened and intimidated tenants.

Tenants had complained about Frank Cassar for at least twenty-five years. He had been take to the Victorian Civil and Administrative Tribunal (VCAT) over sixty times. In 2006, the Minister for Consumer Affairs took him to the Supreme Court and obtained an order for him to manage residential premises through a licensed real estate agent. Sometime after, a protest was organised at his place of business.

After some googling, I realised Frank Cassar had passed away in 2011. He owed tenants over $40,000 in compensation. I don't know whether the tenants were ultimately successful in obtaining moneys owed. What can we take away from this tale? This is obviously an extreme case but it demonstrates landlords can easily circumvent existing legal protection. So basically this landlord had to die for tenants to be protected. Is it just me that sees a problem with this picture?

If you still don’t think there’s a problem, turn to a friend and ask. Almost everyone has a story, or knows someone who does. I guess some people just accept the status quo. I think the prevailing sentiment is that this is just life, this is just the way things are. But to my mind, we need a new way of thinking. If tenancy law has so many problems, why hasn’t someone done something about it? We have bureaucrats, politicians, and lawyers. These individuals usually move in a circle of homeowners rather than renters. Gripes about tenants are more explicit to people in power.

Public dialogue is very much about the rights of the landlord and real estate agencies. We can see that with the Queensland Government’s targeted review of tenancy laws. In Queensland, a landlord or real estate agency can nominate a two-hour window for inspections. They want to increase this window to three hours. This is just ridiculous. Basically, we have a situation that the law actually encourages incompetence and poor time management. In any other professional context, you don’t make an appointment for a window of time. You make a time for a meeting and you stick to it. And what about working tenants who need to take time off work and lose income to attend inspections?

What kind of Australia do we want to be? A country that doesn’t care? Doesn’t take initiative? Merely follows and does not lead? If Australia was a character on the Simpsons, who would Australia be? Lisa – smart and motivated? Mr Burns – evil and calculating? Homer – dim-witted and accident prone? In my view, considering the current state of tenancy laws, Australia is Homer. And that makes me very sad.

See more:

• Andrea Petrie and Ben Butler, ‘Frank Cassar, Australia's worst landlord, has his day in court’, The Age, 3 August 2011
• Denis Napthine, ‘Supreme Court orders injunction against Frank Cassar’, media release, 8 August 2011

 

 

Bond Interest: Final Comments

Now comes the fun part. There’s enough holes here to sink a leaking ship. I almost feel like running for political office. 

Tenants are expected to pay for law reform, dispute resolution, information services, and administrative management. Why isn’t a tax imposed on real estate agencies? They are a business and landlords pay for their so-called expert services. Some landlords make a business out of the investment in residential properties. This is substantively different to the provision of goods and services. Why isn’t a tax or levy imposed on landlords for the use of advisory services?

I don’t have any particular knowledge of the intricacies of government funding so I will talk in loose terms. Say we have a workers compensation authority that is funded by premiums. Premiums are used to influence the behaviour of employers so they provide a safe working environment for their employees. Say we have a local council that fines car owners for parking infringements. Car owners are penalised if they don't pay for parking. I won’t get into how many parking fines I have been given!

When it comes to interest accrued from residential bonds, tenants have not done anything wrong. They have not violated a law or committed an unlawful act. The accrual of interest from tenant bonds is substantively different. I’m going to pretend to be a government administrator. I understand the need to pay for programs and services. But this must be done in a structurally fair and just manner. In some states and territories, landlords can be investigated and fines can be imposed. I would be interested in figures which show the breakdown of interest compared to penalties. What would this show?

 

Institutionalised, legalised and systemised bullying is no worse than a child beating up peers on the playground. Who is the bigger bully? The landlord or the government? Have we merely swapped one for the other? Clearly it is better for a statutory authority to hold onto bonds rather than landlords. Before the reform in Tasmania, some landlords were treating bond money like it was their own money for personal use. But if the money is managed by a statutory authority, and landlords exploit loopholes and unfairly claim bond moneys anyway, what is the point of another level of bureaucracy which tenants pay for anyway. Sorry if I sound a bit harsh but good intentions don't translate to results on the ground.

I would also ask why tenants should pay for a system that is legislatively and administratively biased in favour of landlords. Tenants are paying for a system that does not effectively enforce their rights. If we take a birds-eye view of tenancy laws, we can see the significant impact of landlord lobby groups and the somewhat tortured attempts of hamstrung tenant advocacy groups.

The use of tenant bond interest also raises a few questions. Why should tenants in the private sector forego advice and advocacy to provide for public housing they don't use? Why should a government have access to tenant interest for general governmental purposes? Funding is important. As everyone knows, money is power. Tenant services have done the absolute best they can do with the funding they have been provided by respective governments. When the same body makes decisions about funding of tenant services, but also provides public housing, there is a conflict of interest.

States and territories permit the allocation of funds for the purposes of research and education. Education is great. I’m all for it. Whether this happens is another matter. But I’m looking at the bigger picture here. What is the point of tenants knowing their rights when their rights are not that great to start off with? What is the point when landlords have better rights, and more loopholes to exploit?

Turning to the funding of tenancy tribunals from residential bond interest. Let’s use Victoria as an example. From figures provided by VCAT, roughly 95% of applications are lodged by landlords. Surprise, surprise. I have even heard VCAT referred to as a kangaroo court. I don’t believe for one second this figure accurately reflects the division of fault between tenants and landlords.

Statistics only take us so far. But I think it shows the current system is biased in favour of landlords. We can’t draw this conclusion in relation to all states and territories, but I wouldn’t be surprised if figures were similar. I think the tribunal system has failed when it comes to tenants. Whether it comes down to legislative instruments or judicial discretion is anyone’s guess. 

My brain hurts now as I’m sure yours does. So I am going to end this post on a light note. View animation below for a few laughs.

Bond Interest: The Rest of Australia

As promised, I have looked into what happens to interest accrued from residential bonds in states and territories other than Queensland. This is a departure from my usual approach but the question  is obviously very pertinent to tenants. So here is my tedium alert.

In New South Wales, rental bonds are pooled to earn the maximum amount of interest. Tenants are paid a small amount of interest provided the bond is returned. The rate at which interest is payable is determined by the Commonwealth Bank on a balance of $1000. See section 173 of the Residential Tenancies Act 2010 (NSW). How did they arrive at this figure? I would think that the average bond amount is significantly more. From the start of this year, the average rent per week is about $500. Creativity rather than mathematics is my forte, but this seems decidedly odd to me. The majority of income earned from the collective pool is allocated to the Consumer, Trader and Tenancy Tribunal and the Tenants Advice and Advocacy Program.

In Victoria, tenants are not paid any interest earned on their bond whether it is returned or not. See section 436 of the Residential Tenancies Act 1997 (Vic). From what I understand, the interest goes towards funding the Victorian Civil and Administrative Tribunal. Apparently it used to fund tenants’ advice and advocacy services but this is no longer the case. The Tenants Union of Victoria is dependent on the Office of Housing, Victoria Legal Aid and Consumer Affairs Victoria.

In Western Australia, tenants are not paid any interest at all. I could not locate much information. But I think interest is earned from a collective pool of bonds from which investments are made. Some of the income is given to the Department of Commerce Bond Administration Section as reimbursement for costs and expenses. The WA Magistrates Court can also clawback some funding relative to the number of minor tenancy matters.

The WA Department of Housing also gets a bite of the cherry and can access funds for any public housing purpose if available. If there are any funds left over, the WA Government can step in and allocate funds to the consolidated revenue account.  Check out the schedule to the Residential Tenancies Act 1987 (WA).

I would be interested in figures which indicate how much money the WA Government takes from tenants. Apparently, grants can be applied to WA tenants’ advice and advocacy service. But this is the notice I found when I looked at the website of the Tenants Advice Service - 'Due to unforseen circumstances, Tenants Advice Service is unable to give advice for the foreseeable future and apologise for this inconvenience. If you are in need of urgent assistance, please contact either Department of Commerce or Community Legal Centre'. All telephone and email advice services are not available. What’s going on here?

Turning to South Australia, things get a little better. Interest is accrued from a collective pool of bonds and invested like in Western Australia. The Commissioner for Consumer Affairs and the Residential Tenancies Tribunal are reimbursed for the administrative burden of handling tenancy services and matters. Unlike Western Australia, however, tenants are entitled to some interest from their rental bond. The interest is calculated under a formula released by the Minister for Business Services and Consumer. The interest calculated depends on the amount of bond returned to the tenant. It accrues from the date the tenant paid the bond to the date the tenant is reimbursed. Look at section 63 of the Residential Tenancies Act 1995 (SA). This process seems to be a lot fairer than what we have seen in other states and territories.

It gets somewhat better when we head north to Australia’s famous Uluru. In the Northern Territory, there is no bond authority like other states and territories. A tenant is entitled to interest if the bond money is kept in an interest-bearing trust account. This is so except when the bond amount is held by a real estate agent. For some reason, and I don’t know why, real estate agencies are entitled to the interest. See section 114 of the Residential Tenancies Act 2012 (NT). They’re laughing all the way to the bank. They collect their fee from the landlord and obtain interest from tenants on top of this. Clearly, the downside to this approach is that not as much interest accrues but there is no need to pay for the operation of a statutory body.

Turning to the home of Lack Burley Griffin. The way interest is managed in the Australian Capital Territory is similar to most other jurisdictions. Bond money is kept on trust and interest is kept in a special account. The interest is put towards the operation of the Office of Rental Bonds and the ACT Civil and Administrative Tribunal. The Tenants Union ACT is allocated funding for some of its services. See section 28 of the Residential Tenancies Act 1997 (ACT).

If we look south to the island state, Tasmania is in a period of transition. In 2009, the Rental Bond Authority was introduced along with the Residential Tenancy Commissioner. In 2009/2014 period the new scheme is expected to cost $1.5 million. Apparently, it will be run on a cost-recovery basis until managed bonds start to bear interest.

I will make my conclusions in the next instalment...

 

See more:

'Rental squeeze hits in Australian capital cities', News.com, 20 January 2012

 
 

Bond Interest: The Queensland Experience

The state and territory governments deal with interest accrued from residential rental bonds in different ways. I have developed an interest in this issue because of the recent events that have taken place in Queensland. This is what happened...

The QLD Tenants Advice and Advocacy Service (TAAS) is funded at state level by the Queensland Government. Or rather, it was. QLD Housing Minister, Bruce Flegg, decided to discontinue tenant advice services and reallocate funds towards social housing.
The 20-something affected services quickly swung into action and created a powerful grass-roots movement. The Commonwealth Government, through Housing Minister Brendan O'Connor, stepped in with emergency funding taking tenants’ services through until June 2013. At this stage, we don’t know what happens after that.

At first glance, you might think Mr Dis-Honourable made the right decision. After all, people are homeless...right? But think again. It is patently clear he does not understand push factors into government housing, for example, mental health issues. Tenant advice services help vulnerable and marginalised individuals with problems that might result in their removal from existing housing onto the streets. 

If we understand housing to be a significant yet under-rated human right, how would an action contributing to housing by detracting from it make any sense whatsoever? In any attempt to tackle homelessness, the government needs to understand the social ramifications of its action. We have seen that 1970’s style with the well-intentioned creation of public housing ghettoes. In the ghetto (insert falsetto).

I also understand that the funding allocated to tenant advice services in Queensland is but a small proportion of overall interest generated from tenants’ bonds. So how will its reallocation to the creation of additional public housing stock alleviate the stress placed on housing to any significant degree? Last year, the collective interest earned in Queensland amounted to about $41 million and a mere 12% (about $5 million) was allocated to tenants’ advisory services.

Or does Mr Dis-Honourable have other ulterior motives? I’m a straight shooter and naturally suspicious…but his decision to introduce a three-strike policy sounds ominous. He wants to ‘crack down on unruly tenants’ by evicting them if they receive three strikes for disruptive behaviour like noisy parties, vandalism, or destruction of property. But these kind of social issues are usually managed by other laws. For example, criminal charges can be levied against a person for certain things, like assault and battery. If these deterrents aren't effective, shouldn’t they be reassessed? He is basically saying is law-breakers don’t have a right to housing. I quite agree with measures which encourage respect for government housing and deter property damage. But even prostitutes, junkies, and other degenerates need a place to live. With changes such as this foreshadowed, TAAS will be needed to protect the rights of public housing tenants.

My understanding is that we ('the taxpayers') pay money ('tax') to our governments for community programs and services. Mr Dis-Honourable has presented Queensland with a false dichotomy. Clearly, it’s not a question of one or the other. The provision of public housing for vulnerable and marginalised peoples is a core government service in a wealthy country like Australia.

The Queensland Tenants’ Union also makes an interesting comparison between tenants and landlords in the context of government-funded home buying incentives. In Queensland, I understand the government has reintroduced stamp duty concessions for repeat home buyers. Tenants are expected to pay tax and forego interest earned on bonds to support a system that perpetuates injustice while the government actually supports the concentration of wealth in repeat home buyers who become landlords. It is structural inequities such as this that result in the clique - the rich get richer and the poor get poorer.

 

I support the use of economic stimulus provided it is applied in a fair and equitable manner. I guess it is the dream of most Aussies to have a home and a patch of grass to call their own. If the Commonwealth government was to step in and reform the sector, here’s an idea. For tenants who want to own their own home one day, why can’t the interest earned on rental bonds be allocated towards a deposit?

 

In my next instalment, I will look into what happens to bond interest in other state and territories.

See more:

• Penny Carr, ‘Bruce Flegg's decision to stop funding tenants' advisory service will cost all Queenslanders’, The Courier-Mail, 7 September 2012
• Sarah Vogler, ‘Unruly public housing tenants face three strikes home policy’, The Australian, 31 October 2012