Rental rights

When it comes to residential rental rights and protections, why is it that Australian tenants are far worse off than those in similar countries?
 
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01 .Tenants' rights

Renting

As far as rights go, Australian tenants are left in the dust by many OECD (Organisation for Economic Co-operation and Development) countries.

Of the 34 OECD countries, Australia is one of the few that allows “no grounds” evictions. Plus, renters are forced to accept short leases and very few restrictions on rent increases. Property owners in Australia can limit a lease to any length and let renters know it won’t be renewed any time they want. It’s probably no coincidence, then, that Australians move house more than any other OECD citizens except Icelanders.

Martin Barker, a tenant advocate at Sydney’s Inner West Tenants’ Advice and Advocacy Service, characterises Australia’s lack of tenant support as an “international anachronism”, especially compared with the enlightened rental regimes of countries such as Germany and the Netherlands. 

Tenancy issues

Easy eviction has meant living in a state of stressful uncertainly for many tenants, according to Barker. “It really removes renting as a reasonable long-term option, despite the fact that many people are forced to rent anyway.” Tenants in NSW, for example, can be evicted “for no reason at all” once their fixed term is up, Barker points out, and many landlords in the Sydney area are currently leaning towards terms of six months, or 12 months “at best”.

This is a prime piece of evidence that the system is skewed in favour of property owners, but there are subtler inequities as well. If a tenant in Victoria, WA or NSW needs to break their lease for any reason, they can be required to continue paying until the rental agent or landlord fills the property or the fixed terms ends. Lease breakers in these states can also be liable for maintenance and the rental agent’s advertising costs.

Compare this with Germany, where leases effectively confer permanent occupancy; a tenant need only give three months’ notice with no further obligations. And, in the limited circumstances under which a tenant can be evicted, landlords must give six months’ notice if the tenant has been there five to eight years, and nine months if they've been there longer. 

In NSW, revisions to the Residential Tenancies Act in 2010 further undercut long-term rental security, argues Barker. In a compromise with the landlord lobby, the notification time frame for eviction of month-to-month renters was increased from 60 to 90 days. The trade-off was that the Consumer, Trader and Tenancy Tribunal (CTTT) lost its discretionary power to overturn no-grounds evictions. “Now, if the landlord issues you an eviction notice, you’re gone,” says Barker. (The CTTT can still adjudicate in cases where the landlord wants to evict a tenant on the grounds they’ve breached the terms of the lease.) 

Then again, a win at the NSW CTTT for a tenant in a no-grounds case did little to improve rental security, according to Barker. Tenants could previously challenge a no-grounds eviction if they believed it was issued in retaliation for making a complaint, but “even if they did win they would certainly have been on their landlord’s bad side and, at best, would have only had another year. It made people very reluctant to stand up for their rights”.

 
 

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I’m very reluctant to bring up anything because, among other things, I’m concerned about getting a good reference for another rental

Renting can be stressful no matter where you live. However, over the years, CHOICE has heard from a number of families living on Sydney’s northern beaches where competition for rentals can be cut-throat and the renting life can mean moving house every year and having to send your kids to different schools. None of the renters we spoke to had been able to secure more than a 12-month lease over the past decade or so; and none had any certainty about whether the rent would be affordable if they were given a chance to renew for a second year. 

The northern beaches rental market is notorious for one especially rapacious practice: some property owners make sure any fixed lease ends before Christmas so the property can be turned over to holiday renters. At Christmas time, properties in the general vicinity of the ocean can command as much per day as regular tenants pay per week. Since landlords only have to give renters 30 days’ notice that they won’t be renewing a fixed-term lease when it’s coming to an end, renters may only find out in November that they’ll be out the door by December.

Fear of complaining 

It’s no better for first-time renters, some of whom have learned to put up with poor, yet pricey, living conditions. “I’m very reluctant to bring up anything because, among other things, I’m concerned about getting a good reference for another rental,” says CHOICE staffer, Madison Cartwright. “Things that are wrong with the place were obviously that way when we moved in. I know a lot of first-time renters are in the same situation. There’s an unspoken understanding that you don’t complain out of fear you’ll be evicted.” With Cartwright’s fixed lease period behind him, his status has automatically reverted to month-to-month, a state of limbo that the landlord can prolong indefinitely. “Now I don’t want to say or do anything for fear that the rent will go up.”

Another 20-something month-to-month renter we spoke with, who lives in the Sydney suburb of Newtown, is well acquainted with the dangers of complaining. “The house has been falling apart for a while now; no money has been put into it whatsoever,” says Elise C. “We finally sent six or seven emails to the rental agent over a few weeks. A little while later we got a letter saying the rent would be going up by $110 a week, starting in a month. I’d say there’s definitely a connection between our complaints and the rent increase.”

Elise’s story was echoed by many of the responses we received to our social media call-out asking whether worries about rent increases or eviction made renters reluctant to complain. Senior policy officer at the Tenants’ Union of NSW, Chris Martin, tells CHOICE the advocacy service “gives advice to tenants about getting repairs done all the time – and concerns about whether raising these issues with their landlords will adversely affect their tenancy is a common theme. It absolutely has an effect on their willingness to assert their legal rights.” 

However, this isn’t to say there aren’t also conscientious property owners out there having put up with unscrupulous renters. Merryl E asked us to “spare a thought for the landlord who sees her property deteriorate with bad tenants; where extra people and animals come for a ‘short stay’; where the rent is constantly in arrears; the water and council rates, insurance and repair costs keep going up; and the rent nowhere near matches the mortgage interest and costs”. 

Considering the upward trend in housing prices over the past decade, it’s no surprise that Australians have been increasingly forced to rent. According to a widely cited 2013 International Housing Affordability Survey by the US-based public policy firm Demographia, all of Australia’s major housing markets (cities with a population of more than one million) and three-quarters of all our markets are in the “severely unaffordable” category, which means houses cost more than five times the median income for those areas. 

After Hong Kong, Australia is the least affordable of the seven countries reviewed, followed by New Zealand, the UK, Canada, Ireland and the US. The findings for Australia reflect “vastly overpriced housing”, the survey’s authors wrote, with Sydney, Melbourne and Perth seeing the sharpest spikes since 2000. The authors add a wistful note to round out their analysis, saying the stark message of the report is aimed at “younger generations who have a right to expect they will live as well or better than their parents, but may not, in large part due to the higher cost of housing that is driven by exorbitant increases in house prices relative to incomes”. 

The outlook for the rental world is not much rosier. Between 1995 and 2010, weekly rent has increased by about 45% across the nation, according to the ABS (after adjustments for inflation). But rents in the markets where most Australians live are much higher than in regional Australia (Adelaide’s housing costs, for example, are 53% higher than the rest of SA). 

Did you know? 

The federal government established the National Rental Affordability Scheme (NRAS) in 2008, aimed at stimulating the supply of 50,000 new affordable rental dwellings across Australia by June 2012. The goal is for lower- and middle-income consumers to have access to rentals at 20% below market rates.

As of June 2010 there were 12,830 rentals available; the deadline has since been extended to 2016. A couple with one child can apply if they make $96,068 or less; a single person if they make $56,043 or less. Eligible consumers must apply through a tenancy manager in their state or territory. Tenancy managers are listed on the NRAS page.

CHOICE verdict 

Tenant advocate agencies throughout Australia have long pushed for the abolition of no-grounds evictions, a position we endorse as a starting point for better renter protections. “It wouldn’t be a big deal for most landlords, and it would improve things considerably for tenants,” says Martin. “It would also go a long way towards alleviating the insecurity people feel about renting.”

Our graphic shows how rental conditions in Australia stack up against other, comparable nations.

rental-right-infographic

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