The State of Victoria has just announced a raft of reforms aimed at strengthening the rights of tenants. NZ-born, Melbourne-based tenancy lawyer Joe Nunweek reviews the changes – and the chances of New Zealand following suit.
For three years as of last month, I’ve been living in the State of Victoria. There’s living here, and then there’s living in Australia. Huge amounts of time when I’m Skyping my parents and their enormous cat get eaten up trying to explain the bizarro culture war shit that comes with this country – politicians shrieking about Macklemore turning a generation of NRL fans gay, a former Prime Minister saying climate change is Actually Good because people die in cold snaps, offshore detention centres whose suffering only appears to exist to outrage the federal government’s snowflake opponents.
Victoria is a bit better – uncannily close to a drier New Zealand, with a similarly socially progressive tilt in its population (it’s ahead of the curve in its attitudes to marriage equality and refugees). Unfortunately, its modern housing story is a lot like ours too – home ownership rates have fallen to the 65% mark from 75% in the 1990s, and renting has become a life-long prospect for people who probably always thought they’d buy a house. Both operate under a 20-30 year old legislative model – a procedurally complex raft of corresponding duties that give tenants a lot of responsibilities, but few meaningful rights and few minimum standards of rental accommodation.
In 2015, the then-new State Labor Government here announced a full review of the Residential Tenancies Act 1997. A gruelling gauntlet of half a dozen or so individual review papers followed – my co-workers and countless others in the charitable and legal aid sector hammering out thousands of words at a time to say our piece, along with landlords and tenants themselves (all opinions here, I should note, are strictly mine and not those of any organisation).
The pessimist in me was waiting for some sort of compromised draft legislation,and the RSI-inducing pleasures of annotating it line by line. Instead, political imperatives have overtaken things. Labor has the fight of its life to keep their inner-North seat of Northcote from going to the Australian Greens in a by-election in November. 40% of the electorate are renters. I have no idea of the machinations, but the Victorian government’s tenancy changes have dropped overnight, Lemonade-like, in an audio-visual splash of tenant stories and warm promises. The devil’s going to be in the details, but the big picture is looking good. The important changes, to my mind, are:
An end to ‘no reason’ evictions!
In Victoria and Aotearoa alike, tenants can be given Notice to Vacate without reason (120 days in Victoria, 90 days in Aotearoa). There’s a thin line of defence to this to save the tenancy if the tenant has the paper trail (and the capacity) to argue that this was issued in response to their raising a right (to repairs, to quiet enjoyment) with the landlord.
Mostly, it just has a chilling effect. Going to court to avoid an eviction isn’t nice, even if you’re in the right, so you don’t raise a fuss. Landlords who do have one notice like this struck out can issue another weeks later. In my experience, these generally succeed, making the right of challenge meaningless.
Worse, the people I see targeted by these notices (and without a leg to stand on) tend to be the most vulnerable ones. You get a no-reason notice because you have an acquired brain injury and shouted ‘fuck’ in the HNZ office when you lost your temper. You get it because your PTSD meant you kept rescheduling the mandatory inspection by the real estate agent, a male stranger. You get it because the property manager thinks you’re a mental, tells the landlord so, and suggests getting someone easier to deal with in (on a higher rent, no less).
The for-cause reasons to end a tenancy: rent arrears, illegal conduct, malicious damage, the landlord moving in themselves, etc. – they’re all still there. This gets rid of an ‘at will’ termination that’s a very old and feudal sort of thing to use – the kind of thing we got rid of in employment law but that has hung around in tenancy.
A landlord blacklist
Victorian (and Australian) law tightly prescribes the retention and collection of information on so-called ‘residential tenancy databases’. Tenants’ details can end on these blacklists – commercially operated by information brokers – for serious things like possession orders for arrears or illegal conduct, or damage left behind after a tenancy that exceeds a bond. The information must be delisted after a period of time (ordinarily three years) and there’s an enforceable right to correct it.
The Andrews government is silent so far on two of my big concerns – making access to these commercial databases free and easy for tenants, and protection for victims of domestic violence (your violent ex-partner trashes the place in revenge – you’re listed and can’t get a place). But it’s made the fair call, given we live in a demon panopticon of our making, that landlords who are found liable for their serious breaches of tenancy law should also get named and shamed.
I’d be all for this levelling in Aotearoa, except that we don’t regulate the Wild West databases we have right now. Outside of the Privacy Act, there’s no specific legislation governing how a business like Tenancy Information New Zealand runs itself, but it’s likely that aspects of the arrangement – the right to put up photos of tenants and subjective ratings on things like tidiness and consideration to neighbours, in particular – wouldn’t past muster over the ditch.
In 1999, a month’s bond might have been about $500.00. No longer. My one on my present property, as an example, is $3500. Bonds are bad enough when you’re paying one, but tenants often find themselves having to pay two, coughing up thousands of dollars for the next place without knowing when they’ll get their old one released to them. If it drags out, tenants find themselves unable to make rent (or feed their kids, or fill their car) in the new home.
The Victorian changes will codify the ability for tenants and landlords to mutually agree to the release of the bond and have it paid out up to 14 days before the tenancy ends. This is arguably something that good tenants and landlords could come to as a private arrangement now, but changing the legislative framework in either country could shift attitudes – and end the draconian “you get your bond when you’ve moved out and I’m happy with it, and not before” attitude of some landlords and agents.
To be honest, my view is this is something where innovation has outpaced the law and the reforms have missed the boat. Residential bonds are garbage – relatively huge amounts of money that sit tied up for years. Some landlords claim for wear and tear, or worse, their own renovations – tenants who need at least part of that bond back ASAP will settle, and so goes a slow erosion of low-income people’s wealth and savings.
New products like South Australia’s Trustbond, a surety product brokered by a startup and underwritten by an insurer, require a tenant to pay a fraction of a bond and may offer a more vigorous vetting process of landlord claims. If this model spreads, legislating bonds in 2017 could be like legislating taxis in 2013.
The Victorian government’s terms of reference made it abundantly clear they wouldn’t touch rent control in Victoria with a ten-foot pole (though I raised it anyway, you always miss the shots you don’t take). But rent rises will be limited to once every 12 months, rather than once every 6 (as is the case in both jurisdictions right now). They’re also going to outlaw the practice of rental bidding where you offer more than the advertised price, or get encouraged to do so to secure a property. This will effectively outlaw rent-bidding apps like Rentberry in the state of Victoria. Contra my enthusiasm for innovation in bonds, I’m glad to see what was described as ‘the Martin Shkreli of startups’ take an L. Aotearoa, where the housing crisis is arguably worse, should do the same.
Absolutely huge. Daniel Andrews got on facebook and said ‘puppers’ and ‘doggos’ to sell this one over the weekend, but it can be excused if the change pans out. Tenants will be able to keep pets, provided they have the written consent of their landlord. Here’s the kicker – the landlord won’t be able to unreasonably refuse that consent.
Tenants in both jurisdictions already have an obligation to leave the house tidy and correct careless damage right now, so I’m glad that it looks like Victoria rejected the idea of additional ‘pet bonds’ – yet more bond money tied up for those who love a pet enough to afford it.
It was no secret that Victoria was looking abroad to Western Europe for inspiration, where tenants habitually live in homes for several years and even decades and make them their own – landscaping, painting, and daring to install aerials and dishes. To this effect, they’re preparing a template long-term lease agreement for tenancies longer than five years.
The other thing they’re doing is preventing landlords from unreasonably refusing consent to make modifications – put up a print on the wall, or safely install furniture like a TV bracket. Again, it’s a big perception shift, which will end perverse outcomes like the one I saw where a tenant re-landscaped and re-painted a property at her own cost (and well!) only to be ordered to pay the landlord to restore everything to its original condition (uglier plants, uglier colours).
Meanwhile, Over the Ditch…
Above all else, the Victorian government’s reforms are a kind of acceptance – people are renting for good, so stop blathering about getting tough on foreign speculators and actually make it work. I’m not sure that the #nzpol discourse, which was very caught up in the Kiwi home ownership aspiration this campaign just gone, is quite there. National intends to work to fix its biggest PR embarrassments (legislate for actual meth-testing standards, legislate against slumlords cramming families in garages), but their focus is on would-be owners.
Which leaves New Zealand Labour, who could do a lot worse than emulate the trajectory of Victoria’s Labor. Their policy says they’d increase many for-cause notice periods and limit rent rises to once every 12 months. They’d also introduce comprehensive minimum standards, an idea we have the NZ Greens’ original Rental Warrant Of Fitness bill to thank for.
But there’s some completely inept stuff in there. Confusingly, Labour say they will abolish no-reason notices, but they’ll retain the ability of landlords to ‘get rid of tenants who are in breach of the tenancy agreement with 90 days’ notice, or more quickly by order of the Tenancy Tribunal’. That’s a very broad (and cruel) sounding basis for ending tenancies, one that could allow a tenant who’s a little erratic with their rent to be put out on the street.
The approach to alterations is just as bad. Tenants will be able to make alterations if they pay double bond, and on the basis the property will be restored to the condition it was at the start of the tenancy. Unless there’s serious exemptions for elderly or disabled tenants and their reasonable modifications, this policy won’t just be unfair – it could be discriminatory.
It’s over-cautious stuff without a long-term vision – not necessarily the product of a caucus of landlords, but certainly the product of a caucus of people who rented for a bit in their twenties and don’t really remember it.
Even these proposals were enough to make the NZ Property Investors Federation run bunk survey results claiming that Labour would drive rents up. Indeed, there’s nothing they could do as a new government that wouldn’t make the usual suspects cry foul. They’ve already done so in Victoria, where threats of a landlord exodus from the market have correctly been called ‘economically illiterate’ by the Grattan Institute’s John Daley.
If they do form government, Labour have made some big promises around housing. Given that tenancy reform is an easier ask than tax reform, which they’ve deferred, or an unprecedented house building programme, it’s worth asking whether Labour will follow the lead of their counterparts in Melbourne and show some boldness. If nothing else, it’s an opportunity for a politician to hold a cat or dog while beaming into the camera and call it policy, a basic test of competence we should all expect.
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