Podcast: Death threats and no-fault evictions

Can you imagine that you simply want to exercise your rights to have your defects fixed and a representative from the developer bails you up in the street and tells you people have been killed for less.

Or your chair was in cahoots with the developer and agreed to an $80,000 pay-off for $3million worth of defects?

Or your strata manager was so incompetent that he put the strata scheme’s legally binding seal on a contract that had been changed by the developer to say that you would pay the wages of their corrupt and sexist building manager indefinitely if your block forced him out.

This week we’re looking back as the Owners Corporation Network celebrates its 20^th anniversary, with a glance back at its early days when there was complete lack of government interest in strata … except as a good source of political donations from developers.

---

LISTEN HERE

---

But first, there’s good chance that if you’re reading this you are either a tenant, have a neighbour who’s a renter, or you’re a landlord (“property provider” in Victoria). After all, more than 50 per cent of strata residents rent their homes.

With the Greens announcing that they want to introduce a ban on “no-fault” evictions in NSW, we have something a focus on tenants this week.

Similar legislation has been in place in Victoria for over a year, but what does it mean? Can tenants only have their tenancies ended if they behave badly?

And if there are valid reasons for ending tenancies – like wanting to move back in, or need to renovate – what if the landlord or agent lies about them?

We also look at a survey that shows landlords are three times as likely to take their tenants to a Tribunal than vice versa, and why, surprisingly, social housing organisations taking tenants to NCAT outnumber “civilian” landlords by similar proportions.

That’s all in this week’s Flat Chat Wrap podcast.

If you like this post or find it helpful, please share it with interested friends using the social media buttons. If you wish to respond, registered readers can add a comment at the foot of the story or, we’d prefer, on the Flat Chat Forum.

TRANSCRIPT IN FULL

Jimmy  00:00

We’re going to be talking a lot about renters this week. There’s a report out by the Tenant’s Union about who is taking whom to the Tribunal, NCAT. And the Greens have announced that they want the laws changed to something like they have in Victoria, where you cannot have a no-fault eviction.

Sue  00:20

Yes, look, that’s long overdue, I think, really.

Jimmy  00:24

And we’ll also be talking about a big anniversary this year; 20 years of the Owners Corporation Network. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  00:34

And I’m Sue Williams and I write about property for Domain.

Jimmy  00:36

And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

Okay, well, look at the Tenant’s Union New South Wales; their survey into who is taking who to Tribunal and why. There’s some quite surprising figures in there; social housing landlords are three times more likely to take their tenants to the tribunal, than ordinary landlords… Commercial landlords.

Sue  00:36

Why is that?

Jimmy  00:54

Well, it seems to be that the reason that they take them is because of non-payment of rent, which is the most common reason for anybody to be taken to the Tribunal.

Sue  01:26

Sure. I guess it’s become more common these days, because rents have gone up so hugely. And also, we’ve had COVID, and lots of people lost their living.

Jimmy  01:36

But the interesting thing; well you think the social housing people are (and that’s affordable housing and housing associations, and community associations and things like that)… You think, well, they’d be the last to take their tenants to a Tribunal. But it turns out that even though they do take the tenants to Tribunal, it’s not to get them evicted… It’s to basically force them to sit down and talk about a payment plan. So it’s kind of like…

Sue  02:05

A mediation, really.

Jimmy  02:06

Well, yes, I guess in a way. I think it’s signalling to them, look, this is serious. You can’t keep not paying rent and expecting us to live with that, because there are other people who need this housing, who will pay the rent. So the other aspect of this is, that the landlords are more likely to take tenants to the Tribunal, than the other way around.

Sue  02:28

Really? That’s surprising. I would have thought there’d be a lot of tenants taking their landlords to the Tribunal. Maybe, you know, lots of roofs leaking during all the rains; lots of mould and landlords refusing to fix it up. Landlords charging them more; huge raises in rent. So I would have thought it would be the other way around, so why is that?

Jimmy  02:48

I don’t know. I mean, the thing is, the reason that tenants do take their landlords to Tribunal tends to be over things like bonds; the non- repayment of bonds, at the end of the tenancy. Or occasionally, it’s because of rent rises that they think are excessive. There’s a bit of a mythology around the whole thing about, is there a limit on rent rises? We were talking to people the other day, and they were saying, oh, it can only be 10%, (which is not true, actually). The limit is, whether the Tribunal thinks it’s fair or not. So your landlord could come to you and say “we’re putting your rent up by 12%” and the Tribunal can go ‘well, let’s look at any work that the landlord has done on the apartment, or the house. Have they put in new fittings? Have they improved the standard? And what are the other rents in that area?’

Sue  03:42

What is something comparable?

Jimmy  03:44

Yes, what’s the benchmark for that area, and if that new rent isn’t excessive, then yes, the Tribunal will probably say “yes, it’s fair.” So all these ideas that there’s a limit to the amount that rent can go up…

Sue  04:00

It’s just not true.

Jimmy  04:00

Yes.

Sue  04:01

Is it true in other states; in other states, can you only put the rent up by say, a maximum of 10%?

Jimmy  04:06

I don’t know. I think most of them go by the basis of whether it’s fair or not. I mean, if you’ve got a tenant who has been sitting on a low rent for two or three years, and you go to them and say ‘look, we’re going to put this up to a fair rent, because we are paying a mortgage, or whatever…’ I think most places, they’d say well, even though it’s quite a large amount, it is a fair rent that they’re being asked to pay. But there are limits on how often these rent rises can be applied. I mean, if it’s a fixed-term contract, it can’t…

Sue  04:41

Change the rent within that period.

Jimmy  04:42

In the middle, unless it’s actually written into the contract, that rents will go up, according to CPI, or something like that.

Sue  04:50

Because friends of ours have just rented out a unit that they’ve had as an investment, and they’ve let it out on a two-year contract, but the people actually wanted a five-year contract, because they felt that that would limit any rent increases that would happen later on. it’s quite hard to work out what’s going to happen five years hence, really.

Jimmy  05:09

Yes, I think; I mean, a more reasonable thing would be to attach the rent increases to mortgage rates; interest rates. So if you’re paying more as as the owner (as a landlord), then you might want to pass some of that extra cost on to the tenant.

Sue  05:28

Maybe half of it; that would be fair, wouldn’t it?

Jimmy  05:31

The thing about contracts is, that both parties have to sign; it’s something that people agree to. I think, you know, the idea that you would lock the landlord into a five-year contract; that was never going to fly, really.

Sue  05:45

It’s difficult at the moment, I think, because a lot of people managed to get lower rents during COVID and now COVID is kind of over (hopefully), rents are surging, again. Landlords don’t feel too much compunction about putting up rents to a more realistic level. But then again, there is such a shortage of rental stock and renters are so desperate to find places, especially with overseas students coming in now and overseas migrants about to come in as well… It’s a really difficult time. Rents are going up massively.

Jimmy  06:16

I mean, that’s one of the reasons that the Greens want to bring in the no-fault (or the end of the no-fault eviction). And as we’ve said before, Victoria already has this. I just want to say something here about the mythology and the misinformation about tenancies and rentals… The best source of information for how rents are controlled (or not controlled), and all about evictions, and how they can be done… The Tenants Union in all the states where they exist, and certainly in New South Wales, and Victoria…

Sue  06:51

And Queensland, too.

Jimmy  06:52

They have terrific websites. They have fantastic fact sheets, and if you are a landlord, and you’re worried about what you can do and what you can’t do, and what your tenants can do, and what they can’t do, it’s the best place to get that information, because then you know exactly what information your tenants are getting, as well. So, you’re on the same page, literally. If you just Google ‘tenants in your state,’ it will take you to your state’s Tenants Union website. So this idea of the ending of no-fault evictions; it’s been in Victoria for over a year now, and it’s quite interesting, when you look at their website, and you think, ‘well, how does that work?’ So basically, there are certain reasons that landlords can give to terminate a rental agreement and apart from an emergency, like the house is uninhabitable (which I’m sure as heck with all the floods happening, there’ll be a few of those around).

Sue  07:55

There will be things like, they want to move in themselves, or they want to renovate; that kind of thing.

Jimmy  08:00

Yes. The family member wants to move in, or they want to turn it into a business. I wonder if that applies to Airbnb and things like that? That’s one of the reasons and the other one is that they want to do major renovations and it would be unsuitable for somebody to still be there. Interestingly, you would think, well, some unscrupulous landlords might go ‘oh, we’re going to renovate, or my cousin’s coming from Canada, so you have to move out.’ Then, you find out that this hasn’t actually happened. They’re not allowed… If the landlord wants to terminate the agreement, they have to go to Tribunal in Victoria, and get permission from the Tribunal, to terminate. Now, if they go to the Tribunal and say ‘oh, we’re terminating the tenancy, because we’ve got a cousin coming from Canada, or whatever;’ one of the valid reasons, and then that doesn’t happen, they are not allowed to re-let that property for six months, without the permission of the Tribunal.

Sue  09:02

Wow!

Jimmy  09:03

You know, you get kicked out of your rental property and then you notice that there’s somebody else in there; somebody that you know, or that there’s no renovation work going on, or whatever… You can go back to the Tribunal and say ‘look, they told you they were going to do this and they haven’t done it’ and the Tribunal can say ‘okay, that’s it; cancel the rental for the next six months.’

Sue  09:24

That’s a powerful incentive, to act honestly.

Jimmy  09:27

More likely, the Tribunal would do it, if you saw the property being listed for rent. Like, before somebody’s moved in, they would say ‘no, you’ve got to stop this.’ And then, the landlord has to go back and plead their case, to the Tribunal, or they wouldn’t be allowed to put it up for rental for six months.

Sue  09:46

That’s great, to be able to give tenants a more definite idea of how long they can stay in a rental, isn’t it? You know, the difficulty is the stability; it’s a huge problem and it’s a huge cause of anxiety for tenants. If there is a proper eviction clause and proper eviction laws, then that will be a great thing.

Jimmy  10:07

Yes, so we’re going to take a little break and when we come back, we’re going to talk about the kind of scenario that tenants can get into, where they’re being given a rent rise, or they are being told that they’ve got to get out, or the barriers that there are for tenants, trying to just get a fair deal. That’s after this.

[MUSIC]

Jimmy

And we’re back. Now, one of the reasons that the Greens want to get rid of the no-fault eviction, is because landlords use that as a way of putting up rent.

Sue  10:43

But then, if there are no limits on how much you can put up rent, anyway?

Jimmy  10:46

Well, there are. You can’t make it excessive.

Sue  10:49

So if you evicted somebody, then you could actually put up the rent excessively, because you’re not going to get any objections. And hopefully, you’ll get people…

Jimmy  10:58

Yes, you kick them out. If they are on a periodic tenancy, which is the one where people have been there on a tenancy agreement, and they’ve stayed on; it’s rolled over… It’s a periodic agreement. You’ve got to give them 90 days notice. And even on a tenancy which is under contract, you’ve got to give them 30 days notice, that you’re going to end the tenancy at the end of the contract; at the end of the lease. But people will use that 90-day notice to go ‘right, all the rents around here are going up. If I put my rents up to the amounts that are happening here (which are outrageous), then I’ll probably get some objection. So the easiest thing to do… ‘ And quite often, what will happen is the landlord will (or their agent, more often), will go to the tenant and say ‘we’re going to be putting the rent up by X amount; do you want to sign a lease for that now?’ And if the tenant says ‘no, I can’t afford that,’ then they get the notice. So this all happens three months before they’re expected to move out. Now, obviously, the Greens are saying this puts people under a lot of pressure. But there’s a different kind of pressure… There’s a thing in New South Wales called retaliatory eviction.

Sue  12:15

And that would be if people complain about a place and the landlord would just kick them out as a result.

Jimmy  12:23

Yes. And they can they can go to the Tribunal and say ‘look, here are our letters, complaining about the state of the place and then suddenly, we get this eviction notice; can you overrule that?’ And we know of people who are living in a house which has got damp and mould and terrible problems in the rain, and the agent has come around and basically said ‘we will repaint that wall,’ which obviously, isn’t going to be enough. But the people involved, they’ve got more pets, than they were given permission for.

Sue  12:54

Okay, and it would be really hard for them to relocate easily, I think. So they’re kind of trapped, in lots of ways.

Jimmy  13:01

Yes. So this is where they are not going to go to the Tribunal, and they’re not going to kick up a fuss. They are basically stuck there. And that’s why, the no-fault eviction really would help them to have the confidence to say to that landlord ‘look, we need you to come and fix the roof and stop the leak…’

Sue  13:21

Tear out the mould.

Jimmy  13:21

For most people, and most landlords, it’s not an issue, because they’re not in the business of screwing people over. But you will get some landlords and some agents, who are just basically looking at, what can we maximise?

Sue  13:39

And unfortunately, those people often have a lot of properties. You know, the people who just have maybe one or two, or three rental properties, they are the ones that are most likely to be (this is a terrible generalisation, really), but they are the ones most likely to be reasonable, because they might know their tenants a bit better, or take an interest in their tenants. Whereas, people who’ve got maybe 40 or 50 rental places; you know, they’re not particularly interested, they’re just in it for the money they can make.

Jimmy  14:06

Yes, absolutely. And that’s where the rental agents become absolutely critical.

Sue  14:11

And if you’ve got a good rental agent, I think they can make a huge difference. I was talking to one, and she really works hard to mediate between her tenants and landlords when they’re having problems, and to work it out. And she’s saying, look, some of these tenants are great tenants and you don’t want to lose them. You want to keep these tenants, because who knows how long your place may stay vacant, if you lose these people. So a really good agent is a real bonus and a bad agent is always a drag on everybody, really.

Jimmy  14:41

Yes. When we had our investment property, I remember going to the agent (the people who had rented it were moving out) and saying ‘okay, we want to rent this and we want to rent it at this amount.’ And the agent came back and said ‘I’ve got a fantastic tenant for you, but it’s going to be like, 10% less than you asked for.’ In fact, it was more than that; it was 15%, less than we asked for and our calculations were based on our mortgage. You know, we weren’t looking to rip anybody off. But I realised, this agent; while he’s telling us he’s got this fantastic tenant, he was telling the tenant he’d got a fantastic deal for them. He was sort of feathering his own nest to a certain extent, because the amount that they were making in commission wouldn’t be that much. I thought these people are; they can be a bit dodgy.

Sue  15:35

Yes of course.  I mean, I guess all of us have rented at one time or other and we’ve all had bad landlords and bad agent experiences (as well as good ones). I remember when we were renting once and we complained about the carpet… The carpet was really ancient; it was really filthy and we just couldn’t clean it anymore. It was just falling apart. We suggested to the agent that maybe, the landlord might consider replacing the carpet. The agent came around, with a workman in tow, and rolled out this horrendous carpet. Do you remember that? It was just like… We kept getting electric shocks off it all the time; it was nylon. As he was putting it down, we were saying, ‘we can’t live with this; this is awful. It’s just so cheap and horrible and it’s really painful, these electric shocks we’re getting.’ And he said ‘oh, no, no, no. I’ve advised the landlord that this is good enough for the tenants.’ I think it was at that point, that we decided we’d buy somewhere, but lots of people don’t have that option… It’s a luxury. Although, with rents going up so much, sometimes mortgages; you’re paying less on a mortgage, with prices softening, than you are on rent now.

Jimmy  16:48

I remember that same agent; we went to renew our lease, and we were five minutes late, because we got held up, and we go in and the guy is just ignoring us; ignoring us, ignoring us, and then this  woman who worked in his office… He said ‘oh, you should go for lunch.’ And she said ‘don’t you need me to witness the rental agreement?’ He said ‘just go for lunch.’ And then when she’d gone out, he said ‘I’m sorry, you’re too late. You can’t sign the agreement.’ I think I kind of went a bit nuts.

Sue  17:16

I think he had a friend he wanted to move in, didn’t he? Something like that?

Jimmy  17:20

And then the manager of the business came out and said ‘what’s the problem here?’ I told him, and he said ‘well, look, I’ll witness it.’ And that was another deciding factor in us starting to think about buying. When we come back, we’re going to talk about a big anniversary this week. The Owners Corporation Network is 20 years old!

[MUSIC]

Jimmy

And we’re back. Now, contrary to popular opinion, I am not and never have been, a member of the Owners Corporation Network, but I’m sitting opposite somebody who was one of the founders.

Sue  18:04

Yes, it’s hard to believe it was 20 years ago. I guess like many other people, we were having huge problems in our apartment building, with defects and corrupt building management; all that kind of stuff. It culminated one day, where the developer stopped our chairperson (I was the secretary), and said ‘you know, I think you guys had better shut up about these defects, because people have ended up on the bottom of the Harbour for less.’ At that point, we decided we needed some help in this battle. We didn’t really quite know what we were doing; it was a new apartment building.

And so, we called around lots of different buildings, which were similar ages, because at that point, 20 years ago, there were lots of new buildings being sold off-the-plan for the first time. We invited the chairs of those buildings to a meeting. We got together and there was probably about 10 of us, in that first meeting. We all started talking about the issues we had with our buildings, and they were all exactly the same and we were just stunned to discover that we were fighting the same battles. But all without any knowledge of what we were doing, and any knowledge of this being a persistent problem, within the development industry. And so from those early beginnings, the Owners Corporation Network was formed.

Jimmy  19:19

And it’s funny, because we think about how we’ve now got David Chandler stomping around, kicking backsides everywhere. Back then, Fair Trading was useless, absolutely useless.

Sue  19:31

Well, they weren’t really interested in apartment owners. They kind of considered that we were, you know, very marginal, really. They were of no help whatsoever. And when you’ve got developers and their legal teams and their expertise, against new owners, who don’t really quite know what they’re doing, it’s a real David and Goliath match.

Jimmy  19:50

Absolutely.

Sue  19:51

So actually all getting together was fantastic, because we all  supported each other. We spread information between each other. We worked out our issues and worked out strategies; how we could  overcome the hurdles. It became a great source of comfort and strength for apartment owners. It’s only continued to grow ever since then.

Jimmy  20:15

Well now they have a seat at the table, as they say.

Sue  20:18

Oh, absolutely.

Jimmy  20:20

And the Fair Trading Minister always has an eye on what the Owners Corporation Network (the OCN), might think of things. But you’ve just reminded me that, back in the day, I remember there was one Fair Trading Minister… That was when Flat Chat got going. I think it was still a Labor government then and one Fair Trading minister, she lived in an apartment block in Randwick, but that wasn’t her constituency and her building had terrible problem with the University of New South Wales putting students into flats in the building, who were just… Can you imagine? You know, it was like a frat house, half the time. But the people who lived in the building, even though the Fair Trading minister also lived in that building; couldn’t do anything, because she was begging them not to make too much fuss, because then she would be exposed for not living where she said she lived. Then later on, there was another Fair Trading minister who was appointed and her forte in the Labor Party, was getting donations from developers. Linda Burney was the last Labor Fair Trading minister, who was really good, but then she was gone, you know.

Sue  21:38

Well, that’s the problem, isn’t it? There’s such a huge turnover of Fair Trading ministers. As soon as they get any expertise, they’re off to another portfolio. But the OCN has been incredibly successful in getting laws changed and the celebration of the 20th anniversary is on this Wednesday, and David Chandler is the guest speaker and we’ve got a few other speakers, as well. I think you’re emceeing the evening, aren’t you?

Jimmy  22:04

I’m hosting the thing. It will be fun, if nothing else. And we’ll tell you all about it on our podcast next week. Thanks, Sue, again, and thank you all for listening. Bye.

[MUSIC]

Jimmy

Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free, on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite pod catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.