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Residential Tenancy (Rental Market Reform) Amendment Bill 2021

Cassy O'Connor MP  -  Wednesday, 24 August 2022

Tags: Tenant Rights, Rent Caps, Cost of Living, Legislation

Ms O'CONNOR (Clark - Leader of the Greens) - Mr Speaker, I move -

That the bill be now read the second time.

I can indicate that we will be calling a vote at the end of Greens' private members' time on this bill.

The Residential Tenancy (Rental Market Reform) Amendment Bill 2021 makes four overdue reforms to the Residential Tenancy Act of 1997. Much like the Greens' earlier Residential Tenancy (Rent Control) Amendment Bill 2021, the bill replaces the current unworkable, unfair rent control provisions in the principal act with rent control measures similar to the model used in the Australian Capital Territory. This is tried and tested policy.

Under existing provisions, a tenant can be evicted solely on the basis that their lease has expired, commonly known as no-cause evictions. This provides a strong disincentive for tenants to assert their rights, as once the lease expires the tenant can easily be removed with no recourse available to them. Our bill removes this ground for eviction and provides greater housing security for Tasmanians who rent their homes.

We also introduce provisions that reflect the recent Victorian standards for energy efficiency. These standards apply to the replacement of any appliance, fitting or fixture that uses or supplies water, electricity or gas.

Finally, our bill requires an owner to acquire permission from the Residential Tenancy Commissioner to refuse to allow a pet to kept on the premises, so it reverses the onus. This is also similar to provisions in the ACT legislation, again tried and tested policy that recognises the great bond between people and their pets and how important animal companions are to mental good health.

Mr Speaker, as we all know, Tasmania is currently and has been for some years in the grip of housing and homelessness crisis and soaring rents are key. During my second reading speech for the Residential Tenancy (Rent Control) Amendment Bill 2021, I pointed out that between September 2016 and September 2020, the weighted medium rent per week in Tasmania increased from $266 to $357, a 34 per cent increase over four years. Since then it has increased even more by a further 18 per cent to $420 a week, and this during a pandemic.

Data from SQM Research shows that between March 2017 and March 2021, the weekly rent for houses increased by 42 per cent in Launceston, 41 per cent in Hobart and 29 per cent in Burnie. The SQM Research data also shows an increase in rental costs for units of 43 per cent in Launceston, 32 per cent in Hobart and 20 per cent in Burnie over the same period. Rents are becoming increasingly unaffordable for everyday Tasmanians.

The 2020 Rental Affordability Index produced by SGS Economics and Planning, Bendigo Bank, National Shelter and the Brotherhood of St Lawrence, found the average rental household in Greater Hobart would pay 31 per cent of its total income for a median rate dwelling. Thirty per cent is the commonly used threshold for housing stress, and this housing stress is being felt right across the island.

Opponents have claimed that a rent control model similar to the ACT's would not resolve supply issues in the rental market and would have unintended negative consequences on rental availability and affordability. This bill is not a silver bullet to the housing and rental crisis, nor is it intended to be one. The supply issues in the housing market need to be resolved with further government investment in social housing, addressing the tapped-out construction workforce and, critically, regulating short-stay accommodation. These are actions the Greens support but their absence should not be used as an excuse to avoid making fair and balanced rules in the rental market.

In terms of speculation about unintended consequences, the ACT model has operated in some forms since 1997. SQM Research data shows that in the ACT between August 2009 and March 2021, rental prices for houses increased from $501 to $660 a week, a 32 per cent increase over 11.5 years, while rental prices for units increased from $372 to $494, a 33 per cent increase over 11.5 years.

In Tasmania, rents have increased more over three years than rents in the ACT have increased in 11.5 years. The claim that this model will perversely result in increased rents is not substantiated; the evidence suggests the reverse. In terms of availability, census data shows that between 2016 and 2021 the proportion and gross number of those in the private rental market have both increased in the ACT.

Under current provisions in the Residential Tenancy Act, rents can be increased if a written residential tenancy agreement allows for an increase, or if there is no written residential tenancy agreement. This bill would allow for rent increases in the case of a fixed-term lease if the lease allows for it, or in any other case if the increase is not above CPI plus 10 per cent or is above CPI plus 10 per cent, but the agreement allows for the increase, or the tenant agrees to the increase in writing, or if the landlord applied to the commissioner and an order allowing the increase is issued. These provisions notwithstanding, under both the current and proposed arrangements, rent increases can be challenged as unreasonable by a tenant.

As it currently stands, under section 23 of the principal act a tenant may apply to the commissioner for an order that a rent increase is unreasonable. The proposed new framework has similar provisions but they are more robust. The current arrangements allow for an application at any stage during a 60-day notification period. The proposed amendments require the request to take place at least 14 days before the rent increase would come into effect. The bill also provides for rents to be frozen while an assessment takes place and contains provisions to retrospectively allow for payments to take place based on the decision of the commissioner.

The recent Muddyman v Nest Property decision of the Magistrates Court of Tasmania makes it clear that under the current system the burden is on a tenant to establish that a rent increase is unreasonable. The court noted:

While neither the act nor the minor civil regulations expressly allocate any burden of proof, legal or evidential to the tenant, it was common ground that it is for the tenant to establish that the rent increase is excessive.

The model proposed by this bill provides a fairer and more considered allocation of the burden of proof. If a rent increase is below the rent increase limit that is CPI plus 10 per cent of CPI, then the burden of proof is on the tenant to prove that the increase is unreasonable. If the rent increase is above this limit then the burden of proof is on the owner.

One of the current issues with the principal act is highlighted in the Muddyman v Nest Property decision which notes that section 231 makes it clear that the issue is whether the rent increase is unreasonable, the issue is not whether the result in rent is unreasonable. Our bill, consistent with provisions in the Australian Capital Territory act, allows the consideration of the amount of rent payable before the proposed rent increase. This will in effect allow the question of the reasonableness of the rent after the proposed rent increase to be considered. The current provisions also only require the commissioner to have regard to the general level of rents for comparable residential premises in the locality or a similar locality, as well as any other relevant matter.

We have seen this where the commission has been asked to make a determination. The commissioner has looked at the current rate of market rents and has seen that a landlord's increase to a particular tenant's rent within the context of an overheating market is reasonable, because that is what the market currently tolerates.

While the provisions have a catch-all of any other relevant matter the Muddyman v Nest Property decision makes it clear that it is up to the Commissioner or the court to determine what is relevant. The absence of a prescribed list also fails to provide a guide to tenants, owners, the Commissioner and a court on what matters may be relevant.

Under the proposed new framework, the commissioner is required to consider a range of matters including: current rent and past rent increases; costs, services and repairs provided by the owner; works carried out by the tenant; the general state of the property; rental rates for comparable premises; and any other matter the commissioner considers relevant.

The bill allows for the commissioner, on application from a tenant, to issue or refuse to issue a rent reduction order. A rent reduction order must be issued if the tenant's use or enjoyment of the premises has diminished significantly as a result of: the loss or diminished utility of a feature of the property supplied by the owner; the loss of the use of all or part of the premises; an interference with the tenant's quiet enjoyment of the premises or the tenant's ability to use the premises which has been caused by the owner/the landlord. This order can also be appealed for a fresh decision.

Under the current provisions of the Residential Tenancy Act, a tenant can be evicted solely on the grounds of lease expiration. This bill removes these grounds for eviction. A person can still be evicted after a lease expiration for any number of lawful reasons, including any number of lease violations, or if the owner of the property simply wishes to put the property to a different use.

Under current law if a tenant enforces their legal rights, an owner can easily evict them in retaliation at the conclusion of their lease. We know this happens. The result of this is that the current arrangements strike a poor balance between tenant and owner rights by allowing owners to effectively quash a tenant's ability to enforce their rights.

These amendments require lawful grounds for eviction to be sighted if an owner chooses not to renew a lease which could be for a range of reasons, including: •

the tenant violated the lease agreement; •

the tenant has caused nuisance at the premises that is substantial; •

the premises are being sold; •

the premises are no longer intended to be a rental premises; •

the premises are to undergo significant renovations; and •

the premises are to be used as a residence by a family member of the owner.

This still provides the owner with extensive rights to determine how they to use their property.

In correspondence from the CEO of the Real Estate Institute of Tasmania, Mr Mark Berry, in respect of this bill, it was put to us that similar changes in residential tenancy legislation in Victoria and the ACT have seen investors not only walk but run from their investments in those areas. He claims over a 10 per cent reduction in the private rental market in the ACT.

No-cause evictions were abolished in Victoria on 29 March 2021. To quote the Homes Victoria Rental Report for the March quarter 2022:

Lending to residential property investors in Victoria was $8.541 billion in the March quarter 2022, 50.2 per cent higher than in the March quarter 2021. [OK]

While it is true that the number of active bonds decreased in the same period, it was by less than 0.1 per cent.

As for the ACT, their bill to end no-cause evictions is still undergoing public consultation. It was a 2020 bill that ended the ability of a lease to be cancelled with 90 days without cause. This is not a provision the Tasmanian act allows for. The ACT act was also amended in 2017, 2018 and 2019 for a range of purposes. We do not often see amendments to the Residential Tenancy Act come into this place unless they are brought in by the Greens. While there is no data available for 2022, according to Sensis data, both the proportion and gross number of those in the private rental market have increased in the ACT.

Property sales volumes have also been increasing over this period. Put simply, there is no evidence to corroborate the claims from Mr Berry, in particular, the claim that investors are running from their investments in the ACT and Victoria. It is demonstrably false by a substantial margin.

Mr Speaker, the bill also introduces a new Part 3C to the act. These provisions effectively require an owner to acquire permission from the Tenancy Commissioner to refuse to allow a pet to be kept on the premises. This can occur if the commissioner is satisfied that one or more of these conditions applies: the premises are not suitable to keep a pet; keeping a pet on the premises would result in unreasonable damage to the premises; keeping a pet on the premises would be an unacceptable risk to public health or safety, or the owner would suffer significant hardship; and keeping a pet on the premises would be contrary to a law of the state. The commissioner may also allow for conditions to be placed on pets being kept on premises. Proposed new section 36Q makes it clear that the tenant is responsible for any repairs or additional maintenance to the premises required as a consequence of keeping a pet.

Finally, the new section 360A proposed by the bill adopts the recent Victorian Standards for energy efficiency. These standards apply to the replacement of any appliance, fitting or fixture that uses or supplies water, electricity, or gas. This is a key cost of living measure.

These standards are reasonable, and in most cases are a three star rating under the Water Efficiency Labelling and Standards Scheme (WELS) for water appliances, and a two star rating under the Australia/New Zealand Standards (ASNZS) for electrical appliances for heating. There also exists a range of exemptions including if circumstances make costs prohibitive.

I want to briefly go back to the correspondence I received from Mr Berry after speaking on ABC radio a couple of weeks ago. This letter, which arrived a few hours after I had been on ABC Mornings, was very unusual correspondence from a person who is leading a stakeholder organisation. To paraphrase, it basically said that our proposed amendments were ill judged and childish and that we did not understand the real world of the rental market and how hard life can be for property owners. I did not have time to write a personal letter to Mr Berry, but I refute his accusations and his misjudging of our intent, and what seems to me, to have been a failure to read our amendment bill and its supporting material.

Mr Berry claimed that these amendments would drive more people to short stay accommodation. It is no secret that the Greens strongly believe the short stay market should be regulated to limit new listings in tight rental markets. We already have the highest concentration of short stay accommodation of any Australian capital city right here in Hobart, in the middle of a housing and homelessness crisis.

Mr Berry also claims it is the purview of government to provide social housing. He apparently has not engaged with our outstanding community housing providers, who have done so much, working with government to increase the supply of quality affordable housing. This is a sentiment, of course, echoed by other people like Louise Elliot, Hobart City Council mayoral candidate from the Tasmanian Residential Property Owners Association, which let me remind the House, received $100 000 from the Tasmanian Government apparently to work with landlords, but a year before local government elections. We still have questions about that.

Dr Woodruff - Absolutely disgraceful.

Ms O'CONNOR - Absolutely disgraceful, Dr Woodruff - $100 000 for an organisation that had no governance structure of any robustness that we could determine. Certainly, someone who put it together is very much a representative of the propertied class and is very, it seems to me, pro-development at any cost. Ms Elliot just serendipitously, apparently, announced her pitch for council not long after 100 000 taxpayer dollars were handed to TRPO.

To these people, the Greens say, you have constructed a convenient narrative for yourselves. Rental prices have gone out of control, meaning far more people are struggling to find affordable property than just those on the lowest of incomes. We have all met these Tasmanians, or people who have moved here from interstate, working families on median incomes who cannot find a place to call home whether they want to buy into the Tasmanian market or want to rent here. With rental costs going up and property prices soaring, many people are now unable to ever save up for and afford the same opportunities to buy a home as those of us - most of us in here - who were lucky enough to already have property before prices massively inflated. Tasmanians are being priced out of their own paradise. That is a heartbreaking truth.

I wonder if Ms Elliot and Mr Berry would have felt the same if their cost of living unreasonably skyrocketed, if food prices were to skyrocket and supermarkets told us the cost of living was not their problem, and that is what food vans are for. I wonder how they would take it. If energy and water utilities were not regulated by the Tasmanian Economic Regulator and their bills went through the roof, I wonder if they would advocate for price regulation in that regard.

We know for a fact that the tears flowed freely when their increased property values led to increased land taxes. Our hearts broke for them but not for long because the Government came in and moved two pieces of legislation, twice, that eased the land tax burden on the propertied class.

Dr Woodruff - Gross.

Ms O'CONNOR - Yes. It is disgusting. Funny how people like Mr Berry and Ms Elliot expect the Government to pay for the costs of property inflation but cry about taxes marginally eating into their profits.

Members know that the Greens are passionate about housing. We recognise that every Tasmanian has a fundamental right to a secure and affordable home. We see the suffering in the community that is the consequence of years of underfunding, under the Hodgman then Gutwein governments, both Liberal governments.

We see that there is more attention being paid to this portfolio now and more resources because the suffering being caused by neglect of the housing portfolio is glaringly obvious. We all have constituents who are living right on the margins now because their rent keeps going up. We all have constituents in fear of eviction. That is why, when their rent goes up, they are not so inclined to go to the Tenancy Commissioner for relief because they do not want to be evicted at the end of their lease. We have all had tenants who have had to give up their beloved dog because their landlord will not allow a pet. We all know tenants whose cost of living is soaring through their utilities. These measures around energy efficiency can bring real relief.

We will soon hear from the minister and Attorney General a number of reasons why they will not be able to support our bill. That is very predictable and regrettable because this is good policy, it is well drafted legislation, there is a clear evidence base for it and there is a clear need.

If we cannot appeal to the Liberals' sense of fairness in terms of tenancy, perhaps they might look again at the front of today's Examiner newspaper. We have hundreds of homes empty in the Launceston City Council municipality, we have Launceston businesses suffering, saying they are losing about $200 million because employers cannot find staff due to low vacancy rates and high rents. This is the real world social and economic fallout of failed housing policy, underinvestment in supply and a lack of courage to regulate short stay accommodation.

These amendments to the Residential Tenancy Act are not the be all and end all but they would make a real difference to the lives of people who are right now living on the margins or living in fear of a rent increase or eviction. We know this is a good bill. We know what a difference it would make to the lives of Tasmanians. We hope to have the support of the whole House, but I am a realist. The minister surely understands what we are proposing is good policy, well drafted, that would make a difference. And surely, that is why we are all here.

Mr Speaker, I commend the bill to the House.

Dr Woodruff - Hear, hear.