RESIDENTIAL TENANCIES BILL 2010
The Hon. MATTHEW MASON-COX [3.31 p.m.]: I speak in debate on the Residential Tenancies Bill 2010 and note at the outset that the objects of the bill are as follows:
(a) to provide for the rights and obligations of landlords and tenants and for rental bonds and related matters
(b) to repeal and re-enact, with modifications, the provisions of the Residential Tenancies Act 1987 and the Landlord and Tenant (Rental Bonds) Act 1977
(c) to make consequential amendments to other Acts.
I acknowledge the great work done by shadow Minister Greg Aplin, the member for Albury in the other place, and the key industry stakeholders in endeavouring to achieve a balanced outcome for tenants and landlords in respect of this bill. In particular, key industry and consumer groups put a great deal of time and effort into improving many draconian measures in the draft bill. These groups include the Real Estate Institute, the Property Owners Association, Shelter NSW, the Property Council of Australia, the Tenants Union of New South Wales, the Law Society of New South Wales and the Institute of Strata Title Managers. Greg Aplin worked closely with those groups to try to resolve many of the problems that arose in this bill, which supposedly had gone through a comprehensive consultation process.
When a number of concerned investors in the property market, in particular, mum and dad investors, saw the provisions in the first draft bill they were concerned about their investments. I am sure that members received, as I did, many representations from landlords and some tenants in respect of the provisions in the first draft bill. In a number of the submissions that I received some investors said that they wondered whether or not the bill harked back to feudal times when tenants worked on their landlords' estates. At that time I think they were called peasants. It appears as though this bill reflects those times rather than the modern times in which we now live. It is good that we have come a long way since mediaeval times, although after reading the first draft of this bill one could be forgiven for wondering what era we are living in.
I refer to the consultation process that occurred in the lead-up to the first draft bill. In 2005 the Office of Fair Trading released its options paper and in 2007 the Office of Fair Trading released proposals for 102 changes to the Residential Tenancies Act entitled "Residential Tenancy Law Reform—A New Direction". In November 2009 the Government released the draft Residential Tenancies Bill. Throughout that process submissions were received from tenant groups, landlords and other interested parties. When the bill was finally introduced in this place there was a flurry of activity to introduce amendments that were required to bring some commercial reality to the bill.
Thankfully a number of key provisions in the draft bill were changed as a result of the discussions to which I referred earlier. In particular, provisions that enabled tenants to break fixed-term leases at will, with no compensation to the landlord, and a provision that enabled tenants to conduct cosmetic renovations and repairs to a landlord's property without the landlord's consent. The original bill failed to define what might amount to a cosmetic alteration and there was wild speculation that it might include painting a premises purple, as referred to by one member, perhaps concreting the garden, internal renovations, moving walls and putting up wallpaper—all sorts of options that were open under the original bill that struck at the heart of the long-established relationship between landlords and tenants.
Another provision in the former draft bill enabled tenants to sublet or transfer the lease to other parties without the landlord's consent or knowledge. What an extraordinary provision: a party was able to enter into a legal contract with a landlord that set out obligations and that party was then allowed to give that contract to somebody that the landlord did not know. What an extraordinary and flagrant breach of well-established principles of contractual obligation. I am pleased that the Government saw the light, came out of its mediaeval stupor and struck down that provision. I also note that the original provisions capped bonds at four weeks rent with no topping of bonds allowed and the lease fee itself was not chargeable to the tenant; the cost would have to be borne by the landlord—another example of this Government stripping landlords of their rights while stripping tenants of their responsibilities, which was a major problem in the initial draft bill.
In a tenancy agreement there are rights and responsibilities between a tenant and a landlord. The initial draft bill simply threw that out the window and the Government said, "If you are a tenant, you can do what you like. You can sublet to whomever you like. You can make renovations to a property that you do not own without even telling the landlord." No wonder there was an outcry from many investors in this State, in particular mum and dad investors, about those extraordinary provisions. Why would they want to invest in a property market when their rights had been given away, where tenants can walk away from a legal and written contract at any time that they wish to do so. What an extraordinary range of provisions.
The Government, which is sorting out the problems that it introduced in the first place, should be condemned for wasting people's time. It is an absolute disgrace. It begs the question: How did we end up with those sorts of provisions in the first place? One need only look at the Government's paradigm in relation to many of these issues. It is determining people's rights rather than considering their responsibilities at the same time. The improvements made to the draft bill include deleting the subletting issue to which I have referred, revising the break fee issue relating to fixed leases, alterations relating to terminating a lease for non-payment of rent, and upholding a landlord's right to end a fixed-term lease upon its expiry without having to provide reasons. When a lease expires one should have the right to terminate it—a fairly well-established legal principle that this Government was looking to revisit under the guise of the first draft bill.
Despite all those issues there are still some problems with the bill. I note that in proposed section 50 a landlord is responsible for stopping a landlord's other tenants from interfering with the reasonable peace, comfort or privacy of a tenant. Subsection (3) of proposed section 50 states:
(3) that the landlord's other neighbouring tenants do not interfere with the reasonable peace, comfort or privacy of the tenant in using the residential premises.
No explanation is provided about what amounts to "reasonable steps". Again, this provision will probably require determination by the tribunal and it may exacerbate disputes between landlords and tenants. This bill has a number of other similar provisions. New legislation that strikes at the heart of well-settled principles of existing legislation will always create problems. Time and again this happens with this Government, particularly at the Federal level.
The Hon. Greg Donnelly: As happened with WorkChoices.
The Hon. MATTHEW MASON-COX: The Hon. Greg Donnelly mentions some Federal legislation. One has only to consider the consultation process undertaken regarding the resources super profit tax. The same problems occur in this place. The consultation process bubbles in the background and suddenly a bill is introduced or an idea is floated that demonstrates that no-one listened to the people affected. In this instance, stakeholders provided their views on the Residential Tenancies Bill, but no-one listened to the views of all those affected by the proposed changes. No doubt, the Prime Minister will learn that he will have to change his proposal regarding the resources super profits tax just as this State Government had to change its response to the exposure draft of this bill. The process required some sense of commerciality, and recognition of responsibilities and rights, as well as understanding that tenants and landlords want a relationship that works, is reasonable and is based on mutual respect.
These fundamental principles will prevent disputes occurring under this or other legislation. In this case landlords and tenants will generally deal with disputes. We must ensure that we do not pass legislation that encourages disputes or seeks to tilt the balance towards one side or the other. As I mentioned earlier, the original bill was along those lines. A host of improvements have been made to the original bill. Again, I acknowledge the sensational contribution of the member for Albury in the other place. Whilst those changes are welcome, a number of others should be made. As this bill settles down over time, I imagine the need for further amendments will become more apparent.
Section 159 sets out that a bond is limited to four weeks' rent. This provision runs concurrently with existing conditions of four weeks rent for a bond for unfurnished premises and six weeks' rent for furnished premises. There is good reason for an additional bond for furnished premises. The chattels and furnishings provided by a landlord are subject to wear and tear and ultimately will need to be replaced. Obviously, such furnishings are assets of value that need protection, hence the purpose of a bond. In my experience as a tenant for a number of years while at university and at other places, a bone of contention at the expiration of a lease was always how to extract the bond from a landlord who was not willing to return it. My experience before a tribunal gave me a good understanding of how difficult it can be for tenants to recover bonds, particularly from a vexatious landlord. The bill generally deals with those situations quite well.
When dealing with poor legislation it is difficult to try to turn a lemon into a lamington, as the stakeholders have tried to do with this bill. The shadow Minister for Fair Trading, and member for Albury, made a terrific contribution in that respect. The Government must learn not to reach back to feudal times when dealing with sensitive legislation. We must be cognisant of people's rights and responsibilities, rather than being swayed by preconceptions and out-dated paradigms, and seek to balance important legislation appropriately.
Business interrupted and set down as an order of the day for a later hour.