NSW Residential Tenancy Bill 2010 looks like being pushed through Parliament

10 minute read

In a decision that is set to impact approx. 1 in 4 people within New South Wales, the new Residential Tenancy Bill 2010 has now been passed without amendment by the Lower House of the NSW Parliament and has just been introduced into the Upper House.

Earlier this week I posted an article on apmasphere (a popular Australian Property Management online forum) about REINSW forces changes to NSW Government’s Residential Tenancies Bill, but after speaking with Sam Kremer, Legal Counsel from the REINSW earlier today it appears that the bill looks like being pushed through Parliament in its current form.

The NSW Residential Tenancy Bill 2010 is an extremely important piece of legislation for the real estate industry and it seems strange that after so much time and effort has been dedicated to creating the new bill that the Government sees fit to push it through in its current form without providing reasonable time.

The NSW Government have only provided “four or five days to read and understand the many changes in the final bill”, not much time for  stakeholders and industry bodies to review the recent overhaul to the original bill proposed back in Novemebr 2009, which was labelled as “the biggest attack on landlords in NSW’s history” by the Property Owners Association of NSW.

It’s been 23 years since the last NSW Residential Tenancy Bill was passed back in 1987 and now after 5 years in the making, why is there a huge push to pass the newly amended bill through Parliament right now? Especially, after providing very little opportunity for stakeholders to review the amendments and their possible repercussions.

In her speech before passing the motion that the bill be agreed to in principal, Hon. Virginia Judge, the Minister for Fair Trading and Minister for The Arts said ” the primary aim of the Residential Tenancies Bill 2010 is to rewrite and overhaul the current legislation. As I have outlined, the bill will bring the regulation of residential tenancies up to date and in line with modern industry practices. It will remove archaic and redundant provisions. It will also make more than 100 reforms, which have arisen from a review of the existing legislation—laws that have remained largely the same for more than 20 years.

All the amendments contained in the bill have been the subject of extensive consultation with individual landlords, agents and tenants; community groups who have an interest in this area; those who provide assistance and advice at the coalface every day to those with a tenancy problem; the Consumer, Trader and Tenancy Tribunal, which has the difficult job of trying to resolve tenancy disputes when things go wrong; and peak bodies such as the Tenants Union of NSW, the Real Estate Institute and the Property Owners Association.”

In his Parliamentary speech Shadow Minister for Fair Trading Greg Aplin MP said, “The draft of the Residential Tenancies Bill 2009 was a written expression of a philosophical view that tenants can prosper on their own, without considering the impact on their landlords; that the best way to achieve gains for tenants is to bludgeon their landlords into accepting unreasonable and, frankly, humiliating conditions; and that a government can seek to carry on with its plans in ignorance of the warning bells tolling loudly in the rental marketplace.”

It appears that the government have finally decided to sit up and take some notice to their constituents/stakeholders and have done an about-face on the original draft bill but with so many amendments it appears that the new bill is being pushed through Parliament fairly swiftly without allowing time for much consideration from the people who helped the Government get the bill back on track to what it should be.”

Greg Aplin also went on to say, “Despite all 1,600 submissions and many years of review, it still looks like the Government simply went to sleep on the couch and let the process of review roll over the top of it. That is, until the Government was woken up with a bucket of cold water thrown by various stakeholders—and its own members of Parliament who have heard the cries from their own shocked constituents. Unfortunately, this lack of early focus by the Government meant that everyone else had to waste time and emotional energy on a draft bill, which was a practical mess. It is dangerous to create many new rights, which are poorly expressed.

Despite a 23-year wait for reform, stakeholders now have just four or five days to read and understand the many changes in the final bill. This is an impossible task. The number of drafting errors and other faults, as indicated, should be sufficient notice to the Government to let the debate continue until the spring sittings. Several stakeholder committees are struggling with the ridiculous haste, suddenly come upon them, of seeking input from their members and responding with due attention to this complex bill. Until that time, the bell will continue to toll for thee.”

MP Ray Williams said, “I do not believe that this bill is much different from the draft bill. The Government has taken a long time to introduce it and the draft bill certainly sent shock waves through the community. I do not believe there was a fear campaign, although I do believe that many of the mum and dad investors were frightened about what could happen to their properties. It has been recently reported that one in 10 couples in New South Wales has a negatively geared investment property. That is a huge number of people and it represents an enormous percentage of the private rental market. Tenants NSW suggests that they are amateur landlords and that they should be removed from the market. I do not believe that we could provide adequate residential accommodation across this State if it were not for those many hundreds of thousands of mum and dad investors. The New South Wales Government could never provide enough accommodation given reports indicating that there are 27,000 homeless people in this State.”

MP Craig Baumann said,”Like so much of the legislation dreamt up by this struggling Government, the Residential Tenancies Bill 2010, when presented in draft form, was abhorrent. It highlighted once again just how incompetent and out of touch this Government has become. Fortunately, the most hideous elements of the draft bill have been duly dispatched thanks to the New South Wales Opposition, but not before the Government managed to upset, in some way, numerous elements of the real estate industry, terrify landlords, and waste the time of many stakeholders in the rental and tenancy industry as they attempted to grasp this bill. In the first instance, I condemn the Government for this short sightedness. “

MP Michael Richardson said, “One has only to read the statement issued by the Property Owners Association of New South Wales at the time the draft bill was released. The association described the bill as “the biggest attack on landlords in NSW’s history”. The Real Estate Institute of New South Wales was equally scathing in its condemnation of the draft legislation. Therefore, I am pleased that the Minister listened to the concerns expressed and that she amended that dangerous piece of legislation to make it far more reasonable and balanced, as the Minister herself said she had done in her agreement in principle speech.

The Real Estate Institute of New South Wales said in a release dated 4 June 2010 that is was pleased the Government had listened to its concerns and made key changes. However, the institute indicated that it still had some concerns about the legislation. It said that the Government was trying to rush the legislation through without sufficient time for proper consultation. I suspect that that is because the Government has made so many changes to the legislation that the full impact of those changes still needs to be considered. Some of the changes the Real Estate Institute of New South Wales pressured the Government to make include abandoning a proposal to give tenants the right to break a fixed term tenancy agreement during the fixed term in return for payment of a “break fee”.

As the member for Albury said, essentially that would have meant that that overruled the contract law and the tenant could simply tear up the contract, pay the “break fee”, and walk out the door. The institute also pressured the Government to scrap the compulsory proposal to cap a landlord’s damages, including loss of rent, if a tenant abandoned rented premises, and to maintain the current obligation on a landlord to mitigate their loss in such circumstances. That is only sensible. The Real Estate Institute further pressured the Government to provide greater certainty for landlords when terminating periodic tenancies, and to further limit its proposals to allow tenants to make minor changes to the landlord’s property or to sublet the property without the landlord’s consent. However, the institute still opposes these two proposals in principle and will continue to lobby against them. Allowing tenants to make minor changes to landlords’ property was the area of greatest concern in the bill for the Real Institute of New South Wales and the Property Owners’ Association of New South Wales. Having discussed this with some of my colleagues on this side of the House, I remain sceptical that the bill will encourage more people to invest in residential property and ease the rental shortage in this city that is pushing rents to unprecedented levels. Nevertheless, it is significantly better than the draft bill put out last November. “

MP Ms Clover Moore said, “given its length, I believe the bill should sit on the table for at least 28 days to enable members to consult with their communities. I also believe that the scare campaign initiated by the Real Estate Institute of New South Wales is unfounded and unhelpful. Most protections under this bill will help landlords and the modest improvements for tenants, such as making it easier to get a picture hook fixed in a living room, will not drive landlords out of the market.

The Tenants Union refers to data by the Australian Housing and Urban Research Institute that shows a very weak link between rental investment and tenancy law reform. Research shows that only 7 per cent of landlords have ever considered tenancy laws and that rental property investment is driven by the ability to negative gear and by potential property value gains. Many people consider property a safer investment than stocks or shares, and this bill will not lead to an exodus of landlords from the rental market.”

If the bill gets passed through the Upper House in its current form it will be interesting to see how many amendments will need to be made & how the new bill and its changes will affect agents and investment within NSW.

I understand that a decision needs to be made sometime but rather than pushing the bill through swiftly, I wish the government understood how changes in legislation (both small or large) impacts agents/property managers not only in the overall management and enforcement of tenancy laws but also in the day to day running of an agency.

It would be a pointless exercise to have all the Property Managers/Agents brought up to speed with the new legislation only to find that the Government have to make lots of amendments to the bill again shortly afterwards.

If you’d like to see more of the Parliamentary discussion around this important issue check out…

http://www.parliament.nsw.gov.au/prod/parlment/hansart.nsf/8bd91bc90780f150ca256e630010302c/77ee8c5495bba52eca25773c0080fbcb?OpenDocument

and

http://www.parliament.nsw.gov.au/prod/parlment/hansart.nsf/8bd91bc90780f150ca256e630010302c/4bd8828c7bb26479ca25773d0083c00c?OpenDocument