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When words like ‘filthy’, ‘disgusting’ and ‘dangerous’ are peppered throughout the condition report for a rental property, you go in expecting the worst.

Indeed, as it turned out, the Port Albert house which Vicky Shields rented out in the Gippsland region of Victoria turned out to be a shocker. Three rooms had holes in either the ceilings or the floor, the floor was constantly damp due to regular flooding, mould was everywhere and the place was infested with rats, had substandard wiring, damaged doors and windows and several appliances which were not in working order.

Yet Shields, who had previously been homeless and has a mental illness, had found nothing else which she could afford.

In 2014, the Victorian Civil and Administrative Appeals Tribunal (VCAT) dismissed a case she bought on and ruled that the landlord was under no obligation to bring it up to scratch because the house’s poor condition had been disclosed prior to the commencement of the lease.

In a landmark ruling last September, however, Supreme Court Associate Justice Melissa Lee Daly disagreed, finding that VCAT had erred in its application of Section 68 of the Residential Tenancies Act which requires the landlord to maintain the premises in good repair. The requirement under that section, Daly said, applied irrespective of the relative condition of the property at the commencement of the tenancy even if that condition had been disclosed.

Regrettably, Shields is not alone in her experience.

Assuming the results of a Consumer Affairs Victoria survey of tenant experienced conducted in 2016 is accurately representative of conditions across the estimated 515,585 properties which were rented in that state as of the 2011 Census, the Council for Homeless Persons estimates that across that one state’s rental market alone:

  • more than 92,000 properties are not heated
  • 10,312 have no electricity
  • 15,486 have no running water
  • 25,779 have no toilet
  • 41,247 have no shower
  • 56,714 have no access to a stove or oven
  • 82,494 do not have locks on all external doors

Available evidence suggests this story is in fact repeated elsewhere. Based on an analysis of results of ratings of the external conditions of dwellings around Australia which formed part of the Household, Income and Labour Dynamics Survey conducted by the University of Melbourne, researchers from the University of Adelaide recently concluded that Australia has around 100,000 houses which are in extremely poor condition.

That raises questions about what more can be done to improve standards with regard to rental housing condition and whether or not improvements in regulation would help.

Ned Cutcher, executive director of the Tenants Union of New South Wales, said regulation across states and territories is generally consistent in broad outline but differs in terms of detail, albeit not to the extent that outcomes have differed materially across jurisdictions. In New South Wales, for example, the landlord has an obligation to provide premises which are in a reasonable state of cleanliness and which are fit for habitation. As stated above, Victoria requires premises to be in good repair.

The big challenge, however, is in the enforcement of these rules. Cutcher says the main problem is that a number of tenants at the lower end of the market are reluctant to complain about unsatisfactory property conditions for fear of eviction.

Such fears are underpinned by a number of factors. Whereas employees who are harshly dismissed in a workplace enjoy the protection of unfair dismissal laws, no such protections apply to tenants who are harshly evicted. Many tenancies operate initially for fixed periods of six to 12 months before reverting to a period (usually monthly) agreement. Once the agreement is on a period basis, the landlord is free to end the tenancy (subject to notice periods) without providing a reason or justification.

In the case of a fixed term agreement, the landlord cannot (except for in limited circumstances) end the tenancy before a fixed term ends but is under no obligation (subject to notice periods) to renew a tenancy at the conclusion of a fixed term period. In short, the threat of eviction if a tenant complains about the condition of a property is real.

Especially at the very low income end, such fears are exacerbated by the limited nature of affordable alternatives. In the 2016 edition of its Rental Affordability Snapshot, Anglicare Australia said that of more than 75,000 dwellings offered within the rental market which were advertised around the country during the weekend spanning April 2-3 last year, only around 4.3 per cent were affordable to couples on the age pension. A paltry 0.5 per cent, meanwhile, were affordable to disability support pension recipients and less than 0.1 per cent were affordable to those on the Newstart Allowance.

Because of this, a large number of low income tenants fear being left homeless should the landlord decide to evict them in response to complaints about the condition of the property.

“That puts tenants in a vulnerable position,” Cutcher said. “If they try to insist on the standard of the property being bought up to standard, tenants often put up with living in substandard conditions rather than raise a concern with a landlord because they are worried that they will be evicted.”

In addition to tenants being reluctant to complain about poor housing condition, Cutcher says the weak bargaining position of those at the lower end of the market can also lead to a situation where they can be forced to accept above-market increases when it comes to rent. Aside from taking the landlord to the Civil and Administrative Appeals Tribunal (in NSW) and have the increase deemed to be excessive relative to the ordinary market, a tenant’s only realistic option in terms of a response to rental increases is in fact to attempt to negotiate a lesser increase or alternatively to move out. Given their limited range of affordable alternatives, the latter is often not a feasible option for those at the lower end of the income scale.

In terms of solutions, Cutcher stresses that action is needed on multiple fronts and warns that no singular response will address all of the issues on its own.

On the regulatory front, he says requiring landlords to have reasons for ending tenancies would be a welcome step in terms of handing back some power to tenants and giving them a degree of confidence in terms of taking action about unsatisfactory property conditions.

As well, he says, it would be useful to have an independent inspection on a periodic basis, say every five years (in addition to the condition report which is prepared at the commencement of a tenancy). This would provide information to assist perspective tenants in terms of selecting one property or another, give landlords a sense of peace of mind about the quality of their investment along with reminders about some of the key things they needed to do in order to raise the standard of their asset and provide a form of evidence for both parties in the event of a dispute.

Furthermore, he says action is needed on a variety of fronts in order to improve the availability of affordable housing especially at the low-income end. As well as efforts to encourage home ownership, he says this could include measures such as reforms to the rental market and also more social housing.

More broadly, Cutcher says we need to shift the way in which housing is perceived within society.

“I think we need to be revisiting our expectations of the housing market as an investment strategy and bringing back to mind the notion that housing is shelter,” he said.

“Particularly in a market where more people are being excluded from owner occupation because of the price issue, people who are our landlords have probably not experienced the housing market in the way that their tenants are experiencing it today and are expected to continue to experience it for many years.

“We need to crack that conversation open and say that maybe the way in which we have been doing things (thinking about housing) is not the way to continue. And then we can start to think about those regulatory responses.”

 
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