Statutory Minimum Standards for Queensland Rental Properties

On 3 April 2014 a Bill was introduced into the Queensland Parliament to amend the Residential Tenancies and Rooming Accommodation Act (referred to as ‘the Bill’).

The object of the Bill is to make provision for statutory minimum standards for rental accommodation and rooming accommodation in Queensland. It will allow the Minister to prescribe minimum standards for rental accommodation, by regulation, in relation to matters including, for example:

• sanitation, drainage, cleanliness and repair of premises.
• ventilation and insulation.
• protection from damp and its effects.
• construction, condition, structures, safety and situation of premises.
• the dimensions, cubical extent and height of rooms in the premises.
• privacy and security.
• provision of water supply, storage and sanitary facilities.
• laundry and cooking facilities.
• freedom from vermin infestation.
• energy efficiency.

The member for Bundamba, Jo-Ann Miller, in the first reading speech stated as follows:

“According to the 2011 census of population and housing, there were 513,415 rented dwellings in Queensland, about 60,000 more than in 2006. Rented dwellings accounted for 34 per cent of the 1,510,204 occupied dwellings where tenure was known. Queensland continues to have the highest proportion of rented dwellings of any Australian state. At the same time, public housing for low income Queenslanders is becoming increasingly difficult to access due to a decrease in available housing stock and tighter restrictions on eligibility requirements. Low cost private rental accommodation is increasingly filling the void this creates. Of the 513,415 rented properties in Queensland, 87.6 per cent were rented in the private sector. In 2009-10, 60 per cent of lower income households in the bottom 40 per cent of income distribution paid more than 30 per cent of their gross income on housing.

Sometimes the quality of low cost private rental accommodation is of an unsatisfactory standard. Access to stable, adequate shelter plays a major role in the health and well-being of families, and in particular children, by providing a safe environment and the security that allows participation in the social, educational, economic and community aspects of their lives. Housing issues that impact on health can include such things as structural integrity, weatherproofing, lighting, ventilation, cleanliness and hygiene, security, sanitation facilities and cooking facilities.

By imposing minimum housing standards for private rental accommodation, governments can fulfil their obligations to ensure that, even at the lowest end of the rental market where renters are most vulnerable, standards are enforceable to provide that basic minimum health and safety standards apply to places where Queensland families live.”

The problem as we see it with this legislation is that the Bill in its present format gives no indication as to what the minimum standards might be.

We would all agree that no one should live in a shanty or a hovel. That goes without saying. The Honorable Member makes the statement in her speech ‘sometimes the quality of low-cost private rental accommodation is of an unsatisfactory standard’. Unsatisfactory to who? The Honorable Member?

Certainly we would agree that there is some accommodation on offer for the lower end of the rental market that does not have all the ‘bells and whistles’ of other accommodation –  i.e. no dishwasher, air-conditioner, remote control garage, maybe Lino floors, an old hot water system. However, does that make it unsatisfactory?

The problem as we see it with this legislation is that the Bill in its present format gives no indication as to what the minimum standards might be. They will be in the form of regulation as determined by the Minister (i.e. read bureaucrat). To what extent will these minimum standards extend? Who knows? As can be seen from the list above they could potentially be extensive.

The question also must be asked why the proposed minimum standards must extend to the areas proposed. We already have a plethora of State and Local legislation, regulation and by-laws relating to building, sanitation, hygiene, water etc. Why do we need more and for what purpose?

The Honorable Member also seems to have missed one vital point. She is correct in stating that low cost private rental accommodation is increasingly filling the void in the availability of public housing. The point is that it is ‘low cost private rental’.

The Honorable Member proposes therefore that if the providers of the ‘low cost private rental’ do not comply with the minimum standards which are to be imposed, then that provider, under the terms of the legislation can ultimately be forced by order of QCAT to undertake the necessary work to comply with the minimum standards.

If work has to be undertaken by the provider of low cost private rental accommodation, then ultimately that work has to be paid for. As it is a landlord determines a rent to be paid based on the capital investment. If that investment increases by virtue of having to expend further funds to achieve the ‘minimum standard’ then that landlord will (quite rightly) want an increase in return to compensate for that expenditure.

The likely consequence of that is that the property will then be priced to rent outside the price range of the persons the Honorable Member has referred to as those requiring low cost rental, If the figures quoted by the Honorable Member in her speech are to be believed (and there is no reason not to) then that proportion of renters is very large.

What governments continually fail to recognise is that private landlords play an invaluable role in our society.

If these landlords are going to be forced to spend money to meet these minimum standards and increase their rents to compensate, where then are the low-income renters going to find accommodation. The only answer can be public housing, however, as the Honorable Member already concedes in her speech, public housing is already stretched to the limit, and if we are to believe what the government is telling us the Budget is so tight that no major public housing is likely to be developed in the foreseeable future.

What governments continually fail to recognise is that private landlords play an invaluable role in our society. They provide a source of housing for people who otherwise would have none. Yes, it is true that it is invariably done by them for investment purposes – to receive an income and hopefully a capital gain. In saying that however, they still also must pay mortgages, rates, insurance, maintenance and the like.

If governments keep making it harder for the private investor to invest in property for rental purposes, when legislation such as this is proposed, then we know from experience and feedback that these investors are simply going to say it is all too much and too hard and look for alternative forms of investment.

That would then put the onus back on the government to find accommodation for those that cannot in a reduced private rental market – i.e. more public housing.

However, these are not the only matters for concern associated with the Bill. The contents of the Bill itself propose quite onerous obligations on landlords and have some far-reaching consequences. It is not proposed to examine the Bill in detail however some of the issues for real concern are as follows:

1. We have already outlined that the Bill gives no insight into what the ‘prescribed minimum standards’ might be, other than to outline numerous factors for which minimum standards will be prescribed. That lack of detail alone is enough to cause major concern.
2. The Bill provides that a lessor must ensure that before the premises are let that the premises comply with the minimum standards.
3. A tenant may give written notice to a lessor stating that the premises do not comply with the minimum standards.
4. The Residential Tenancies Authority (‘RTA’) may, without application by a tenant, investigate whether a lessor has failed to ensure that the premises comply with a minimum standard. If the RTA does find a breach then it is to give notice to both the tenant and the lessor, and advise the tenant that an application can be made to the Tribunal for an Order requiring the lessor to ensure that the premises comply with the minimum standard. Substantial penalties apply if the lessor does not comply with the Order.
5. A tenant may apply to the RTA to investigate whether the lessor has failed to ensure that the premises comply with the minimum standards if the tenant has given the notice to the lessor as referred to in 2 above. The RTA is obliged to investigate and report.
6. If a tenant has entered into a tenancy agreement, but before the tenant enters into occupation of the premises, and the tenant gives the lessor notice that the premises fail to comply with a minimum standard, then the tenant is not required to enter into occupation of the premises or pay rent until such time as the tenant actually enters into occupation of the premises. (Editor’s note. This is so badly drafted that it is beyond comprehension and is merely a bonanza for lawyers. The assumption is that the tenant gives the notice to the lessor after having inspected the premises, agreeing to enter into a residential tenancy agreement, then giving a notice to the landlord that the premises do not comply with a minimum standard. The Honorable Member obviously has no direct knowledge as to how the rental market operates. Most potential renters are looking for premises NOW, not 4 to 6 weeks in the future. Is this potential tenant going to wait around to take occupation pending the landlord undertaking work to achieve the minimum standard? Unlikely. And what happens to any bond and rent paid in advance? The Bill does not address these issues.)
7. Probably one of the most disconcerting aspects of the Bill is in relation to the establishment of a ‘special rent account’ to be administered by the RTA. In the event that a tenant has given the lessor notice that the premises do not comply with a minimum standard and the authority has given a report to the lessor that in its opinion the premises do not apply, the tenant may apply to the Tribunal for an Order that rent be paid to the ‘special rent account’. The Tribunal, if it decides to make an Order, may order that the whole of the rent or such part as it determines is paid to the Lessor. (Editor’s note. Again, the drafting of this Bill is deplorable. Is the payment to the special rent account dependent upon the lessor carrying out work to bring the premises up to the minimum standard? What happens to a real estate agents’ entitlement to receive management fees and to pay for authorised expenses? The Bill is silent.)

From our point of view, it is patently obvious that the Honorable Member has no idea of how property management operates. This has certainly been an issue that we at Barclay MIS have always been vehement in our approach to change in residential tenancy laws. If you want to make changes you need to talk to ALL stakeholders, and that means landlords and property managers. It is apparent that this Bill has not been presented based upon consultation with all interested parties. It is not sufficient for our Parliamentarians to merely pander to ‘bleeding heart groups’ who have a biased and one-sided view of the property management industry.

For instance, when a property is available for rental, an inspection is invariably available for the potential tenant. That potential tenant could fully appraise the property and decide as to whether to apply to tenant the property. That person has the ability at that time to decide whether that property meets their needs. It matters not from what socio-economic group that person comes from – it is freedom of choice.

This Bill potentially provides for the following scenario. A potential tenant inspects a property and agrees to a tenancy agreement. A standard residential tenancy agreement is entered into providing for commencement say 7 days hence. Following the signing of the agreement the tenant gives the lessor notice that the property does not comply with a minimum standard. That tenant can potentially wait until the procedures as to reports from the RTA and application to the Tribunal have been determined before the liability to pay rent arises.  The effect is that a rental property can be ‘tied up and off the market’ until these issues are determined.

Apart from our comments regarding the Bill being badly drafted and not addressing issues, the question must be asked. Why is this necessary?

There was an old saying that went along the lines ‘if it ain’t broke, don’t fix it”.

And that is exactly the point we would make. Why is any amendment to the act necessary? As it is the Act provides:

185 Lessor’s obligations generally

1. This section does not apply to an agreement if-
   1. the premises are moveable dwelling premises consisting only of the site for the dwelling; and-
   2. the tenancy is a long tenancy (moveable dwelling).
2. At the start of the tenancy, the lessor must ensure-
   1. the premises and inclusions are clean; and
   2. the premises are fit for the tenant to live in; and
   3. the premises and inclusions are in good repair; and
   4. the lessor is not in breach of a law dealing with issues about the health or safety of persons using or entering the premises.
3. While the tenancy continues, the lessor-
   1. must maintain the premises in a way that the premises remain fit for the tenant to live in; and
   2. must maintain the premises and inclusions in good repair; and
   3. must ensure any law dealing with issues about the health or safety of persons using or entering the premises is complied with; and
   4. if the premises include a common area—must keep the area clean.

The existing provisions of the Act dictate specific liability on a lessor as to what that lessor’s obligations are to be in a residential tenancy. The legislation provides mechanisms for a disgruntled tenant to seek redress for a breach of these obligations. There is a plethora of case law to determine what may be a breach of these obligations by a lessor. Each case must stand on its own merits and we do not need bureaucrats telling us what is ‘minimum’.

There is no need to take these provisions further.

We concede that there are some ‘rogue’ operators in the residential tenancy industry (especially in the rooming accommodation industry) however why does this need to affect the industry as a whole.

Why not adopt the New South Wales approach whereby if a landlord has received several breach notices, the Director General of the Department of Fair Trading can order that the landlord appoint a professional managing agent.

This proposed Bill is nonsense as must be opposed as an industry of property managers.

If you want to know more go to the Queensland Parliament website for full details of the proposed Bill, Explanatory Notes and First Reading Speech including details on a public hearing and how to have your say.

Submissions close at 5pm on Friday 18 July 2014