Minggu, 31 Mei 2009

Better protection for tenants when landlords default on mortgages

Some much-welcome news: the NSW State Government has announced that it will introduce legislation this week to better protect tenants when landlords default on their mortgages and the mortgagee (usually a bank) takes possession of the premises – and evicts the tenant.



(Well done!)

We don't yet have the detail of the legislation, but the Minister for Fair Trading, Virginia Judge, says that it will provide:

    • Immediate introduction of a 30 day notice to vacate once a mortgagee is entitled to possession of rented premises
    • Permit a mortgagee who becomes entitled to possession of a premises to authorise the release of the tenant’s rental bond
    • Relief for relocation expenses, with tenants who receive an eviction notice to withhold all future rent and / or recoup advance payments – i.e. a rent holiday, or compensation from the mortgagee.

    All of which represents a massive improvement on the current law, under which tenants have been evicted by mortgagees with little or no notice, and no real prospect of compensation. (Click here to download a briefing paper by the Tenants' Union on the problems with the current law.)

    The TU has previously asked the Government to deal with the mortgagee eviction problem as a matter of urgency, so we are very pleased that action is being taken now.

    The TU and the Tenants Advice and Advocacy Services saw a wave of these cases a couple of years ago, when interest rates were rising. We expect to see another wave in the coming months, as unemployment rises. This time, it looks like the law will better protect tenants.

    Well done, Minister Judge.

    Kamis, 28 Mei 2009

    Your ad here!

    With heavily mixed feelings, your correspondent from the Brown Couch participated the other day in a story for one of the commercial TV current affairs shows. It goes to air sometime next week. I'll not name the show – not out of any ill-feeling for the show (it's done some good stories on renting, and this one may also turn out to be more or less balanced), but because it doesn't need the free advertising. Which brings me to cause of my mixed feelings.

    One of the other participants in the show is a real estate agent, who has become well-known to TV audiences through his appearances on current affairs shows over the years. I'll not name him either – he gets more than enough free advertising from the current affairs shows. His schtick is to confront a tenant in arrears, with cameras rolling, and do his bully-boy, alpha-ape routine; this appeals to a certain type of embittered landlord, and these types then take their business to the agent. It's good business for the agent; I doubt that the bully-boy routine is actually so good for the landlords. You lose good tenants that way, and I've seen enough Tribunal proceedings to know that in most (sure, not all) cases, a landlord's best chance of getting arrears repaid is for the tenancy to continue with a sensible repayment schedule negotiated. The better and cleverer agents know this too.

    Anyway, my own participation in the story was to point out that it was in fact a free ad for the agent, and to try to make the point that the larger problems facing tenants were not individual agents like the one depicted/advertised, but were instead problems in our renting laws (in particular, no-grounds terminations) and problems in the economics of housing (in particular, the house-price speculators who have screwed up house prices). We'll see how much of that comes through in the story.

    Finally, to any tenants whose lives have been touched by this agent: I'm sorry if your correspondent did not reflect the sort of indignation you might feel – that's because indignation from the Tenants' Union is best advertisement for this agent of all.

    Minggu, 17 Mei 2009

    Rent and Sales Report no 87, part 2: tenancies and turn-over

    The big news from the latest Rent and Sales Report, as discussed in the previous post, was the sudden drop-off in rents for new tenancies in the March quarter, after several years of increases.

    There's another aspect of the Rent and Sales Report that hardly ever gets reported in the media, but here at the Brown Couch we find it pretty interesting. It's the number of new bonds lodged with the Rental Bond Board, and the number of total bonds held by the Board. Because just about all tenants in the private rental market pay a bond, the number of new bonds lodged is a pretty good proxy for the number of new tenancies starting in a given period, and total bonds held is a pretty good proxy for the total number of private tenancies.

    The graph below gives both these numbers, going back to March 2003. The number of new bonds lodged jumps around a bit, but there's a rhythm to it (it's in time with the academic year) and if you look at the trend, the number of new bonds lodged – and hence new tenancies starting – is declining.

    On the other hand, though, the total number of private tenancies in New South Wales has grown continuously over the period.



    (Rent and Sales Reports, March 2003-March 2009. Click on image for a better view.)

    What this tells us is that the turn-over of tenancies has declined; in other words, tenants are not moving around as much as they used to.

    There's a number of possible explanations for this. Perhaps tenants generally are getting older and more settled in their homes. Without ruling out other explanations, I suspect the strongest is the lack of affordable housing, both for purchase and, especially, for rent. In the face of rising rents, many tenants have battened down the hatches and tried to weather the storm in their current residences - which led to fewer vacancies and, in turn, yet higher rents for new tenancies.

    So, back to rents: if they are indeed starting to level off, or even come down, will tenants start moving again? Maybe – if you feel that your income is secure you might think about venturing out into the market again, and you might even find a few reasonably-priced high-quality premises to let from credit-crunched investors who need the cash. But for those tenants who are not so secure in their employment, the storm has not passed yet.

    Jumat, 15 Mei 2009

    Rent and Sales Report no 87: rent increases stall as recession hits

    Housing NSW's excellent Rent and Sales Report is out today, with figures for median rents for new tenancies starting in the quarter to March 2009. Over the year to March, median rents increased painfully – between eight and 11 per cent (eight per cent in inner Sydney and for New South Wales, over all, higher in middle and outer Sydney) – but what's really interesting is what happened in the most recent quarter:

    Sydney, inner ring: down 1.3 per cent

    Sydney, middle ring: no change

    Sydney, outer ring: no change

    New South Wales over all: down 1.5 per cent.

    That's the recession starting to bite: more and more tenants don't have the incomes – or even the jobs – to keep paying higher rents.

    Selasa, 12 Mei 2009

    The Brown Couch's Budget Reply Speech

    It is with regret that the Brown Couch, having applauded the Federal Government's second stimulus package in February, must now issue a strong boo in reply to its Budget.


    (Boo!)

    The booing is deserved for two reasons.

    The first, of course, is the decision to extend the Boost to the First Home Owners Grant until the end of the year (albeit at a reduced amount for the last three of the six months). So first home buyers can continue to pay too much for their housing for the next six months (and, because almost all of them also borrow heavily, they will also be paying too much for the next three decades or so).

    I understand the argument that the Boost, as it applies to newly-built dwellings, stimulates employment in the building industry. But that argument doesn't hold in relation to existing dwellings, which is where most of the Boost money goes. (And I think the housing industry lobby agrees. In the pre-Budget speculation about the fate of the Boost, they were implicitly saying: keep the newly-built-dwelling-Boost and, if you must, ditch the existing-dwelling-Boost.)

    The Boost, as it applies to existing dwellings, doesn't keep builders and tradies employed. Let's call it for what it is: it's part of Australia's own housing-bubble bailout. This is a bailout of house-price speculators, partly financed by the taxpayer through the FHOG Boost, and partly debt-financed by first home buyers. And for many of the latter, as the recession hits harder and they lose their jobs, their participation in the bailout will end in tears.

    The second reason for booing: what the Budget does in relation to pensions and other social security payments – or more accurately, what it does not do. One feels a bit curmudgeonly for begrudging Age Pensioners their increase, but not all of them need it so much as the social security recipients who rent privately do. These folks include Age Pensioners, but also Single Parent Payment recipients, Newstart recipients and others, and their housing costs have recently much more than the housing costs of Age Pensioners who own their homes or who rent in social housing.

    The better way to go would have been to increase these citizens' incomes through the Rent Assistance payment. In particular, the Government should have lifted the maximum amount of Rent Assistance a person can be paid, because currently it is capped at amounts that leave some recipients in severe housing stress. This would entail no across-the-board increases, nor any expansion of eligibility, so shouldn't inflate rents generally – instead it would be targeted assistance to people who desperately need it. But no, they'll not be getting it from this Budget.

    Selasa, 05 Mei 2009

    Tenancy Culture Studies: the Fonz

    Today’s subject of study is Arthur Herbert Fonzarelli, better known as the Fonz or, affectionately, as Fonzie.



    (The Fonz.)

    The Fonz is a lodger; he lives in a room above the garage at the suburban home of Howard and Marion Cunningham and their children, Richie and Joanie, in 1950s Milwaukee, Wisconsin. A mechanic and a motorcycling aficionado, a lover and a fighter, the Fonz is consummately puissant, such that at the click of a finger he can coax music from a broken jukebox and cause any woman (or ‘chick’, as Fonzie would say) to swoon. The Fonz is the coolest figure in the history of American television, if not all Western art.

    At least, that’s how we would like to remember him. Originally conceived as a supporting character in the cast of the American nostalgic sit-com Happy Days, charismatic Fonzie quickly became the star of the show. Over the show’s 11 seasons, however, the Fonz changed further: he stopped his womanising, he became the part-owner of a small business, he adopted first a scruffy white mutt (Spunky) and then a scruffy orphaned boy (Danny). By the show’s end the Fonz had even become, of all things, a schoolteacher – the very opposite of cool.

    Happy Days is, in truth, a tragedy: it is the tale of the downfall of the Fonz and the annihilation of his coolness.

    One interpretation of this tragedy is to see it following from the popularity of cool Fonzie, as the TV executives found themselves unable to resist tinkering with their star, putting him through increasingly bizarre and demeaning events (a water-skiing Fonzie ‘jumping the shark’; Fonzie making the acquaintance of a friendly alien from the planet Ork) and misusing him in the trite moral-making formulae of sit-com story-telling.

    On another interpretation, however, Fonzie’s downfall has a wider and deeper significance; it is the story, told in the peculiar language of the American sit-com, of the historical decline of the lodger.

    This story is also told by Jacques Donzelot in the very different, if scarcely less peculiar language of French governmental sociology. In his major work, The Policing of Families (first published 1977 – the same year Fonzie jumped the shark and commenced his decline), Donzelot considers the various ways in which family life, from the eighteenth century onwards, has come to be regulated, and how family relations themselves come to be elements in the regulation of modern life.

    Since the latter half of the nineteenth century, housing has been one of the chief instruments of this regulation. Donzelot observes the general strategy of this regulation:

    [T]he woman was brought out of the convent so that she would bring the man out of the cabaret; for this she was given a weapon – housing – and told how to use it: keep strangers out so as to bring the husband and especially the children in.

    That objective of keeping out strangers – that is to say, lodgers – was pursued by various means: in architecture, by building houses large enough for children and parents to have their own hygienic spaces, but too small for the inclusion of outsiders; and in law, by the inclusion in leases of terms prohibiting sub-letting. The objective of the elimination of the lodger was pursued most pointedly by the administrators of social housing, who were – and remain – obsessed with knowing precisely who is living in each and every one of their tenants’ houses, and their relations to one another within the household.



    (The Policing of the Family in action: the Cunninghams and their lodger)

    The early cool Fonzie represents perfectly the supposed dangers posed by the lodger. He is sexually potent; he is violent; he is a delinquent (so much so that he is a member of not one but two outlaw gangs). It is these qualities that attracted audiences to the Fonz, but when the writers of Happy Days placed him in such close proximity to the Cunningham family they had, after a century of housing policies that were directed to the extinction of the dangerous lodger, no stories to tell other than the elimination of what made the Fonz cool.