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Expenses, turnover and conflict

Expenses

It is common in share housing for housemates to share expenses – often in equal shares, but sometimes according to some other arrangement determined by the housemates. The usual provisions of the Residential Tenancies Act 2010 (NSW) (the RT Act) about bonds, rent and rent increases and utilities apply to co-tenants (as tenants) and head-tenants and sub-tenants (as landlords and tenants respectively).

Bond

Most share houses require new housemates to pay a bond, either to a departing housemate or to a head-tenant. When you pay a bond in share housing, you can protect your money by changing the names under which the bond for the premises is lodged with Renting Services. To do this, complete a ‘Change of shared tenancy arrangement’ form, available from NSW Fair Trading or your local Tenants Advice and Advocacy Service.

Alternatively, if you are a sub-tenant and you are to pay a bond to your head-tenant, you are entitled to have the bond lodged with Renting Services (that is, lodged separately to any bond paid by the head-tenant to the landlord and lodged with Renting Services). In practice, few head-tenants do this; if you do not want to insist on it, you should at least insist on them giving you a receipt for the bond you’ve paid.

If you’re a co-tenant and you’re moving out and terminating your share of the tenancy (see ‘Termination’ below), you can demand the remaining co-tenants pay your share of the bond to you within 14 days (section 174(2); but not if you’ve been excluded from the premises by an AVO (section 174(4))). The remaining co-tenants can deduct from your share of the bond any amounts you owe them, and refuse to pay anything if your liabilities exceed the amount of your share of the bond (section 174(3) and (6)).

Rent and rent increases

In most share houses housemates pay rent either in equal shares, or in different amounts depending on the quality and amenity of the bedroom each housemate occupies. (In a few share houses the head-tenant arranges things so as to pay less than the sub-tenants; there is nothing unlawful about this, but the head-tenant cannot expect it to be a happy share house.)

The rent may be increased as provided by the RT Act 2010. When a head- tenant wants to increase the rent paid by a sub-tenant (because, for example, they’ve received a rent increase notice from the landlord, or because a housemate is moving out) the head-tenant should, strictly speaking, follow the provisions of the Act and give each sub-tenant a separate 60-day written notice stating the amount of the increased rent for that sub-tenant.

Utilities

It is common in share houses for each utility account to be held by a different housemate, and bills to be shared. If you’re moving out, it is a good idea to close your account and have another housemate set up an account in their own name.

There are no special provisions in the RT Act 2010 about utility bills in share houses. Strictly speaking, if you are sub-tenant, your liability to pay bills should be dealt with according to the usual provisions of the RT Act 2010 about utilities – separate meters, etc – but in most share housing arrangements this will be impractical.

Turnover of housemates

The composition of share houses often changes, as housemates come and go at different times. There are different ways for getting new housemates into, and for departing housemates out of, the legal relationships of a share house: each has different legal requirements and consequences.

Sublet

Subletting gets an additional housemate in, or gets a new housemate to take the place of an existing housemate, without changing the existing housemates’ rights and obligations to the landlord. The new housemate is a sub-tenant or lodger of one or more of the existing housemates.

See the section on Subletting in Other issues during a tenancy for more information.

Transfer

Transferring gets an additional housemate in on the same footing as the existing housemates, or gets a new housemate to take the place of a departing housemate while ending the rights and obligations of the departing housemate.

See the section on Transferring (assigning) the tenancy for more information.

If you are a sub-tenant or lodger and you want to move out while your housemates get a new person in, it is more straightforward for you to terminate your sub-tenancy or lodgement than for you to transfer it. (Leave it to your house-mates to do a new transfer, sublet or lodgement with the new person.)

Termination

Termination ends a housemate’s rights and obligations, regardless of whether anyone else is going to move in, or whether the whole tenancy ends up being terminated.

Your options and obligations in relation to termination depend on the nature of the legal relations in your household.

If you are a co-tenant

You can terminate your tenancy rights and obligations under a periodic agreement by giving a 21-day termination notice to your fellow co-tenants and to your landlord and moving out (section 101). The other co-tenants’ rights and obligations continue.

Note that if you do not move out after giving a section 101 termination notice, your co-tenants can apply to the Tribunal to terminate your co-tenancy on the basis of your notice (section 101(4)).

A section 101 notice cannot be given during the fixed term of a tenancy. Instead, you can apply to the Tribunal for an order terminating your share of the tenancy (or, alternatively, the whole of the tenancy) (section 102). You will need to show the Tribunal that there are ‘special circumstances’ that justify termination. The Tribunal will also notify your landlord of the proceedings and allow them to have their say (section 102(6)). If the Tribunal terminates the tenancy during the fixed term, it can also order you or another co-tenant to compensate the landlord (up to the amount of the applicable break fee) (section 102(5)).

Alternatively, if you want to remain in the premises and make a co-tenant move out instead, you can apply to the Tribunal for an order terminating theirtenancy (section 102). As above, you will need to show ‘special circumstances’, and the landlord will be allowed their say.

If you are a head-tenant

You can terminate your agreement with the landlord by using any of the methods available to tenants (see Ending a tenancy). This does not, however, deal with your obligations to a sub-tenant or lodger (and if the landlord takes possession of the premises while there is still a sub-tenancy in place, you may be liable for breaching the sub-tenant’s right to quiet enjoyment). Discuss with your housemates the possibility of transferring your tenancy to them or, if that’s not possible, give them an appropriate termination notice.

You can terminate a sub-tenant’s tenancy using any of the methods available to landlords (see Ending a tenancy). You can terminate a lodger’s right to occupy by giving them notice and, if they remain after the notice period, removing them (see Marginal rental).

If you are a sub-tenant

You can terminate your agreement with the head-tenant by using any of the methods available to tenants (see Ending a tenancy). In most cases, this means giving the head-tenant a 21-day termination notice and moving out. There is no need to contact the head-tenant’s landlord.

Alternatively, if your head-tenant is moving out and you want to remain in the premises, you will need to become a tenant yourself. You may do this by:

  • Arranging with the head-tenant and landlord for the head-tenant’s tenancy to transfer to you;
  • Arranging with the landlord to enter into a new tenancy agreement; or
  • Applying for a Tribunal order recognising you as a tenant and vesting a tenancy in you (section 77).

If you are a lodger

You can terminate your agreement with the head-tenant by giving a termination notice and moving out.

If the head-tenant is moving out and you want to stay, you will need to become a tenant yourself (see ‘If you are a sub-tenant’, above).

Avoiding and dealing with conflict

When you set up or move into a share house, you should be clear about the legal relationships between the housemates: that is, whether you’re going to be a co- tenant, sub-tenant or lodger. Whatever the arrangement, it is a good idea to put it in writing (this may seem excessively formal and fussy, but the potential for problems is greater when things are not in writing).

It is also a good idea for all housemates to be clear about what they expect of living together. Some households work best when housemates’ expectations are spelt out in ‘house rules’ and rosters; others manage informally with a large degree of ‘live and let live’.

There are no failsafe ways of dealing with conflict in share housing. In some households, free and open discussion about potential problems works best to resolve them or prevent them from getting worse. In others, housemates may avoid letting problems intrude on normal conversations and instead communicate about problems in notes slipped under doors.

The law does not have much to offer in dealing with conflict at this level. It does offer options, however, where conflict has reached the point where it looks like someone is going to have to move out (see the section on ‘Termination’ above), or where there is a threat of violence (see the section on ‘Domestic violence’ in Other issues during a tenancy).