Protected tenants

Many people are aware of ‘rent control’ through American TV shows, and don’t know that New South Wales has had rent control legislation at various times since the early 20th century – and that some tenants remain covered by rent control and related protections today. These tenants are often called ‘protected tenants’ and are covered by the Landlord and Tenant (Amendment) Act 1948(NSW) (the LTA Act 1948). They are not covered by the Residential Tenancies Act 2010 (RT Act 2010), and are also excluded from the jurisdiction of the Tribunal.

The LTA Act 1948 provides strong protections against rent increases and terminations. On the other hand, it makes no provision for tenants’ rights in relation to repairs or maintenance. It is also notoriously complex and difficult to comprehend.

No new protected tenancies have been created since the mid-1980s, so they are gradually dying out. We estimates that there may be several hundred left.

The LTA Act 1948 operates in conjunction with another, even older piece of legislation, the Landlord and Tenant Act 1899 (NSW) (the LT Act 1899). In 2015, the NSW Parliament passed legislation that will repeal the LT Act 1899 on 29 June 2020. It is not clear how this will affect the LTA Act 1948 or any protected tenancies that may still exist at that time.

Am I a protected tenant?

Strictly speaking, the LTA Act 1948 applies to premises, rather than persons or their tenancy agreement. These premises are known as ‘controlled premises’. Over the years, amendments to the LTA Act 1948 have limited its application to certain premises only; also, certain events can cause premises to become decontrolled and pass out of coverage.

Use the following checklist to see if your premises might be controlled premises:

  • Are the premises owned by a private landlord? (The LTA Act 1948 does not apply to the Crown (including NSW Government agencies, such as Roads and Maritime Services: Interpretation Act 1987 (NSW), section 13A), or to the NSW Landlord and Housing Corporation (that is, public housing) (section 5). Note that local councils are not ‘the Crown’.)
  • Did you move into the premises before 1 January 1986? (No new protected tenancies have been created from that date (section 5AA).)
  • Were the premises built before 16 December 1956? (The LTA Act 1948 does not apply to premises built (or finished being built) on or after that date (section 5A(1)(a).)
  • If the premises are a flat, did it exist as a flat before 1 January 1969? (The LTA Act 1948 does not apply to ‘residential units’ that came into existence – for example, through the subdivision of an old building – on or after that date (section 5A(1)(b).)

If you answered ‘yes’ to each of these questions, your premises may be controlled premises. Note that it is possible for a boarding house to be a ‘dwelling house’ under the LTA Act 1948, so if you are a resident of a boarding house and you can answer ‘yes’ to the above questions, you may be a protected tenant and not a boarder or lodger.

Next you will need to find out if the premises have been decontrolled at any stage. Consider each of the following questions:

  • Has the owner had vacant possession of the premises, or occupied the premises themselves, then let the premises under a lease registered under section 5A of the LTA Act 1948, in the period 1 January 1969 to 1 January 1986 (section 5A(1)(d)(ii))?
  • Has the owner had vacant possession of the premises, then let them under a lease registered under section 5A of the LTA Act 1948, before 1 January 1969, with the terms of the lease remaining unvaried between the time of registration and that date (section 5A(1)(e))?
  • If the premises comprise both a residence and a shop, has a single lease for both the residence and the shop been entered into (even if not registered) since 1 January 1969 (section 8(1B)(b))?

If you answered ‘yes’ to any of these questions, the premises have been decontrolled, and your tenancy is not covered by the LTA Act 1948.

A couple of points of clarification are necessary. Section 5A leases are standard form agreements that were commonly used by landlords and agents before the introduction of the RT Act 1987, and that could be registered with the State Government. In most cases, where a landlord got vacant possession and let the premises again under a registered section 5A lease, the premises became decontrolled. Registration is crucial: an unregistered section 5A lease does not decontrol premises (except where it is a lease for both a residence and a shop). A properly registered lease should also include a certificate from an independent solicitor or registrar of the Local Court stating that they explained the lease to the tenant before it was executed (sections 5A(1)(d)(ii)(b) and 5A(1)(e)(ii)(b)(i)-(ii)). No new registrations of section 5A leases have been allowed since 1 January 1986 (except in certain very limited circumstances: section 5A(9A)-(9C)).

In relation to the second point (section 5A lease registered before 1 January 1969): this is a decontrolling event only if the terms of the lease – including the rent paid – were not varied between the time of registration and 1 January 1969. For example, if a lease was entered into and registered sometime in 1967, and the rent was then increased sometime in 1968, the registration does not decontrol the premises.

Finding out the answers to all of these questions may take some detective work. Contact your local Tenants Advice and Advocacy Service for tips.

Rents

Protected tenants are entitled to pay a ‘fair rent’. There are two ways in which a fair rent may be set:

  • By a registered agreement between the landlord and tenant (section 17A); or
  • By the Fair Rents Board, considering certain matters set out in the LTA Act 1948 (sections 21, 26B, 27 and 31MAA). Either you or the landlord can apply to the Fair Rents Board for a decision setting the fair rent.

The fair rent may be significantly lower than the market rent for similar premises. It cannot be increased except by another section 17A agreement or decision of the Fair Rents Board.

If you have been paying more than the fair rent for the premises, you may apply to the Local Court to have the overpaid money returned to you (up to six years of overpayments: section 35(3)). The landlord may also be prosecuted for an offence.

If a fair rent for the premises has never been set, the lawful rent is the rent you have been paying, until such time as a fair rent is set.

Tip

If possible, try to set the fair rent by a section 17A agreement. This gives you more control over the outcome than leaving the decision to the Fair Rents Board. You might also be able to negotiate other matters as part of your agreement, such as getting repairs done, or that the landlord will not seek a rent increase for a certain number of years. Get advice from a tenants advocate or lawyer before signing a section 17A agreement.

If your income is higher than a certain threshold, the Fair Rents Board can set the fair rent at the ‘current value rental’ (there is a complicated formula for this (section 31MMA), but it is similar to the market rent). The threshold is an annual income equivalent to 65 times the fortnightly single Age Pension (clause 5(1), Landlord and Tenant Regulation 2009 (NSW); in other words, an annual income of $45,195). Your landlord can give you a notice requiring you to provide a statutory declaration as to your income for the previous financial year (section 31MBA).

Enjoyment of the premises

It is an offence for your landlord or agent to interfere with or restrict your enjoyment of the premises (section 81(1)). This includes interference with the supply of services to the premises, or conveniences usually available to you.

Generally speaking, it is up to NSW Fair Trading to decide whether to investigate and prosecute an alleged breach of section 81(1).

Repairs

There is nothing in the LTA Act 1948 that expressly gives you a right to get repairs done. (As a result, many controlled premises are rundown.) You can try to get repairs done by the following means:

  • As part of a section 17A agreement for a rent increase;
  • Complaining that the failure to repair is in effect an interference with your enjoyment of the premises (section 81(1)); and
  • Complaining to your local council and asking that it makes an order for repairs to be done (Environmental Planning and Assessment Act 1979 (NSW), section 121B).

Beware that if your premises have become too rundown, the local council can order that they be demolished or repaired such that vacant possession will be required.

Termination

A protected tenancy cannot be terminated by the landlord without grounds. Instead, a landlord may give a ‘notice to quit’ on one of the numerous grounds of termination provided by the LTA Act 1948. The most commonly used grounds are:

  • You have failed to pay rent for 28 days or more (section 62(5)(a)(ii));
  • You have failed to take reasonable care of the premises (section 62(5)(c));
  • You are guilty of conduct causing a nuisance or annoyance to neighbours (section 62(5)(d));
  • You have sufficient means such that it is reasonable that you should buy or rent other premises (section 62(5)(w));
  • The premises are reasonably required by the landlord for reconstruction or demolition (section 62(5)(m)); and
  • The premises are reasonably required by the landlord, or a dependant, for their own occupation (section 62(5)(g)(i)).

There are numerous other grounds for termination, some of them very narrow (for example, that the premises are to be used as a vicarage: section 62(5)( h)); and numerous qualifications and special provisions. Always seek advice if you receive a notice to quit or if your landlord otherwise asks you to move out.

The period of a notice to quit, for most grounds for termination, is 30 days (strictly speaking, it’s seven days plus an additional seven days for every six months you have occupied the premises, up to a limit of 30 days – so, in practice, 30 days (section 63(1) and (2)(a)(ii)). For some grounds the notice period is shorter: for example, for failure to take care of the premises, and for nuisance and annoyance, the notice period is 14 days (section 63(2)(a)(i)). Also, if the premises are shared accommodation (for example, a boarding house), the notice period is 14 days (section 63(2)(iii)).

If you receive a notice to quit and do not move out, your landlord may apply to the Local Court for an eviction order (section 69). The court will consider whether the grounds for termination are proved, and any hardship that would be caused to you if the order were made, balanced against any hardship caused to the landlord if the order were refused (section 70(1)(a) and (b)). In relation to some grounds for termination, the court must also consider whether reasonably suitable alternative accommodation is available to you (section 70(1)(c)); in relation to the ground at section 62(5)(m), the court must be satisfied that all required development consents have been given (section 70(2A)(b)). The court may, in its discretion, refuse to make an eviction order, even if the grounds for termination are proved (section 70(1)).

Offers of money, harassment and dirty tricks

Because it is difficult to terminate a protected tenancy, some landlords may offer you money to move out. (Moving out effectively decontrols the premises, and increases their value.)

If you are offered money to move out, seek advice and weigh up the short-term gain (the money) against the long-term consequences (the higher cost of buying a house or renting privately, or waiting for social housing).

Some landlords, on the other hand, resort to threats and harassment to try to drive a tenant out. If you’re threatened or harassed, seek legal advice, and consider a complaint to NSW Fair Trading or the police, and/or an application for an apprehended violence order.

Finally, beware of tricks that may oust you from coverage by the LTA Act 1948. For example, your landlord might offer to repaint the premises, and ask you to move out while they do the work; if you do, they might then claim that you’ve given vacant possession and ended the protected tenancy. Similarly, if you live in a boarding house and your landlord offers you another (perhaps nicer) room, moving out of your old room will mean that your protected tenancy is terminated. If you receive an offer or request to leave the premises, even if only temporarily, get advice from a tenant advocate or lawyer.