RTA in focus: Break fee

RTA in Focus: Fit For Habitation

13 March 2020

This article is part of the RTA in Focus series. With a raft of reforms to the residential tenancies framework set to start on 23 March 2020, we’re giving you the information you need to ensure you understand your obligations.

You can access all the articles in the RTA in Focus series here.

All residential rental properties will be required to meet new prescribed minimum standards to ensure they are fit for habitation.

Smoke alarms, decks, balconies, glass, window safety devices, blind cords and more. Property managers are expected to have their eye on a long list of building-related issues – and now that list will grow.

On and from 23 March 2020, new minimum standards will be prescribed to clarify the circumstances in which a rental premises is considered to be “fit for habitation” and “structurally sound”.

“The responsibilities attributed to property managers are staggering,” Michelle McLean, Senior Property Manager at Leah Jay and Chair of the REINSW Property Management Chapter Committee, said. “The scope of our role has changed dramatically over the years and we’re now expected to make assessments on things that are outside our core function of managing the landlord and tenant relationship.

“While the need to comply with the legislation goes without saying, we need to put systems and processes in place to ensure that the responsibility for risks and safety issues is shifted back to the landlord.”

So what additional responsibilities are being placed on property managers on and from 23 March 2020?

What’s the current situation?

Under section 52(1) of the Residential Tenancies Act 2010 (NSW), a landlord must ensure that the premises is in a reasonable state of cleanliness and fit for habitation by the tenant. However, to date, the phrase “fit for habitation” has not been defined, leaving it open to interpretation.

For example, the landlord may think it’s quite alright that there’s only a single power point in the lounge room, but the tenant complains that it’s simply not adequate to run the TV, stereo, modem, lamp and various other appliances and devices. Property managers have been left in the unenviable position of having to negotiate what the appropriate standard is in circumstances like these and broker a resolution.

What’s changing on 23 March 2020?

To clarify the meaning of “fit for habitation” and set clearer expectations for tenants, landlords and property managers, seven minimum standards have been introduced.

The standards, that will be set out in the new section 52(1A) of the Residential Tenancies Act, require that all rental premises must:

  • Be structurally sound
  • Have adequate lighting, either natural or artificial (except in storage rooms or garages)
  • Have adequate ventilation
  • Be supplied with electricity or gas with an adequate number of outlets for lighting and heating
  • Have adequate plumbing and drainage
  • Be connected to a water supply service or have infrastructure that’s able to supply hot and cold water for drinking, washing and cleaning
  • Contain bathroom facilities that allow for privacy, including toilet and washing facilities.

To clarify the requirement of being “structurally sound”, the new section 52(1B) of the Residential Tenancies Act, sets out that floors, ceilings, walls, supporting structures, doors, windows, roof, stairs, balconies, balustrades and railings must:

  • Be in a reasonable state of repair
  • Not be subject to significant dampness
  • Not allow water penetration into the premises
  • Not be liable to collapse because they are rotten or otherwise defective.

The amendments in practice

Michelle said that prescribing minimum standards in the Residential Tenancies Act provides a mechanism for greater consumer protection.

“This is a good thing,” she said. “It also ensures that tenants, landlords and property managers are each engaged in ensuring the safety and compliance of the property.

“However, some aspects of the wording of the new section 52(1A) are concerning. For example, the use of the word ‘adequate’ is vague. What one person thinks is adequate, another may not. So how is an assessment to be made?”

Michelle also cautioned that property managers need to be aware of how the new section 52(1B) will impact their role.

“Property managers are simply not qualified to comment on the matters set out at section 52(1B),” she said. “We don’t have any specific building skills or the like that enable us to form an opinion that could or should be relied upon by the landlord or tenant in terms of assuring the health, safety or compliance of various aspects of the property.

“Put simply, we shouldn’t be providing opinions or making assessments regarding the soundness of structural matters that are outside our skill, knowledge, qualifications and experience.”

By way of example, Michelle pointed to the compliance requirements for swimming pools.

“When the NSW Government introduced the new regime a number of years back, they recognised that property managers weren’t appropriately qualified to make the required assessments and therefore an independent certifier must assess compliance,” she said.

“The same should be the case when it comes to establishing the structural integrity of a residential rental premises.

“You should always seek professional advice from structural and engineering experts before commenting on whether a property is ‘fit for habitation’ or ‘structurally sound.’ And, if you’re in any doubt about whether a property complies with these sections, the best course of action is to say ‘no’ to the management.”

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