O'Brien-Malone & Diamond v Obermeder
[2006] ACTRTT 20
•7 September 2006
O’Brien-Malone & Diamond -v- Obermeder ACTRTT 20 [2006]
CATCHWORDS
Rental rate increaseLEGISLATION
Residential Tenancies Act 1997 (ACT)Part 5, Section 68
Clauses34 - 41 Standard Residential Terms
CASE LAW
Commissioner of Housing v Key [2003] ACTSC 44
Case Reference Number: RT 2160 of 2006
Re: Premises at 15A Goble Street, Hughes, ACT 2605
DECISION
1.To disallow $5.00 per week, being part of the proposed rental increase of $20.00 per week from 2 August 2006.
2.To allow a rental rate increase of $15.00 per week from 2 August 2006.
Member: J. A. David
Date: 7 September 2006
IN THE RESIDENTIAL ) RT2160 of 2006
TENANCIES TRIBUNAL )
OF THE AUSTRALIAN )
CAPITAL TERRITORY )APPLICANT: R Angela O’Brien & Mark Diamond
(Tenants)
RESPONDENTS: Mr and Mrs Obermeder
(Lessors)
STATEMENT OF REASONS
BACKGROUND
1 The parties entered into a residential tenancies agreement in relation to premises at 15A Goble Street, Hughes in the Australian Capital Territory on 13 July 2005. The tenancy was for a further fixed term tenancy from 3 August 2005 to 1 August 2006 that converted to a periodic tenancy from month to month thereafter. The rent specified in the tenancy agreement was $290 per week.
2 The initial fixed term tenancy was for 12 months from 17 March 2004. The Inventory and Condition Report dated 17 March 2004 described the premises as “Internal: 4 bedroom home combine laundry under shared with flat tenant. No car accommodation. Carpets professionally cleaned 16 July 2004. External: Heavily treed grass area patchy garden beds neglected. Tenant to mow, prune and remove leaf/garden litter on regular basis”.
3 The Property Managers, Wright Dunn Real Estate Pty Limited, attached to the tenancy agreement dated 13 July 2005 a document entitled “Endorsement of Prescribed Terms & Tenant Information Sheet” which purported to contain further “conditions”. In so far as they are inconsistent with the Prescribed Terms, these additional "conditions" are void under section 8 of the Residential Tenancies Act 1997 (the Act) as they were not endorsed by the Tribunal.
4 On 6 June 2006 the Property managers on behalf of the Lessors served on the Tenants a Notice of Rental Increase that gave notice of an increase of $20.00 per week from 2 August 2006 (the first day after the fixed term ended).
5 The Applicants sought the following relief from this Tribunal: “Limitation of rental rate increase.” The Property Manager for the lessors filed a Statement of Particulars in Response to the Application supporting the rental rate increase.
6 Initially, the matter was part-heard on 17 August 2006. It was adjourned for the parties to file a ‘bullet-point list of any points they want considered by the Tribunal”. The Tribunal acknowledges that the parties made significant efforts to collect documentary evidence to lodge with the Tribunal. The Applicants lodged 4 pages of bullet-points supported by 48 itemised documents. The Property Managers lodged 3 pages of bullet-points. The matter was further heard on 31 August 2006 after which the Tribunal reserved its decision.
Applicants’ Evidence
7 The Applicants submitted the following documentary evidence:
· Tenancy Agreement dated 13 July 2005 together with document entitled “Endorsement of Prescribed Terms & Tenant Information Sheet”
· Statement of Particulars
· Copy of letter from Wright Dunn R/E Pty Limited dated 6 June 2006
· Various photographs, Exhibit “C”
· Coloured plan of 15A Goble Street, Exhibit “D”
· Three additional photographs, Exhibit “E”
· Document entitled “Property Comparison” comparing 15A Goble Street Hughes with advertised property 53 Carroll Street, Hughes
· allhomes.com.au listing for two properties in Hughes on 20 August 2006
· Bullet-point list dated 24 August 2006 with 23 “items” of documentary evidence attached, including:
i.Inventory and Condition Report of premises dated 17 march 2004
ii.Additional photographs, tags 14-16, 20-23
iii.Various correspondence between the tenants and the lessors/Property Managers
iv.Plan of premises, tag 19
· Freedom of Information Request response from ACT Planning and Land Authority dated 18 August 2006 with 24 documents attached
Respondents’ Evidence
8 The Respondents submitted the following documentary evidence:
· Statement Contesting/Defending Application
· Photographs marked Exhibit “A”
· allhomes.com.au listing of properties for rent in Hughes on 19 July 2006, marked Exhibit “B”
· Document entitled “15A Goble street, HUGHES” listing increases in taxes and rates paid on the property from 1 July 2004 to 30 September 2006
· Various photographs marked Exhibit “H”
· Bullet-point list in support of increase in rent filed on 25 August 2006
FINDINGS AND REASONING
Applicable Law- Rental Increase
9 Clauses 34 - 41 of the Standard Residential Terms, Schedule 1 of the Residential Tenancies Act 1997 (the Standard Terms) apply to rental increases. Essentially the relevant clauses for this Application provide that the rent may be increased on or after 12 months from the commencement of the tenancy (Cl. 35). The lessors must give the tenant 8 weeks notice in writing of the increase and specify the amount and the proposed commencement date for the increase in the notice (Cl.38). The tenant may apply to this Tribunal for a review and the increase is not payable until the Tribunal so orders (Cl.39 and s 66 of the Act). All of these requirements were met in this matter.
10 Part 5 of the Residential Tenancies Act 1997 (the Act) binds this Tribunal's review of rental increases, specifically s 68. Sub-section 68 (2) provides:
"(a) unless the tenant satisfies the tribunal otherwise, a rental rate increase is not excessive if it is less than 20% greater than any increase in the index number .. since the beginning of the lease; and
(b) unless the lessor satisfies the tribunal otherwise, a rental rate increase is excessive if it is more that 20% greater than any increase in the index number over the period since .. the beginning of the lease
Sub-section 68(5) provides that the "index number" means the Consumer Price Index (Privately Owned dwelling rents expenditure class) for Canberra published from time to time by the Australian statistician.
11 As Crispin, J stated in Commissioner of Housing v Key [2003] ACTSC 44 para 8, the Tribunal's task under s 68 is to:
"Determine which party bore the onus of proof, having regard to the rebuttable presumptions provided by subs (2), then to determine whether that onus had been discharged, having regard to the matters enumerated in subs (3) and then, if appropriate, to determine how much of the proposed increase should be allowed."
12 The factors relevant to this matter that the Tribunal is to consider in determining whether the rental increase is or is not excessive are set in subs 68(3) below. In its consideration of those factors, Justice Crispin also stated (supra par. 31) that the Tribunal is not obliged to explain what weight it gives to a particular factor set out in subs 68(3), or how that factor is taken into account in determining the extent to which a proposed rental increase should be disallowed.
Subs 68(3)
(a)the rental rate before the proposed increase;
(b)if the lessor previously increased the rental rate while the relevant tenant was tenant –
(i)the amount of the last increase before the proposed increase; and
(ii) the period since that increase
(c )outgoings or costs of the lessor in relation to the premises;
(d) services provided by the lessor to the tenant;
(e)the value of the fixtures and goods supplied by the lessor as part of the tenancy;
(f)the state of repair of the premises;
(g)rental rates for comparable premises;
(h)the value of any work performed or improvements carried out by the tenant with the lessor's consent;
(j)any other matter the tribunal considers relevant.
13 Section 67 of the Act enables the Tribunal either (a) to allow the increase or another increase the Tribunal considers just, (b) to disallow the increase, or (c) to disallow part of the increase. Finally, subsection 68(4) provides that, if the Tribunal considers a proposed rental rate increase is excessive but a lesser increase would not be, the Tribunal may disallow so much of the increase as is excessive.
14 The Tribunal is satisfied that the proposed rental increase sought by the lessors is more than 20% greater that “any increase in the index number” since the beginning of the tenancy. Therefore, the onus is on the Respondent lessors to satisfy the Tribunal that the proposed rental rate increase of $20.00 per week is not excessive.
15 The Respondent lessors raised a number of factors for the Tribunal's consideration of the proposed rental increase. In summary they were:
a) The tenants moved into the property on 17 March 2004.
b) There was a rental rate increase of $10.00 per week in August 2005 which is 12 months ago.
c) It is now a periodic month to month tenancy.
d) Comparison of rental rates for properties in Hughes, a popular renting suburb, shows that the current rent is below the rent for similar properties in the area. The lessor demonstrated this with copies of allhomes.com.au listing of rental properties in the area, particularly 53 Carroll Street, Hughes which was referred to as the “comparison property” by the lessors. These listings reflected rentals in the range of $335 per week for a two bedroom plus study duplex for the comparison property to $400 plus for 4 bedroom houses.
e) The lessors pay for water consumption and a yearly gutter clean under the terms of the tenancy.
f) The lessors have carried out maintenance as the need for it is reported by the tenants. If the tenants do not report a need for maintenance to the Property Managers, the lessors do not know of the need.
g) Whilst seven (7) large trees were removed from the rear of the property this year, there are 3-4 trees still remaining that provide shade and privacy. Not all shade and privacy was removed.
h) The lessors did not know there were continuing problems with the plumbing and the clothesline, nor of a plastic outdoor chair being broken when trees were taken down at the rear of the property. When informed by the tenants, the lessors have informed the tree removalists of the need to replace the chair and to repair the clothes line.
i) The lessors only became aware of the need for some internal painting as a result of the initial hearing; they have obtained a quote and will undertake the painting when convenient to the tenants.
j) The tenants reported the “flat flooded” after the January 2006 storm. So the Property Manager inspected the flat, whereas the mould growth was in the storage area under the house which was not inspected. The Property Manager was unaware of the continuing mould problem until the initial hearing before this Tribunal. The tenants did not raise the mould problem during the inspection on 31 July 2006.
k) After the initial hearing when the continuing problem with the internal plumbing was discussed, the lessors wanted to inspect the plumbing prior to the resumed hearing. The tenants refused to allow the inspection until after resumed hearing.
l) The lessors have incurred the following costs during the last year:
a.Removal of 7 large trees at the rear of the property at the direction of ACTEW which considered them dangerous $9, 370.
b.New plantings to replace the removed trees at $962
c.Lessors pay the water consumption which has increased over the last year
d.Increases over last 12 months in:
General rates $388.84
Water rates $ 31.38
Water consumption $164.94
Land tax $590.87
Insurance $ 20.30
e.Cost of: New gas heater $313.50
New security door $295
Plumbing services $167.75 and $132
16 The Applicant tenants raised a number of factors for the Tribunal's consideration of the proposed rental increase. In summary they were:
a) There has been no increase in the real rental value of the property: in fact, it has diminished due to the removal of the 7 large trees at the rear of the property in November 2005 as shade and privacy screening has been significantly affected. The new plantings will take years to provide the same amenity.
b) The premises were not in a good condition when the tenants moved in, as is demonstrated by the Inventory and Condition Report dated 17 March 2004. The overall internal condition has further deteriorated as a result of the flooding of the downstairs in January 2006 due to faults in the plumbing. For instance, there is significant mould growth in an unused room below one of the tenants’ bedrooms which affects the use and amenity of the bedroom. This was brought to the Property Managers’ notice at the inspection in April 2006. The tenants reported that nothing was done to rectify the problem. The tenants stated little maintenance has been carried out by the lessors until after the initial hearing.
c) The property is in shabby condition only. The comparison property and other rental properties in the allhomes.com.au listings all are in better overall internal and external condition and they each have some of other various amenities that the premises do not, such as ducted heating, a garage or carport, no other tenancy on the property, separate dining room, own laundry.
d) The tenants said the lessors only do maintenance after many reminders by the tenants: for instance it took 9 months for the gutters to be cleaned after the tenancy first commenced in 2004 even though the Inventory and Condition Report noted on page 10 that the gutters were full of leaves and the tenants wrote to the Lessors on 21 March 2004 requesting that the gutters be cleaned within 7 days as they had noted there was water damage on internal walls from the full gutters. The gutters were cleaned a second time in August 2006 even though considerable rubbish fell into them whilst the 7 large trees were removed in November 2005.
e) The new heater was only provided after the coldest part of winter this year, though it was requested by the tenants well prior to winter.
f) The plumbing problem in the ensuite bathroom has been raised with the Property Managers on a number of occasions. No repairs have been undertaken. The problem is serious as whenever the downstairs tenant uses his bathroom water or toilet (also when the downstairs laundry is used) air “bubbles” up in the toilet in the tenants bathroom and releases unpleasant air and odours.
g) The Lessors’ increased costs in general and water rates, land tax and insurance should be apportioned between the two tenancies on the property as there is a tenant in the flat under the premises. The rentals for the two premises are $290 and $90 respectively. Also, the lessor has benefited from the increased water consumption as increased water has been used by the tenants on the new plantings.
h) Some of the increased costs the lessors claimed were incurred by the lessors prior to the last 12 months. Thus they were costs on which the increase in July 2005 was based.
17 The tenants also raised certain arguments based on information obtained from ACTPLA in response to their Freedom of Information Request. Those arguments and that material were not considered by the Tribunal in coming to its decision.
18 After carefully taking into consideration the oral and documentary evidence presented and all of the factors summarised above for both the lessors and the tenants, together with all relevant factors under section 68 (3) of the Act, the Tribunal finds that the proposed rental rate increase of $20 per week is excessive. The Tribunal further finds that a rental rate increase of $15.00 per week from 2 August 2006 should be granted. This is on the basis of what is just and fair to all the parties in the circumstances.
ORDERS
- To disallow $5.00 per week, being part of the proposed rental increase of $20.00 per week from 2 August 2006.
- To allow a rental rate increase of $15.00 per week from 2 August 2006.
Jennifer David
Member
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