End of fixed term evictions are unfair 'no grounds' evictions: Part 2
Leo Patterson Ross
In the blog earlier this week, we looked at recent reforms to 'no grounds' provisions in Queensland tenancy law. Today, we continue the conversation and consider attempts to reform tenancy law to remove 'no grounds' provisions in other Australian jurisdictions. We dive even deeper into the problem of 'no grounds' in fixed term tenancies to examine why and how these reform attempts have, so far, fallen short.
Failure of previous attempts to end ‘no grounds’ evictions
When NSW tenancy law was under review (late 2015 through early 2018, with reforms implemented March 2020) the NSW government ultimately refused to seriously consider removing ‘no grounds’ provisions. This despite the now Treasurer, then Minister for Better Regulation, Matt Kean, publicly acknowledging the lack of security and stability renters face is a serious problem:
"No grounds evictions, retaliatory evictions, all these things are currently undermining renters' rights in NSW."
While governments in other jurisdictions have committed to ending 'no grounds' evictions, their reforms have fallen short. Like Queensland - as discussed in our blog earlier this week - they have misunderstood or misrepresented an ‘end of fixed term’ notice as a ‘reasonable ground’ for ending a tenancy.
The Victorian government claims to have ended ‘no grounds’ evictions, but still allows ‘end of fixed term’ notices. However, they are the Australian jurisdiction closest to getting rid of them - only allowing a tenancy to be ended on this ground at the end of the first fixed term. This in fact creates a perverse incentive for landlords in Victoria to increase the churn of tenancies in order to ensure they always maintain control over the premises. It is probable that this perverse incentive will only remain strong enough to overcome the risk of extended vacancies in areas where renters are most easily replaced - generally, the most affordable homes. We hope those in Victoria are developing strong data mechanisms to evaluate this!
Tasmania sometimes claims to have ended 'no grounds' evictions, but actually they limit them only to the end of fixed terms. They have had this system since their 1997 Act came into effect, and now around 84% of renters in Tasmania are on ‘fixed term’ agreements, very effectively preserving the ability of landlords to arbitrarily end agreements every 6 to 12 months. This is the system the Queensland government has chosen to implement. This means they have only made any kind of improvement for less than one in five renters in the state, and the most obvious outcome is that they will simply drive more landlords to maintain rolling fixed terms as is the case in Tasmania.
The ACT government is also currently reviewing tenancy laws in order to 'reform and modernise' them, and are looking at how they can end 'no grounds' evictions (called 'no cause' evictions in the ACT). However, in their discussion of the issue so far, they also seem to be misunderstanding the keeping of ‘end of fixed term’ evictions as distinct or separate from the issue of continuing no grounds evictions. Their discussion paper suggests, for example, keeping 'end of a fixed term tenancy' as an approved reason in the same way Queensland has.
In all these jurisdictions, politicians have proudly claimed – just as the Queensland government did – that they are ending ‘no grounds’ evictions. It is unclear if they do this in misinformed but good faith, or if they know what they are doing and are simply misleading renters and other supporters.
So it feels like time to take a step back to consider the basics of how we in Australia understand evictions and the ways they inform how our renting contracts are made.
What is eviction?
Eviction is the use of some force, whether legal or physical, to remove someone from their home. The best way to understand eviction in a practical way is to include any instance where a landlord makes it known that they are exercising a power (whether lawfully or not) that will eventually lead to the tenant being dispossessed of the premises.
Eviction without a court or tribunal order is unlawful for tenants in every state and territory and only appointed people, sheriffs, bailiffs or the police, are allowed to physically evict once the court order is made. Generally lodgers and other occupants not given tenancy rights are not protected but this is slowly changing.
It's probably worth mentioning that a tenancy will in practice usually end when the landlord or the renter gives notice to the other party, and the renter then vacates by the date specified in the termination notice. Formal legal eviction through Tribunal, requiring orders to vacate and a warrant for possession occurs relatively infrequently. Nonetheless most renters who receive a termination notice, even if they simply leave once notice has been given, experience the end of their tenancy as 'eviction'. They were forced to leave their home. It was not their choice, and the forced move likely resulted in significant costs to them and their household. So while it can be useful to distinguish between termination and eviction in some instances, for the purposes of this blog we use the two somewhat interchangeably and point you again to our definition set out above. It bears repeating: eviction can be most usefully be understood as any instance where a landlord makes it known that they are exercising a power (whether lawfully or not) that will eventually lead to the tenant being dispossessed of the premises.
At fault eviction
There are three basic categories of legal eviction. First, they can be divided into at fault and no-fault evictions.
At fault evictions are punitive actions in response to the tenant breaching, or not following the terms of, the contract. Whether or not this is the most appropriate response by a landlord is a separate question (especially for public and community housing providers) but it is clear that this is a different type of eviction to no fault evictions.
No fault eviction
No fault evictions happen without any breach by the tenant. These can then be divided into a further two categories - with and without grounds. Grounds here should be understood as a circumstance leading to the premises no longer being available for occupation by a tenant (note, not the tenant - any tenant). Some grounds are reasonable, and some are not. Our colleagues at Better Renting developed this handy flowchart to help explain this division.
We’ve previously explained why it is appropriate for a tenant to be able to end a tenancy "without a reason". It allows you the basic freedom to relocate as your housing needs change. In general, there is no reason to justify those needs to your landlord, or explain to them how your circumstances have changed such that you now wish to move house, any more than you need to explain your decisions as a consumer to other businesses. Your landlord should have no concern beyond knowing when the property will become available to them again, so that the comparatively simple process of finding a new tenant can be commenced.
On the other hand, landlords being able to end tenancies 'without a reason' is bad public policy. It undermines tenants' abilities to establish their homes with any certainty. Landlords tend to serve the 'no reason' or 'no grounds' notice in one of three circumstances: where they have a good reason that the law does not accommodate, where they have another legislated reason but would rather not be put to the trouble of proving it, or where they have a questionable reason that they'd rather not have examined at all.
There is always a reason - the reason may be one of the above grounds, or it might be that the landlord wants to increase the rent and believes that will be easier with a new tenant. Or the reason may be that the landlord would prefer a tenant who doesn’t keep on asking about when the roof will be fixed. Or maybe an eviction into homelessness is as simple (and unfair) as the landlord thinking: 'I just don't really like that renter very much'.
Some people defend no grounds at the end of a contract by claiming that contracts have to have an end date and that both parties should expect at that time to end the relationship. This is a very limited understanding of contracts and tenancy. Let’s dig a little deeper.
Tenancy contracts – perpetual and ‘fixed term’ agreements
There are contractual relationships that do not have an end date, called perpetual contracts. Think of a permanent employment contract - there is no expectation that the contract will end without grounds. This would be unlawful termination. There is generally greater understanding that allowing 'no grounds' provisions to end an ongoing or periodic (or 'perpetual') tenancy agreement is not appropriate. Losing your home is just as serious as losing your job, and it seems reasonable to expect a landlord should likewise be asked to demonstrate a good reason for evicting a renter. While in NSW provisions allowing this still remain, as we discussed above many jurisdictions have removed 'no grounds' or 'no reason' provisions from their tenancy law.
'Fixed term' agreements establish a contractual relationship, and set out the terms of that relationship for a set period of time, that is for a 'fixed term' with a start and end date. When the end date arrives the relationship doesn't necessarily end, instead it might be that the terms simply vary.
Let's look at what happens when you sign up to a consumer contract with a fixed term (vs an ongoing plan), say for example with a mobile phone provider. If you've enter into a fixed term contract with the mobile phone provider it's likely you will need to pay an early termination fee if you want to end your contract during the 'fixed term'. Once outside this period you'd still expect to get mobile service until you cancel, but if/when you decide you want to cancel you no longer have to pay the early termination fee. The terms may have changed, but the contractual relationship still exists. It would be a strange experience though, for the mobile phone provider to cut you off at the end of the initial contract with no explanation and claim you should have expected this merely because the contract date has passed.
And this is exactly how a 'fixed term' tenancy agreement works. It establishes a contractual relationship between the parties (tenant and landlord). Under the agreement the tenant receives a service (the provision of housing) from the landlord for a fee (rent). The fixed term agreement sets out certain terms that cannot be varied during this time, such as rent, and allows for compensation to be provided to the other party if either one wishes to terminate during this fixed term. Once this period ends, the agreement still continues - whether a new fixed term agreement is entered into or not. The terms may have changed, but the contractual relationship still exists.
The idea that at the 'end of a fixed term' it is reasonable to assume that the agreement will be ending, or that, indeed, this is a 'reason' it should end is perhaps a hangover from earlier regulation of residential tenancies through common law and land law, and the continued 'dual nature of a lease'. That is, "a lease is both a contract between parties and an estate in land".1 In the regulation of residential tenancies, modern residential tenancies law (consumer law) travels in tandem with an 'estate in land' (land law). And perhaps this is a root of the muddle and confusion - or at least for the lawyers amongst us!
For those not grounded in or familiar with contracts in consumer law or land law, it's probably most useful to just consider whether it seems sensible or fair that a landlord can evict a tenant simply because the 'fixed term' has ended but the premises remains available for rent. Is this really a reasonable ground? One housing researcher very familiar with residential tenancies likes to call 'no grounds' notices a 'because I say so' notice. If the property is still available for rent after the fixed term comes to an end then there must be a reason a landlord doesn't want to continue receiving rent from this particular tenant for use of the house. A landlord giving notice to terminate simply because the 'fixed term' has ended doesn't explain the reason or motivation for ending the tenancy. It's a pretty straightforward 'because I said so' from the landlord. And it allows all of the same problems of 'no grounds' notices used during a periodic tenancy: retaliation, discrimination and continuing uncertainty for tenants.
An old issue
This is exactly why Ronald Sackville (now the Honourable Sackville, currently a Commissioner of the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability) wrote in his report into Law and Poverty in 1976 clear recommendations against keeping 'no grounds' evictions in both fixed and periodic agreements. The report, published 45 years ago, recommended most of the modernising elements we see in the Residential Tenancies Acts around the country like minimum property standards, limits on rent increases, and recourse to tribunals, amongst many others. They made the point that many of those recommendations would simply have no effect if the ability to end the tenancy without grounds were to continue in either periodic or at the end of fixed term agreements, because "(A)ny other view would render worthless many of the substantive reforms we have suggested, since a tenant is hardly likely to insist on the full measure of his legal entitlement if the price of his actions is eviction from the premises."
Sackville here recognised the dominant use of no grounds evictions in the same way Matt Kean did - in its invisible use rather than explicit. A landlord may never actually serve a no grounds notice. They may never even recognise their usage in this way, or the power it gives them. This is partly why some find it so challenging to consider in law reform. The real power of the 'no grounds' notice is its usefulness in keeping tenants from raising issues at all.
Sackville recommended landlord's notices be restricted to only these grounds:
rent arrears, other breaches or illegal conduct;
the tenant serving their own notice but then not moving;
the landlord or their immediate family moving in, or demolishing and reconstruction;
the landlord having sold the premises to another owner occupier who requires possession (which is really the same as the landlord moving in)
That's it. That's the list. These grounds also fit neatly within the conception that while the premises remains available to rent, the sitting tenant should be able to assume they are staying unless they have breached the contract (or told the landlord they were moving). Strangely, of the 37 recommendations Sackville made this is the only one that still hasn't been implemented in any state or territory in Australia. Internationally we are also being increasingly isolated in our views, with the Conservative Party in the UK, and Labour in New Zealand (the last two Commonwealth OECD countries maintaining these rules) both committing to bringing them to an end.
End of fixed term evictions are unfair 'no grounds' evictions. Addressing the continuing lack of security renters face requires removing the ability for landlords to end tenancies without genuine reason that the premises are no longer available to rent. This means removing 'no reason' or 'no grounds' termination provisions from tenancy law, including any provisions allowing such an eviction simply because the 'fixed term' of an agreement has come to its end.
1. Allan Anforth (1998) Residential Tenancies Law and Practice New South Wales, 1st edition, p.639