When a landlord kicks a tenant out even though the tenant is doing nothing wrong, who should bear the costs of the move?
In the current system, tenants pay moving costs. Even if someone is complying with every term of their tenancy agreement, they can be forced to move, and suddenly they face a whole range of costs:
- moving costs like paying movers or hiring a van,
- end of lease cleaning costs, which might include carpet cleaning or fumigation,
- disconnecting/reconnecting utilities, including potential fees for breaking a contract,
- having to take time away from paid work, or use up leave,
- the cost of paying rent at a new property while still paying rent at an old property,
- buying takeway food because a kitchen isn't available,
- paying a new bond while waiting for a refund of the old bond, (also: likely to face some deduction of their old bond)
- potentially paying storage costs in between tenancies,
- potentially paying costs for short-term accommodation while looking for a new long-term rental.
These costs can be thousands of dollars. They are likely to be more expensive for people who have fewer resources. In most parts of Australia, a person who rents could face these costs every 12 months.
And the landlord who made the move happen?
They face virtually no costs. They might have a brief period with an empty property, but this seems unlikely. In many cases, they'll basically get a free floor-to-ceiling clean of the property, and they can probably increase the rent on new tenants. Maybe they claim money from the bond but don't actually spend it on the property. It's even better for agents: they get a one week letting fee, so they actually make more money by getting new renters in.
Wait, this is totally unfair.
It seems pretty clear this is not a fair approach. The costs are almost entirely imposed on someone who didn't get any choice in the matter. Not only that, this system encourages property managers to cycle through tenants, a perverse incentive that is bad for homes and communities. It fails to discourage landlords from issuing frivolous terminations, and may even advantage such landlords relative to others who behave more reasonably.
It's also unfair between tenants. Someone might be unlucky and pay thousands every year due to a forced move. Someone else might be lucky and get to stay where they are for a few years, saving thousands. 'The luck of the draw' shouldn't mean that some renters are significantly out of pocket just due to chance.
A fairer option: a rent waiver for lease termination
What if the person responsible for ending the tenancy is expected to contribute to the costs of moving? What if, for example, when a lessor terminates a tenancy, they also sacrifice the last four weeks of rental income?
This means tenants would get some financial compensation to offset the costs of moving. It's unlikely this would fully compensate the tenants for the loss of their home. But it would at least address some of the monetary cost.
Importantly, it would also discourage unnecessary terminations. If a landlord is genuinely going to move into the property, a few weeks of missed rental income isn't too much to pay (and, because the income would have been taxed, the loss to the landlord is less than the gain to the tenant). But if a landlord is just a bit pissed off that the tenants opposed a rent increase, or asked to get the oven repaired, this might make them hesitate. (Of course, there should be other changes to prevent retaliatory or unjustified terminations).
In effect, this would encourage and reward lessors who terminate tenancies less often - which is a good thing. It would reduce the burden on tenants who, through no fault of their own, are forced to move often.
Further, it's implausible that this change would be reflected in rent prices, which are determined by what landlords are able to charge (ie, what the market will bear) rather than actual landlord costs. (If you disagree, please explain why you think rents are not affected by supply and demand). Even if this did result in some increase in rents, it would still be OK: it would function like an insurance policy that all renters contribute to in order to cover the cost of forced moves. In effect then, the expense of forced moves would be smeared across more parties: not just the unlucky tenant, but property investors and other tenants also. This would be an improvement.
Providing stable homes
In the last few years, more Australian parliaments have looked at ending unfair 'no grounds' terminations. This is a good start. But more needs to be done to provide for stable homes and to discourage retaliatory or unjustified terminations.
The main benefit of a rent waiver isn't that it's less costly for tenants when they move. Instead, it's that people would get to stay in their home, because a lessor would face a higher threshold to make it worthwhile for them to carry out a termination. This wouldn't prevent legitimate terminations - it wouldn't even prevent illegitimate terminations where a lessor is willing to miss out on some rental income. But it would make lessors hesitate, and it would reduce the economic hit taken by people who are forced to move.
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Rent waiver for forced moves
Currently a landlord can end a tenancy when the renters are not at fault and the renters then have to cover all the moving costs, economic and otherwise. This is difficult for people who rent, especially people on lower incomes. It also means there is little disincentive to a landlord to hesitate before giving a notice to vacate, even if they don't have very good justification.
When tenants are given a no-fault notice to vacate, the four weeks of rent should be waived. This would reduce the cost burden of an involuntary move, and it would make lessors think twice before forcing people to leave their home.