NSW Rental laws under scrutiny

This is a story of how one Sydneysider became the face of the current rental crisis crippling NSW, as solicitors and organisations call for reform of the sector. By sharing her story on social media platform TikTok, Chantelle Schmidt exposed the flaws in the system and clued the wider public into the injustices felt by everyday people as the cost-of-living hits unprecedented heights.

On a Friday afternoon, after 5pm, Chantelle Schmidt received notice that her rent was going to increase by $350 a week.

This is all too familiar for hundreds of thousands of people currently renting in NSW, particularly in Sydney where the median rent price has gone up by over 24 per cent in the past year, leaving many in financial distress.

What makes Schmidt's case so notable is that she took her story to the internet. The Sydney-based freelance writer used the social media app TikTok as a platform to report on her dealings with her property manager, and the subsequent attempts to renegotiate her rental amount.

It was an unconscious plea to ask the social hive mind for advice, but it became an opportunity to cast a spotlight on one of the most critical issues currently facing the state. With raw candor, Schmidt's videos expose the "often-overlooked" point of view of the tenant, including the distress and concern of negotiation, and the feeling of powerlessness.

Schmidt's videos gathered millions of views. On February 16, Schmidt details a failed attempt to renegotiate the rent increase, drawing a comparison with another property in the area. This clip has over four million views and twelve thousand comments.

Schmidt co-shares a three-bedroom house in the inner-Sydney suburb of Redfern. The tenants had been living on the property for just under two years when they were notified of the increase. During their lease, the tenants noted several issues with the property, including water-damage, and a crack in the wall of the living room. There was mold and floorboards that had to be replaced several times.

"The voices on the internet validated [$350] was an excessive amount. When we were told it was non-negotiable, the only other way forward that we could see was to take it to the tribunal," Schmidt told LSJ.

During the tenant's application to the NSW Civil and Administrative Tribunal (NCAT), Schmidt continued to report the process on her TikTok account. From the end of March until the end of May 2023, she posted 27 times, including details of the evidence that supported their case, correspondence with the property manager about fixing some of the issues with the house, and recaps of both conciliation and tribunal hearings.

Withing a week after the NCAT application was submitted, and the property manager subsequently notified, Schmidt received a $50 reduction on the original offer, which the tenants still found excessive.

"We were worried if we entertained any sort of rent negotiation before the repairs were done, then we’d still be dealing with all [rest of the property's] problems. We’ve been led on by our property manager and landlord in the past, and that trust was gone," Schmidt said.

Later in March, hours before conciliation, Schmidt received one final offer from the landlord. In a TikTok video now watched by over half a million people, Schmidt reveals the landlord offered $100 less than the original price. The justification for which Schmidt quoted in the video: "I really don't want to be travelling to Sydney in horrible weather" followed by a smiling emoji.

"It was really confusing and, from where I was standing, manipulative as well," Schmidt confesses. "It made me question what is the market value of this place, if it can change $100 based on the weather?"

After almost four months of back and forth, the day of the NCAT hearing arrives. In a now famous post (garnering over a million views), Schmidt shows a large binder of evidence she prepared for the tribunal, expressing all her built-up anguish and concerns, a moment of catharsis and defiance.

At one point in the clip, she grabs her hair dryer and pre-emptively remarks the impending comments she expects from people watching her videos about the dryer's quality and price – people who say that if she can afford a fancy hair dryer, she should pay the rent increase.

"The fact I have to justify everything expensive in my life is ridiculous," she says.

Three days later, Schmidt posted the tribunal's decision. It had sided with the landlord.

We have this broad issue with the way rents are set is not reflective of the dynamics of the market, or of the needs of the community

The perfect storm

Leo Patterson Ross, CEO of the Tenants Union told LSJ that there's "not really a definition" of what counts as a reasonable rent increase.

"A very rapid increase is perfectly legal, even if it's got no relationship to the increase in costs that the owner has or the quality of the building," Patterson Ross said.

Formed in the late 1970s, the Tenants Unition offers support to tenants in NSW, and advocates for reforms to laws and policies affecting tenants. They have become an important source of aid, by providing tools like a Rent Increase Negotiation Kit (to help the negotiations with the landlord), and a Rent Tracker Postcode Tool (to find out the average rent in each postcode).

According to Section 44 of the Residential Tenancy Act, to decide if a rent increase is excessive or not, a tribunal has eight points it can consider. These include the market level of rent in comparable premises in the same area; any work or improvements made to the property; the state of repairs of the property; and the last time there was an increase.

However, the tribunal is strictly instructed not to consider the tenant's ability to afford the rent increase.

Patterson Ross makes the comparison that no other essential services are based on market conditions. In food production, for example, we have instruments to make sure the price of food meets the needs of the community.

"But in tenancy that's not the case. We have this broad issue with the way rents are set is not reflective of the dynamics of the market, or of the needs of the community," he concludes.

According to Tenants Union, the number of people seeking advice due to rent increases has almost tripled. This is due to the perfect storm of high inflation and interest rates, next to one of the lowest occupancy rates in recent memory.

The market demands increase rents, and landlords use the chance to make up for interest rises in their mortgage repayments. The problem is that tenants may be left with no other choice but to accept the increases.

In March, according to the CoreLogic Quarterly Rental Review, Sydney overtook Canberra as the most expensive capital city to rent and saw an average annual increase of over 12 per cent.

For Patterson Ross, the lack of regulation in NSW is part of the issue. Compared to countries of similar wealth and demographics, Australia is not as strict with protecting tenants.

"Often the frustrations people have with the tribunal, is that the tribunal is only applying the law" Patterson Ross explains, "it is the law imbalanced and unfair, the tribunal cannot fix that."

He gives an example where in cases of "no grounds" evictions, the tribunal cannot refuse to evict unless tenant's present enough evidence that the eviction is somehow retaliatory, and the tribunal decides to exercise discretion.

"Retaliatory notices are not unlawful, and the tribunal, having found the action was retaliatory, doesn't have to refuse eviction."

Though frustrating, Patterson Ross believes it's partially because the tribunal is a quick and direct way of accessing justice, though he says that comes at the expense of decisions which often lack transparency.

"This is one of the issues we’ve raised with the tribunal previously – the lack of accessibility and therefore a kind of a level of accountability for the decision making is not always clear." Patterson Ross concludes.

"On what basis was this decision made? And on things like rent increases, are we confident that the decision making meets the community's expectations?"

The comments on Schmidt's videos support this claim. One user writes: "Disappointed for you. The tribunal is supposed to make it fair for all".

Another notices: "Why would anyone bother going through with tribunal? The amount of time and energy spent." Above all, many express the frustration that the tribunal is there to support landlords.

At some point in Schmidt's videos, she questions if any of the process is worth it. Hours gathering evidence that needs to be collated, photocopied in different colours and presented in a very specific way. It's hard work.

But then Schmidt is inspired by comments from people who want this case to provide the justice they believe to be deserved. And hopefully will provide a secure precedent when their time comes to dispute a landlord.

It's something that everyone needs, not just shelter, not just four walls but a stable and safe home that you can rely on

Calls for change

Ned Cooke, from the Inner Sydney Tenant's Advice and Advocacy Service, notes it can be a challenge for a tenant to gather the evidence themselves.

"Landlords and real estate agents have access to data and information that it can be hard for a tenant to dispute."

The burden of proof is left on the tenant, but the tools are not given to them. Often tenants look at advertised data, which can be unreliable, or request a report from their real estate agent.

To help, the Tenants Union's Rent Tracker Postcode Tool calculates the current median rent in NSW from a calculation of the bonds lodged. But the tool doesn't consider the state and value of the property, only a range of prices.

Cooke says that it is possible to appeal, in which case a tenant needs to prove there was an error in the tribunal's reasoning. "There's a bit of a hill to climb to file an appeal point," he says.

If a tribunal is looking at the state of the repair, it must determine if each situation is the landlord's or the tenant's fault. Leaks, liftings, penetrations, general defects in the building, tend to be responsibility of the landlord.

But, for example, it can be considered that the mold was the tenant's fault. It can be argued the ventilation is inadequate, so it's a landlord issue.

But Cooke notes that after an extremely rainy season, like the one NSW experienced in 2022, many properties that didn't have a previous mold issue were suddenly now experiencing it.

"It's hard for people to pin down where responsibility lies, whether it's a repair issue or lack of diligence by the tenant" Cooke concludes.

Cooke still recommends that people apply for a tribunal if they believe the increase is excessive. But he admits he can be tricky.

If it's something specific – for example, the tenant didn't get at least 60 days’ notice, or there has been less than 12 months since the last increase – then it's straightforward to dispute. Otherwise it comes down to the tenant to collect the evidence.

Added to this, disputed increases can be followed by termination notices. A tenant may consider that they can try to dispute an increase, or risk receiving being evicted which they won't be able to dispute unless they prove the eviction is retaliatory.

And in that scenario, there is a different challenge, where tenant's must prove the landlord's motivation. And if the tribunal considers the evidence presented is not conclusive, then the eviction cannot be rejected.

"Even if you have the most sympathetic tribunal member, they still have to apply the law," Cooke says, before concluding it's essential to reform the law, especially if it creates better access to justice.

"If there are changes that can be made at the tribunal that make it easy to access, and less technically difficult to pursue matters, then that would also be welcomed".

The Tenants Union brings forth a series of demands they have been advocating, even before this current housing crisis.

Patterson Ross starts by calling for regulation around limiting rental increases to keep in line with inflation. This is similar to what happens in Europe, with countries like Belgium, France, Germany and Norway having strict limitations to how much a rent can be raised, either indexed to inflation or to a cost-of-living index.

Patterson Ross reiterates the need to see renting as an essential service.

"It's something that everyone needs, not just shelter, not just four walls but a stable and safe home that you can rely on", he says.

"The primary purpose of the housing sector [in Australia] seems to be as a wealth generating investment vehicle, with housing as a secondary byproduct. We think that should be turned around".

As an organisation, the Tenants Unition advocates for the removal of "no grounds" evictions, and to increase supply with a diverse range of price points.

"Ultimately, we need a housing strategy that really addresses that supply cannot fix everything alone, and regulation can't fix everything alone. We need a balance that's working to ensure that there are enough available properties and acknowledging that the value of properties needs regulation to ensure that they meet community's needs and expectations."

Schmidt agrees with capping increases but calls for an investigation if the current system is hurting the public's trust in the law.

"For every person that goes to the tribunal, they have to consider how it's going to affect their rental references or the future of [their] tenancy," Schmidt says.

"Is this going to affect my security and stability knowing that every day I might get evicted because I poked the bear. And people shouldn't have to feel like that, you should be able to stand up there without a fear of being homeless."

LSJ approached NCAT for a comment. However, said they do not comment on matters before the tribunal but invite tenants to visit the page for information about the process.

The Tenants Union continues to offer help and advice to tenants. You can find the Rent Increase Negotiation Kit and other resources on their website.