Is your rental property fit for habitation?

As from 23 March 2020, residential rental properties in NSW will need to satisfy seven legal requirements to be fit for habitation. That is, fit to live in.

This article examines the seven legal requirements and four NCAT Tribunal decisions upon the tenant’s rights to obtain compensation from the landlord if the rental property (the ‘premises’) is not fit for habitation.

The seven legal requirements to be fit for habitation

Clause 19.1 of the 2020 standard form Residential Tenancy Agreement lease paraphrases section 52(1) of the Residential Tenancies Act 2010 (NSW) (the ‘Act’) – the fit for habitation section as follows:

The landlord agrees to make sure that the residential premises are reasonably clean and fit to live in.

If clause 19.1 is breached, the tenant has the right to terminate the lease without paying the break fee and to claim compensation.

Up until now, what fit for habitation meant has been largely guesswork because there was no definition in the Act. But now, new sections 52(1A) & 52(1B) of the Act contain a list of seven minimum legal standards to be met for residential premises to be fit to live in.

These standards are reproduced as Notes under clause 19.1 of the 2020 standard form lease. The Notes read as follows:

Note 1. Section 52 of the Residential Tenancies Act 2010 specifies the minimum requirements that must be met for residential premises to be fit to live in. These include that the residential premises:

1. are structurally sound*, and
    
2. have adequate natural light or artificial lighting in each room of the premises other than a room that is intended to be used only for the purposes of storage or a garage, and
    
3. have adequate ventilation, and
    
4. are supplied with electricity or gas and have an adequate number of electricity outlet sockets or gas outlet sockets for the supply of lighting and heating to, and use of appliances in, the premises, and
    
5. have adequate plumbing and drainage, and
    
6. are connected to a water supply service or infrastructure that supplies water (including, but not limited to, a water bore or water tank) that is able to supply to the premises hot and cold water for drinking and ablution and cleaning activities, and
    
7. contain bathroom facilities, including toilet and washing facilities, that allow privacy for the user.

Note 2. *Premises are structurally sound only if the floors, ceilings, walls, supporting structures (including foundations), doors, windows, roof, stairs, balconies, balustrades and railings:

1. are in a reasonable state of repair, and
    
2. with respect to the floors, ceilings, walls and supporting structures—are not subject to significant dampness, and
    
3. with respect to the roof, ceilings and windows—do not allow water penetration into the premises, and
    
4. are not liable to collapse because they are rotted or otherwise defective.

The premises must be fit for habitation when the tenancy begins.

This requirement is different from landlord’s obligation to keep the premises in reasonable state of repair which is an ongoing requirement during a lease.

How does the Residential Tenancy Tribunal (NCAT) treat fit for habitation?

It has been a legal requirement that residential rental premises must be fit for habitation for more than 100 years. In the case of Proudfoot v Hart (1890) 25 QBD 420 the Court said that “habitable” means that the premises “might be used and dwelt in not only with safety but also with reasonable comfort” by the tenants.

NCAT has considered what fit for habitation means in a number of cases. This is a selection of cases dealing with claims for: cigarette smoke drift, flooding caused by poor roof drainage, mould caused by a leaking pipe and overflowing sewerage:

Bhandari v Laming [2015] NSWCATAP 224 (16 October 2015)

The tenant complained of a very strong intermittent smell of toxic cigarette smoke permeating into the apartment from the time the tenant moved in.

The apartment was in Potts Point. The smoke was emanating from the apartment below where an elderly, sick occupant, who was chain smoking, resided. The owner of the apartment below was reluctant to evict the tenant and the Owners Corporation of the strata scheme was reluctant to intervene, even though the cause was a mechanical problem in the internal ventilation passages in the strata building which permitted the smoke to enter. The smoke was a health hazard.

The Tribunal ordered damages of $11,681.00, comprising $7,980.00 for a rent reduction of 40% from the commencement of the lease until the date of the hearing, packing costs totalling $1,801.00, removalists’ costs of $1,000.00 (at the rate of $125.00 per hour) and an agreed refund for blinds of $900.00.

Comment: In this decision, the Appeal Panel of NCAT said that: “The obligation to provide residential premises fit for habitation is mandatory and … is not contingent on the landlord being at fault or having control over the event or circumstance affecting the state of the premises.” The landlord cannot avoid liability by showing that they took reasonable steps – the landlord must provide premises fit for habitation.

Marsters v Graham [2016] NSWCATCD 73 (14 September 2016)

The tenant’s belongings were damaged by water which entered the house during a storm caused by the roof not being structurally sound.

The tenant had moved into a house at Blacktown two days before. The tenant’s belongings were lying on the floor, unpacked in their boxes along with furniture, in the back section of the house which was flooded to a depth of one inch. The tenants decided to move out.

The landlord released the tenants from the lease, refunded the rent and the bond.

The Tribunal ordered $7,822.21 compensation, consisting of $2,500 for the cost of repair of 4-poster wooden bed; $5,041.60 for items disposed of (mattresses, quilt, pillows, blanket and computer monitor at current value, after offsetting remaining life expectancy of: 10 years for mattresses, 5 years for the other items, against cost of purchase); and $280.61 for unusable items to be disposed of (IKEA shelving and bookcase – 1 year old). The Tribunal rejected claims for repairable items (no cost of repair evidence was produced).

Comment: The Tribunal dismissed the landlord’s defence that they were not aware that the premises might flood, and the landlord’s attempt to pass the blame on to the tenant by arguing that they should have raised concerns about blocked gutters and drainpipes during their pre-tenancy inspection.

Raats v Zein [2016] NSWCATCD 62 (7 September 2016)

The tenants complained of a serious and extensive mould infestation in a townhouse at Waitara. It was not present when they inspected. But it was when the tenants took possession and escalated over the first week of the tenancy. The cause was a plumbing leak.

The tenants were unable to occupy bedroom 3, a designated child’s bedroom, from the outset of the tenancy due to the risk of respiratory difficulty and infection. The mould growth was unsightly and gave off a foul odour. The tenants moved out after two weeks.

The Tribunal was “satisfied that the mould infestation constituted an unreasonable interference with the comfort of the tenants judged by contemporary standards. Again, I do not draw this conclusion lightly; the evidence to this effect is compelling.”

The Tribunal ordered compensation of $1,741.00 for removalists’ costs.

Comment: It is a question of degree whether or not the premises are ‘badly affected’ by mould (caused by water leakage and dampness problems) so as to be not habitable. If the mould is able to be cleaned, the premises are habitable – see Bannister v Cheung [2014] NSWCATCD.

Lazarevska v Ozturk [2017] NSWCATCD 21 (31 March 2017)

Shortly after the tenant moved into the granny flat at the rear of the landlord’s house at Liverpool, she complained about a serious and persistent odour from overflowing sewerage caused by a blocked sewer pipe and mould associated with water leaks from the roof.

The tenant moved out after 12 weeks because these problems persisted.

Applying the “risk of injury test” and the “reasonable comfort test” to determine the question of whether or not residential premises are “habitable”, the Tribunal found that the defective sewer drainage was a safety issue due to the threat of disease and the odour impacted the reasonable comfort. Similarly, with the roof leaks and the mould growth which affected the kitchen/living room and the porch.

The Tribunal ordered compensation of $1,280, representing one-third of the rent paid.

Condition Report: Questions on fit for habitation

The landlord’s obligations to comply with the minimum standards for habitability is emphasised by the inclusion of a questionnaire for the landlord to complete in the Condition Report.

This is an edited selection of the questionnaire in the new MINIMUM STANDARDS section:

• Are the premises structurally sound?
   
• Does the premises have adequate natural or artificial lighting in each room; ventilation?
   
• Are the premises supplied with electricity and gas, and have adequate electricity or gas outlet sockets?
   
• Are the premises connected to a water supply service; are there bathroom facilities; is there adequate plumbing and drainage?
   
• Are there signs of mould or dampness; pests and vermin; has any rubbish been left on the premises; and are the premises listed on the Loose-Fill Asbestos Insulation Register?
   
• Have the smoke alarms been installed and checked and found to be in order; have the batteries been replaced within the last 12 months?
   
• Are there safety issues, visible hazards relating to electricity or gas?
   
• Is a telephone / internet line connected?
   
• Are water efficiency compliance measures in place?

Note: the landlord must indicate  Yes or  No to each question.

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