Submissions are in!
January 30 was the final day for submissions to be tendered on the draft Residential (Land Lease) Communities Regulation 2014. NSW Fair Trading will now consider the submissions and prepare a report for the Minister for Fair Trading.
The Tenants’ Union (TU) consulted with resident groups and the Tenants Advice & Advocacy Network in the course of preparing our submission. There were positive provisions in the draft Regulation and a few that we believe need some revision. We also highlighted some additional areas that the Regulation ought to cover.
One of the most complex clauses of the draft Regulation is clause 11, which provides an exemption from the requirement that operators can only charge for utilities where usage is separately metered. Clause 11 enables operators to charge residents a sewerage usage charge based on the amount of water used at the residential site.
The sewerage usage charge will only apply to sites that are individually metered for water because the calculation is based on measurable water usage.
To calculate sewerage usage the operator takes the total water usage for the whole park and works out what percentage of that usage applies to each area of the park including common areas, and to each site according to the metered amount of water used by that site.
The operator then takes the overall sewerage usage charge for the whole park and each residential site is billed the same percentage for sewerage usage as for water usage.
Let’s use Tom as an example. He lives in a park with 48 residential sites where the only facilities are the communal showers and toilets.
The quarterly water usage account for the whole park, including the common areas and facilities, is $5,837.
Tom’s water bill for the quarter is $99.23, which the operator calculates to be 1.7% of the total water usage at the park. The sewerage usage account at the park for the same quarter is $3,521. So, Tom will pay 1.7% of $3,521, which is $59.86.
The draft Regulation continues the status quo regarding service availability charges for sewerage and water by setting the maximum combined charge at $50 in any calendar year.
Site fee increases
As many residents already know, the new Act provides for fixed method site fee increases to be linked to the Age Pension. The Act states that site fee increases may be “by fixed calculation (for example, in proportion to variations in the Consumer Price Index or in the age pension).”
The draft Regulation provides a standard form of site agreement for use after the Act commences and in this agreement the terminology around fixed method increases has changed. The site agreement provides for fixed method site fee increases to be “in accordance with variations in (single/couple) age pension.”
In our submission the Tenants’ Union expressed concern that “in proportion to” and “in accordance with” do not have the same meaning and the standard form of site agreement appears to allow for the whole of the Age Pension increase to go to the operator as the site fee increase.
Electricity service availability charge (SAC)
The draft Regulation appears to continue the status quo by providing for lower service availability charges for electricity where the supply to the site is less than 60 amps. However, through another subtle and unnecessary change in terminology the draft Regulation may fail. Instead of continuing to use the word “supply’” the draft Regulation introduces the term “capable of flowing”, which could have a different meaning.
The Consumer, Trader and Tenancy Tribunal (now the NSW Civil and Administrative Tribunal, or NCAT) considered the meaning of supply in relation to electricity on many occasions and found that it was different to available. We are concerned that capable of flowing is more akin to available than supply. This is important for residents because the site or dwelling may only be supplied with 15 amps of electricity but if 60 amps are capable of flowing then residents may have to pay the full SAC rather than 20 per cent of the SAC.
Prohibited terms of site agreement
The draft Regulation prescribes four terms that cannot be terms of a site agreement including one that indemnifies the operator against any liability for damage or loss due to an act or omission in relation to the occupation or use of the site.
The agreement cannot require residents to take out any form of insurance. Insurance is now a matter of personal choice.
The draft Regulation adds to the retaliatory conduct provisions in the Act by including the withdrawal or withholding of a service or use of a facility.
Sale of homes
Currently, section 82 (1) of the Residential Parks Act 1998 enables terms in site agreements that place restrictions on the sale of homes on-site. The draft Regulation provides that any such terms cease to have effect on commencement of the Act.
In our submission we have suggested that the Regulation should also provide for terms in site agreements that prohibit sales (allowed under section 80 (1) of the Parks Act) also cease to have effect on commencement of the Act.
Unlike the new Act, the Regulation does not need to be passed by Parliament to come into force. The final draft of the Regulation will be submitted to the Governor for approval then published in the Government Gazette or on the NSW Legislation website and a notice tabled in both Houses of Parliament.
It is expected that the Residential (Land Lease) Communities Act 2013 will commence around mid 2015.