Introduction to Rental Housing in the ACT

Contributed by Canberra Community Law and current to December 2021.

Introduction

Tenancy, in its simplest terms, is an agreement where a party ('the tenant') lives in the property of another ('the lessor') for a periodic payment (usually called 'rent').

As tenancy is a very common form of housing, and in recognising there is often a power imbalance between tenants and lessors, governments have regulated the terms of tenancies. In the ACT, all residential tenancies are regulated by the Residential Tenancies Act 1997 (ACT) ('the Act').

The Act:

1. defines what a residential tenancy is and what an occupancy is;
2. establishes Standard Residential Tenancy Terms (SRTT) that apply to all residential tenancies in the ACT (the Standard Residential Tenancy Terms are Schedule 1 to the Act);
3. provides a set of principles that must be considered in dealing with occupancy agreements (the occupancy principles are in section 71EA of the Act);
4. establishes a number of rules about how tenancies should be conducted;
5. gives the ACT Civil and Administrative Tribunal ('ACAT') jurisdiction to deal with tenancy and occupancy disputes;
6. sets up a regime for administering rental bonds;
7. sets out the circumstances in which a tenancy can be terminated;
8. sets out the process for eviction by the police once a tenancy has been terminated by ACAT;
9. provides a process for dealing with rent increases during a tenancy; and
10. makes rules concerning tenancy databases.

The best way to see the latest version of the Act is via the ACT Legislation Register.

Who is a tenant?

A tenant is a person who is a party to and has a right of occupation under a residential tenancy agreement.

Not everyone who lives in a property needs to be a tenant of the property. For example, when a family rents a house one or both parents may be the tenants, but the children are not tenants although they have a right to live in the house. Others in a similar position include:

• extended family members who live in the property;
• houseguests and short term visitors; and
• boarders and lodgers.

For the purposes of this handbook, the word 'occupiers' means people living in a rented property who are not tenants. 'Occupants' will be used for occupants who have that status under an 'occupancy agreement'.

Although they are not a party to the agreement, occupiers are required to comply with the rules in relation to the tenancy, e.g. not cause nuisance to surrounding properties, not damage the property etc. If these rules are breached by the occupiers, the tenant is responsible and, if the breach is serious enough, the tenancy can be brought to an end.

What is an tenancy agreement?

A 'residential tenancy agreement' is defined in s 6A of the Act:

(1) An agreement is a residential tenancy agreement if, --

(a) under the agreement

(i) a person given someone else (the tenant) a right to occupy the stated premises; and

(ii) the premises are for the tenant to use as a home (whether or not together with other people); and

(iii) the right is given for value.

(b) the agreement is not an occupancy agreement under section 71C

(2) The agreement may be--

(a) express or implied; or

(b) in writing, oral, or partly in writing and partly oral.

(3) The right to occupy may be--

(a) exclusive or not exclusive; and

(b) given with a right to use facilities, furniture or goods.

Note the important aspects of a tenancy agreement--

• The agreement gives the tenant a right to live in the premises;
• The tenant is to use the premises as a home;
• The right is given for value, i.e. the tenant pays for the right, normally in the form of rent payments.
• It doesn't matter if the right of residence is not exclusive - it could be a shared home. In addition, the provision of meals or other services, such as washing, do not prevent the arrangement being a residential tenancy (unless the agreement specifically states it is an ‘occupancy agreement’).

Many informal arrangements, such as members of a family staying in a property and guests staying for an extended period with no expectation as to payment would fail the 'for value' test and not be tenancies. Section 6A is subject to a number of exceptions, such as arrangements relating to the sale or purchase of premises; e.g. a purchaser of a property taking occupation before settlement, or a seller remaining in the property with the agreement of the buyer (section 6E(1)(a)).

Although sections 6D and 6E provides some exceptions to section 6A, an agreement is a residential tenancy agreement if it complies with section 6A (1) to (3), is in writing and expressly states that it is a residential tenancy agreement (section 6B).

Once an agreement is a residential tenancy agreement, even if it is implied or oral, the SRTT apply to that agreement.

It is important to note that an arrangement between parties that is an 'occupancy agreement' is not a tenancy agreement. Occupancy agreements are discussed below.

What is an occupancy agreement?

Under the law before 2005, a number of arrangements fell short of being residential tenancy agreements. These arrangements included short term stays, boarder/lodger agreements, paying guests and other similar, less formal situations. It was difficult to ascertain the status of such arrangements, and there are many cases from various tribunals trying to determine which side of the line the arrangement fell on. If the arrangement was held not to be a residential tenancy agreement, the Tribunal did not have jurisdiction. If the Tribunal did not have jurisdiction, enforcement of the arrangement was difficult and owners often had to resort to self-help, involve the police, or in extreme cases the Supreme Court. In 2005, the ACT government introduced changes to the Act to recognise 'occupancy agreements', and gave ACAT jurisdiction to deal with them. The most recent amendments introduced in 3 March 2021 to the Residential Tenancies Act 1997 have further changed the laws surrounding occupancy agreements.

The amended section 71C of the Act has expanded the definition of occupancy agreements, specifically under section 71C(1)(b). Section 71C(1)(a) reads as follows:

(1) An agreement is an occupancy agreement if--

(a) under the agreement -

(i) a person (the grantor) gives someone else (the occupant) a right to occupy stated premises; and

(ii) the premises are for the occupant to use as a home (whether or not with other people); and

(iii) the right is given for value; and

Section 71C(1)(b) lists the following as being occupancy agreements:

(i) except if section 6B applies, an agreement to occupy premises in the grantor’s principal place of residence;

(ii) an agreement, which (explicitly) states that it is an occupancy agreement and gives the person the right to exclusively occupy a sleeping space in a building with other sleeping spaces with access to shared facilities or provision of domestic services;

(iii) an agreement for emergency accommodation for people in crisis and that states explicitly that it is an occupancy agreement for emergency accommodation for people in crisis;

(iv) an agreement to occupy premises under a housing support program and that states it is an occupancy agreement for a housing support program;

(v) an agreement to occupy premises because of membership in a club or other entity and which states it is an occupancy agreement;

(vi) unless the agreement states it is a residential tenancy agreement, an agreement to occupy premises provided by the grantor in a residential park or a site in a residential park for the purpose of the occupant placing a manufactured home or a mobile home on the site.

Under an occupancy agreement, the person living in the premises is known as the 'occupant', and the party giving the occupant the right to occupy the premises is the 'grantor’. In practice, ACAT's approach is that an arrangement where the right to reside in premises is a separate, identifiable property right is considered a tenancy, and other arrangements, including the arrangements set out in section 71C(1)(b), are occupancy agreements. All the arrangements (listed above) must state that they are occupancy agreements, except in circumstances where the grantor is also living on the premises that the occupant occupies.

For occupancy agreements, there are no fixed set of terms that are similar to the SRTT. However, section 71E(1)(a) states that an occupancy agreement is taken to contain the ’occupancy principles’ as set out in s 71EA of the Act. Section 71EA reads as follows:

(1) The following principles (the occupancy principles) apply to an occupancy agreement in relation to premises:

(a) an occupant is entitled to live in premises that are--

(i) reasonably clean; and

(ii) in a reasonable state of repair; and

(iii) reasonably secure;

(b) a grantor must ensure that the occupancy agreement is in writing if

(i) the agreement is for a fixed term of more than 6 weeks; or

(ii) if subparagraph (i) does not apply to the agreement – the total time the occupant occupies the premises under the agreement is more than 6 weeks.

(c) a grantor may require an occupant to pay a security deposit only in accordance with section 71EC;

(d) a grantor must give an occupant a written receipt for payments made under the occupancy agreement in accordance with section 71EF;

(e) a grantor may only impose an occupancy rule, fee, charge or penalty to an occupant if the requirements in section 71EG are met;

(f) an occupancy rule must be reasonable and proportionate to the outcome sought by the imposition of the rule;

(g) any penalty or consequence (other than termination of the agreement) for breaching an occupancy rule –

(i) must be reasonable and proportionate to the seriousness of the breach of the rule; and

(ii) must not impose unreasonable hardship on the occupant.

(h) a grantor must provide the occupant with quiet enjoyment of the premises including access to the premises as set out in section 71EH;

(i) a grantor must give the occupant the information mentioned in section 71EI about the dispute resolution processes that apply to the occupancy agreement;

(j) a grantor may enter the premises only in accordance with section 71EJ or section 71EM;

(k) an occupant must not behave in a way that detracts from the rights of others (including other occupant) to live and work in the premises in a safe environment, free from harassment or intimidation;

(l) a party to the occupancy agreement must not terminate the agreement otherwise than is accordance with section 71EK;

(m) an occupant must vacate the premises when the agreement ends;

(n) an occupancy must, at the end of the occupancy agreement, leave the premises –

(i) in substantially the same state of cleanliness the premises were in at the start of the occupancy agreement; and

(ii) in substantially the same condition the premises were in at the start of the occupancy agreement (allowing for fair wear and tear); and

(ii) reasonably secure)

(2) If subsection (1)(b)(i) does not apply to an occupancy agreement and the agreement is not in writing, the grantor may comply with any requirement in subsection (1) to include information in the agreement by giving the occupancy the information, in writing, in any other appropriate way before the agreement starts.

(3) For a site-only residential park occupancy agreement –

(a) premises means the land and any fixtures in the residential park provided by the grantor for the purpose of the occupant placing a manufactured home or a mobile home on the land; and

(b) the grantor is entitled to enter the occupant’s manufactured home or a mobile home only with reasonable notice at reasonable grounds and for reasonable purposes.

The rights and obligations of grantors and occupants are set out in Part 5A of the Act. These include:

• Smoke alarms - section 71CB
• Condition reports – section 71EB 1 A grantor must, not later than the day after the occupant takes possession of the premises, give the occupant a report about the state of repair or general condition of the premises and any facilities, furniture or goods provided with the premises.
• Payments and lodgements of security deposits – section 71EC and section 71ED 1 A grantor must not require an occupant to pay a security deposit unless the agreement is in writing, for a fixed term of more than 14 days and the grantor complies with section 71EB in relation to a condition report.

1. The maximum amount of a security deposit cannot be more than the amount of the first 2 weeks of any occupancy fee payable under the agreement if the fixed term of the agreement is more than 14 days but less than 6 months. If the fixed term occupancy is longer, then it cannot be more than 4 weeks equivalent of any occupancy fee payable.
2. a grantor must not require or accept more than 1 security deposit.
3. A security deposit must be lodged with the Territory. If it is lodged, the same provisions under Part 3 of the Act (discussed below) apply. These provisions normally apply to bonds deposited under a residential tenancy agreement.

• Deductions from security deposits – section 71EE 1 A grantor may deduct from the security deposit the reasonable cost of repairs to the premises (other than damage caused by fair wear and tear), the reasonable cost of securing the premises if the occupant fails to return the keys (such as the cost of changing locks or keys) and any occupancy fee or other amount owing and payable under the occupancy agreement.
• Receipts for payments - section 71EF 1 The grantor must also keep a record of all payments received from the agreement and provide a receipt of payment to the occupant if a payment is more than $75.
• Occupancy rules, fees, charges and penalties – section 71EG 1 a grantor must include certain information in an occupancy agreement, such as: i. Any occupancy rules that applies to the premises;

ii. Any penalty that may apply for a breach of an occupancy rule;

iii. Any penalty, fee or charge that may apply if the occupant terminates the agreement before the end of the agreement;

iv. Any other fee or charge payable under the agreement (such as the weekly occupancy fee or a stated share of a utilities bill.

1. If the grantor wishes to change an occupancy rule in the agreement, increase (or introduce) a fee, charge or penalty payable under the agreement, they must give the tenant at least 8 weeks’ notice. If a grantor gives such a notice, the occupant is entitled to terminate the occupancy agreement by giving 2 weeks’ written notice to the grantor before the end of the 8 weeks’ notice).
2. The grantor must also give reasonable notice to the occupant about imposing a penalty for breach of an occupancy rule included in the agreement

• Occupant’s access to the premises – section 71EH 1 A grantor must also give the occupant 24-hour access to the occupant’s part of the premises and a toilet and bathroom and access at reasonable times to shared facilities (as far as reasonably practicable).
• Providing information to occupants about dispute resolution processes – section 71EI
• Entry into premises by grantor – section 71EJ 1 The grantor must ensure the occupancy agreement sets out under what circumstances the grantor may enter the premises and the relevant kind of notice and notice period the grantor must give to the occupant prior to entering the premises (section 71EJ). If it not practicable to give prior notice, the agreement must state that notice must be given after entering the premises if, for example, there were reasonable concern about an imminent risk to the welfare of the occupant, another person or of property damage where the occupant cannot be contacted
• Termination of occupancy agreements – section 71EK
• The ACAT’s power to issue warrants for eviction – section 71EL
• What happens when an occupant abandons a premises – section 71EM

The resolution of occupancy disputes is covered under Part 6 of the Act and gives ACAT exclusive jurisdiction to hear and decide any matter or dispute arising under the occupancy and occupancy principles. If there is a dispute in relation to an occupancy, the Act clearly states that the ACAT must have regard to the occupancy principles.

For more information about occupancy agreements, see the ‘Occupancy Agreements’ factsheet on the Tenancy Advice Service website.

What is in a tenancy agreement?

A tenancy agreement is the agreement that permits a tenant to reside in the premises as a home for value. A tenancy agreement can be in writing, oral or implied. Even if the tenancy agreement is oral or implied, the Standard Residential Tenancy Terms (SRTT) are deemed to apply to it.

A tenancy agreement:

• automatically contains the SRTT by law;
• may include a 'break lease clause' and/or a 'fair clause for posted people';
• may contain any other terms agreed between the parties that are consistent with the SRTT;
• may contain agreed terms that are inconsistent with the SRTT only if those terms have been endorsed by ACAT and consented to by the tenant(s) and lessor(s).

A 'break lease clause' is a clause that limits the amount of compensation a tenant must pay if they terminate a fixed term lease early. A 'fair clause for posted people' permits a party to terminate a tenancy, whether fixed term or periodic, by giving the requisite notice if the lessor is posted to Canberra or the tenant is posted away from Canberra.

A term is consistent with the SRTT if the term does not reduce the rights of a tenant when compared to those provided in the SRTT. Following the case of Toora Women's Inc v Various Tenants [2020] ACAT 2, a term will usually be deemed by ACAT to be inconsistent with the SRTT if it impinges on the following protected attributes which are established by the SRTT--

1. The exclusive right of possession of the premises, including to the exclusion of the lessor. This includes the right to determine who can, and who cannot, come upon their property and when. The legislation significantly limited when and how the lessor could enter the premises.
2. The quiet enjoyment of the premises as a home. This requires restrictions on the lessor's power to intervene in or dictate the tenant's activities in the premises, consistent with it being the tenant's home and the human rights of the tenant.
3. The rent payable and how and when the rent could be increased.
4. The security of tenure, involving the circumstances and manner in which a tenant could be evicted.

A prospective tenant should carefully consider any extra terms that are included in a proposed tenancy agreement and only sign if they are happy to accept them. This includes 'explanatory notes' that some lessors (mostly operating through real estate agents) include in the terms. If these do more than clarify the SRTT, they are likely to be additional terms, and are void without ACAT endorsement. If a lessor publishes an advertisement for the lease of a residential premises with endorsed terms (or a requirement of the lessor’s consent to keep an animal on the premises), they must be included in the advertisement.

What is the length of a tenancy agreement?

A residential tenancy agreement can be for a specified period, generally 6 or 12 months. This is known as the fixed term. During a fixed term both parties are bound by the agreement and neither party can terminate the tenancy, unless the parties agree in writing to terminate the tenancy, there is a breach of the agreement or the ACAT permits the termination. However, a tenancy does not terminate at the end of the fixed term; it continues as a 'periodic tenancy'. A periodic tenancy is one that continues into the future until it is terminated by one of the parties. The rights to terminate a periodic tenancy are wider than just for breach of the tenancy agreement and are mostly contained in the Standard Residential Tenancy Terms (SRTT).

A tenant can terminate a periodic tenancy by giving 21 days’ notice, provided that notice expires at, or after the end of the fixed term (SRTT 88-89).

A lessor can terminate a periodic tenancy:

1. with no grounds, on giving 6 months' notice (SRTT 94); or
2. if the lessor, or an immediate relative of the lessor, or another person who the lessor has obligations to house genuinely intend to live in premises - 8 weeks (SRTT 96); or
3. if the lessor genuinely intends to sell the premises - 8 weeks (SRTT 96); or
4. if the lessor genuinely intends to reconstruct, renovate or make major repairs to the premises - 12 weeks (SRTT 96).

Are there any up-front charges?

The only charges that a lessor can impose on a tenant at the commencement of the tenancy are rent in advance and a bond. As noted below, a bond cannot exceed four weeks’ rent. The lessor generally cannot require more than 2 weeks' rent in advance (SRTT 28).

Section 18 of the Act makes it illegal for a lessor to require a holding deposit. If a holding deposit is paid, it can be recovered by the tenant. Other forms of payment for the giving of a lease, for example 'key money', a payment for preparing a tenancy agreement and the like are also illegal.

What is a bond?

A bond is a payment by the tenant to secure the tenant's compliance with the terms of the residential tenancy agreement. A bond must be paid to and held by the ACT Revenue Office. A tenant must not use the bond for the payment of rent. A bond is to be refunded at the end of the tenancy. However, the lessor is entitled to claim from the bond the following under section 31 of the Act:

1. the reasonable cost of repairs to 'the premises';
2. the reasonable cost of securing the premises (e.g. replacing keys or rekeying the premises if the tenant does not return the keys);
3. any rent outstanding at the end of the tenancy;
4. the reasonable cost of replacing the fuel provided to 'the premises' (e.g. gas); and
5. any reasonable amount of legal fees incurred by the lessor in assigning the tenant's rights under residential tenancy agreement.

Tenants’ Rights - overview

In general terms, a tenant has the following rights under a residential tenancy agreement:

• to receive a copy of the proposed tenancy agreement to review prior to signing it;
• to receive a copy of the signed residential tenancy agreement within 3 weeks after it has been signed by both parties and received by the lessor;
• to have premises rented in a reasonable state of cleanliness and fit to live in;
• to occupy the premises for residential purposes without legal impediments;
• to be given rent receipts (unless rent is paid into a nominated bank account);
• to receive 8 weeks’ notice of any intention to increase the rent and to not have rent increases more frequently than every 12 months;
• to have quiet enjoyment and use of the premises - the lessor/agent must not interfere with the tenant's possession and use of the premises except to carry out agreed, lawful inspections;
• to receive 2 copies of a condition report on the state of repair or general condition of the premises, and of any goods leased with the premises, no later than the day after the tenant takes possession of the property;
• to have reasonable peace, comfort and privacy;
• to have reasonable repairs and maintenance done within 4 weeks of the lessor receiving notice of the need for repairs;
• to have urgent repairs carried out as soon as necessary upon the lessor receiving notice for the need for repairs, having regard to the nature of the problem;
• to request to keep an animal;
• to be given written notice of the lessor wanting to end the tenancy agreement;
• to allow the lessor access to the premises during the tenancy as provided by the law, the tenancy agreement, the Act, or an ACAT order;
• to receive at least 1 week’s notice of an inspection of the property, and to have the inspection take place with reasonable regard to the work and other commitments of the tenant and the lessor; and
• not to be evicted except under an ACAT order.

Along with their rights tenants also have responsibilities. They are:

• to pay the agreed rent on time and in full;
• to provide the lessor with the tenant's name;
• to not intentionally or negligently damage the premises or allow damage to occur;
• to notify the lessor if damage occurs;
• to pay for any damage caused by the tenant or their guests;
• to report the need for repairs or maintenance of the property;
• to leave the premises reasonably clean and in substantially the same condition as it was at the beginning of the term, minus fair wear and tear;
• to return 1 of the 2 copies of the condition report to the lessor within 2 weeks of receiving the condition report, either signed or endorsed with a signed statement from the tenant saying whether the tenant agrees or disagrees with the report;
• to only make modifications allowed under statute or with the lessor's consent;
• to comply with all applicable strata rules;
• to only use the property for residential purposes unless otherwise agreed in writing;
• not to use the property for an illegal purpose;
• not to interfere, or permit the interference with the quiet enjoyment of neighbours;
• not to leave the premises vacant for more than 3 weeks without notifying the lessor; and
• to provide the correct written notice when the tenant intends to leave.

For details about specific tenancy issues refer to the following sections:

Beginning a Tenancy - finding somewhere to live.

During a Tenancy - access and privacy; bond; making a complaint about a real estate agent; rent arrears; rent increases and reductions; repairs; sale of premises and mould.

Ending a Tenancy - ending a tenancy and breaking a lease; moving out; eviction in the ACT and defending and eviction.

Going to the ACT Civil and Administrative Tribunal - general information; an evidence checklist and search decisions and requesting reasons.

Resources and links - standard lease agreement; condition report; tenancy checklist; share housing booklet; information kits; frequently asked questions; and useful links.