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Slatter, Michele --- "Who pays for evictions?" [2003] AltLawJl 69; (2003) 28(5) Alternative Law Journal 220

Who pays for

Michele Slatter[*]

Evicting people from their homes harms everyone.

An increase in evictions

Each working day in South Australia, four families are forcibly evicted from their homes by bailiffs. The number of forced evictions doubled in the short period between 1997 and 2000. It has remained more or less stable, at 1000 per year or 2% of ending tenancies, since then. The Residential Tenancies Tribunal caseload also doubled over the same period.

Made curious by these statistics, I investigated them further with a geographer colleague who specialises in housing issues, Andrew Beer. For a first study, we were especially interested to examine the supply-side experience of the market and the statutory process. We were able to compile a 'snapshot' of bailiff-assisted evictions during the second quarter of2002, recording all bailiff call-outs during that period and then, using de-identified Tribunal data, profiling the tenancies involved and the process for eviction under the Residential Tenancies Act 1995 (SA). Bailiff-assisted evictions are, obviously, a worst case scenario. Most tenants move out long before that point if problems develop with the tenancy. Nevertheless it is the risk of the worst case that should be factored into management calculations. We were keen to see how the statutory Tribunal process was working in practice and where any costs lay. The results in detail can be seen in our report Housing Evictions in South Australia.[1]

This article summarises some of our main findings and reflects briefly on the 'costs' of eviction.[2]

The market context

The 2001 Census showed that about 25% of private dwellings in South Australia were rented. Public housing constituted 35% of the state's rental sector, the private market contributed 62% and community housing made up the remaining 3%. In addition to its role as housing provider, the South Australian Housing Trust (the Trust) also underwrites about 27% of the private rental market through its provision of bond guarantees to clients seeking private rental housing.

Data produced for us by the Department of Human Services indicates that real estate agents managed 73% of all private tenancies known to the Office of Consumer and Business Affairs in the year to June 2001. This statistic is a useful corrective to the image of the private rental market as an essentially amateur or 'cottage industry'. Across the nation the vast majority of landlords own only one property. [3] This is also true in South Australia where 73% of investors own only one property and a further 14% own two. The decision to invest by renting thus remains an individual and possibly 'amateur' decision. However, the day-to-d;1y management of those investments is predominantly in professional hands.

The other interesting aspect of the market we observed was the energetic marketing of landlords' insurance in South Australia. A new product with low premiums and generous cover is achieving considerable market share, according to the brokers. It is only available where property managers are employed. Its impact on the management of tenancies is yet to become clear, but the security it suggests could support investor confidence in rental investment.

The tenancies

During our study period 240 tenancies ended with the arrival of the bailiff.

Almost 90% of them were located in Adelaide, although only 75% of the state's population lives within the metropolitan area. There was some concentration in four postcodes in the northern suburbs, which together accounted for 27.5% of the sample. They correspond with areas of entrenched poverty identified in the Legislative Council's 2003 Report on Poverty. These are also areas with a traditionally strong Trust presence where a substantial proportion of the public housing stock has recently been sold into the private market.

Nearly all the tenancies in the sample ended because of rent arrears: over 90% of the possession actions studied were brought on this ground. Where the option of an arrears action is available, the relatively straightforward proof makes it attractive to landlords and agents, even where there are other problems between landlord and tenant. 'Behaviour cases' on the other hand, which constituted just 3% of the sample, are much more difficult to prove and are costly in terms of time, emotion and uncertainly.

The sample included public, private and community tenancies. Public tenancies, at 17% of the total, were under-represented. Since 2000 the Trust has minimised its use of eviction, using it now only as a last resort. Instead, it deploys pro-active early intervention strategies designed wherever possible to support tenants in sustaining 'successful tenancies', keeping them housed and addressing the underlying problems that can result in tenancy failure.[4]

Over 80% of the tenancies involved had rents of$150 per week or less, putting them in the lowest quartile of rents. Only two had weekly rents of more than $250. Of the private tenancies, 58% had bond guarantees provided by the Trust. This is a significant over-representation: Trust guarantees support 27% of the state's private rental tenancies overall. If we aggregate all Trust customers, those assisted by a guarantee and those housed by the Trust, they represent approximately 60% of the tenancies in the study, a considerable exposure for the Trust. By definition all these will be low-income households. They may have other needs or issues to address as well as restricted means. Those with guarantees may well be on the Trust's wait list. Before the changes in federal policy which have resulted in the reduction of public housing, such customers might well have secured Trust accommodation, with the support, management practices and income-linked rent that that entails.

Perhaps most disturbingly, we noted that the tenancies ending in bailiff-assisted eviction were ending remarkably quickly. Overall, the median length of the tenancies in the sample was eight months. The median for Trust tenancies was 26 months, no doubt reflecting the management policies of the Trust, including attempts to sustain the arrangements. The median for private tenancies with a bond provided by the tenant was eight months. Private tenancies with a Trust bond guarantee, however, were lasting only six months from moving in to being moved out.

The precariousness of these fleeting arrangements is further underlined when we notice that one-third of the tenancies in the sample had already been into the Tribunal on one or two previous occasions, also because of rent arrears. Those hearings had resulted in conditional orders for possession, with repayment schedules included to ensure the gradual payment of rent and existing arrears. In other words, many of these tenancies were stumbling early and some appear to have stumbled from almost the first step.

The profile of the tenancies ending with forced evictions shows considerable strain in the lower end of the rental market. It suggests that some very vulnerable tenants are now finding themselves in the private rental market while lacking the skills, abilities or finances to sustain a tenancy. Given the eligibility criteria for Trust bond guarantees, this is not surprising. One of the criteria for eligibility is that the rent in prospect will amount to between 40% and 65% of their income. Since housing stress is generally reckoned to exist if rental housing costs are more than 30% of the income of low-income tenants[5] these applicants are, by definition, in extreme housing stress. In addition, some tenants may have special needs. Others, for example, very young tenants, who constitute a significant proportion of the Trust's waiting list, may have extremely limited life skills.[6] Such tenants can fall out of the rental market through eviction and into homelessness[7] very quickly and easily.

The process

South Australia's Residential Tenancies Act 1995 confers exclusive jurisdiction over 'residential tenancy agreements' on the Residential Tenancies Tribunal. Where a landlord wishes to terminate a tenancy and retake possession, the Act provides a regulatory structure and process. If the problem is rent arrears, the landlord cannot serve notice of termination on the tenant before rent is 14 days in arrears. The tenant must then be allowed at least seven days to remedy the breach but, should this not occur, possession will be due and if it is not offered, the landlord may lodge an application with the Tribunal for an order for possession of the premises: ss 80, 93. It is not lawful to re-enter without the authority of such an order: s 95. The Act imposes a rhetorical 'duty to act expeditiously' on the Tribunal: s 21 states that it 'must, where practicable, hear and determine proceedings within 14 days after the proceedings are commenced and, if that is not practicable, as expeditiously as possible'. Section 93(3) permits the Tribunal to allow the tenant up to seven days grace after the order for possession has been made for them to move out. However, if they are still in occupation after the appointed day, the landlord or agent may immediately request the assistance of a bailiff of the Tribunal to enforce the order.

For convenience, this process can be summarised diagrammatically as follows:

Problem/default- termination notice - lodgement-hearing/order­ possession date - bailiffs

When a tenancy is terminated for arrears of rent, a minimum of three weeks rent will be owed before the landlord or agent can make an application to the Tribunal (14 days arrears to trigger termination notice plus seven more days to remedy before application is possible). Landlords have pointed out that the Act restricts the amount of security bond that can be required to the equivalent of four weeks rent for low rent tenancies: s 61(3)(a). If the bond were to cover their rent losses in forced eviction cases, not only would each notice have to be served with punctilious promptness but the entire Tribunal process from lodgement to bailiff call-out would have to occur within seven days. This seems totally impossible. The statutory provisions, the incidence of weekends and public holidays and the realities of caseflow management in a busy forum all militate against it.

We were, therefore, interested to see how much extension of the timetable occurred at each stage. How far did non-working days extend the process beyond the protection offered by the bond? Did landlords or agents act immediately 14 days arrears had built up? How long did it take after lodgement for the Tribunal to hear a case? How much time were tenants given to organise their departure? Did the landlord or agent call for the bailiffs immediately they were entitled to assistance? Landlords, the Tribunal and the calendar could all contribute to the total length of these proceedings. We were keen to track what was happening and what implications that had for management costs. The confidentialised Tribunal files provided data for this. They also gave us an insight into parties' participation and engagement with the process which itself raises questions for further investigation.

In the Tribunal, approximately 80% of private rental cases were presented by an agent. If we add to this the Trust cases, presented by professional Trust officers, landlords were professionally represented in 89% of all the cases in our sample. Agents are 'repeat players'[8] who appear frequently, are familiar with the Tribunal's culture, procedure and environment and have the advantage of professional distance from the impact of the case.

Only 25% of tenants overall appeared at hearings or made any other contact with the Tribunal. Analysing this by sector, the proportion of Trust tenants who appeared was higher, at 33%, while private tenants appeared for only 23% of hearings. This low degree of engagement echoes the experience of other jurisdictions.[9]

Investigation of the reasons for tenants' non-participation were beyond this initial study. However, it did surprise us that in a state where the 2001 Census recorded over 150 languages other than English being spoken at home, only three interpreters appeared in the study cases and all were acting for landlords. It was also notable that a tenant representative appeared in only one hearing. Representation in the Tribunal by a non-lawyer agent is permitted in certain circumstances by s 113(3) of the Residential Tenancies Act 1995. Representation by a lawyer as of right is permitted if the other party is represented by a lawyer or agent. This would allow 89% of these tenants legal representation as of right. The reality, however, is that three-quarters of tenants did not engage with the process at all. The expense of legal assistance would be prohibitive making this a merely illusory right, especially for tenants in the low-end of the market. The Act, currently under review, needs to be revised on this point and steps taken to remedy the absence in South Australia of a tenants' support service available to all tenants. Research from other jurisdictions has demonstrated the importance of tenants' participation.[10] In one Victorian study, appearance at the hearing was shown to improve the tenant's chance of avoiding eviction ninefold. A high profile, well-publicised service dedicated to tenant's needs would be easy for tenants to find or be referred to. It could empower tenants to appear, with or without support. It should also provide linkages to other specialist services whose expertise might assist tenants to address the variety of issues which may undermine the stability of their tenancies.

The length of the Tribunal process is affected by two major factors: the occurrence of non-working days and the promptness with which the parties and the Tribunal operate the statutory framework.

'Behaviour' cases were dealt with as 'urgent' or 'emergency' cases and processed extremely promptly by landlords/agents and the Tribunal.

In the 'arrears' cases, landlords and agents generally tended to move quite promptly in using the Act. Often any apparent delay was caused by non-working days: the Tribunal is not open at weekends or on public holidays. The exception was the initial step, formalising the tenancy problem into a dispute for the Tribunal. In most cases, the notice of termination was not served until approximately 28 days rent was owing, rather than when the statutory 14 days arrears had accrued. Most actions, therefore, were formally initiated when the arrears were already equal to the bond. This could be because of attempted negotiation, pure optimism or simple inefficiency. Whatever the cause, it would increase the landlord's loss on the tenancy when the tenant did not move out before the bailiff is called.

The Tribunal also was found to operate fairly promptly, remembering the Act's exhortation to hear matters within 14 days of lodgement 'where practicable'. Some 78% were heard within 14 days of lodgement and 90% were heard within 18 days of lodgement (the equivalent of 14 working days). The Tribunal allowed tenants time to prepare to move: 96% of orders included up to seven days' grace at that point and nearly all of these included a weekend or public holiday.

Taking all these periods into account, most cases took about eight weeks from the tenant's initial default on rent to the arrival of the bailiffs.

The financial costs

The Tribunal does not charge lodgement fees, nor does it charge private landlords for the assistance of the bailiffs.

In 219 of the 240 cases in the study, the amount of rent owing at the date the bailiffs arrived was more than four weeks rent. For private rental tenancies this means that the security bond would not have been sufficient to cover the rent arrears. The Trust, which does not take bonds, had noticeably higher debts, reflecting primarily its management options and, to a small extent, slightly longer delays at each point of the statutory process.

Most of the cases in the sample would have required the equivalent of a second security bond to cover the arrears accrued by the time the bailiffs evicted the tenant.

These calculations do not take account of any losses other than rent arrears. Such claims did not form part of the possession actions and were not documented in the Tribunal data we were using. Claims for additional costs such as cleaning, water or damage would be made in separate Tribunal applications after possession had been secured. All estimates of cost, or loss, to landlords should therefore be treated as conservative estimates. It should, however, be mentioned that interrogation of the case files disclosed no evidence in this sample of major damage claims additional to the arrears of rent on which most applications were based.

The changed private rental market

Since the first Australian Residential Tenancies Act was passed, in South Australia in 1978, several radical changes have affected the private rental market in Australia. The changes have been gradual and unheralded but their impact is now becoming evident. Whereas renting in the private market was typically a tenure of transience, en route to home ownership, people are now remaining renters for longer. A growing proportion of low- and middle-income earners are renting for periods of over ten years, whether continuously or as 'returners'. At the same time, rates of home purchase have been slowing for over a decade and the supply of public housing has been reduced. The federal government has, during the same period, shifted from funding 'bricks and mortar' state housing to providing rent subsidies through Commonwealth Rent Assistance. This shift embodies a de facto policy of reliance on the private rental market to house low-income tenants, reflecting a belief by policy makers in Canberra that the supply of housing is adequate and the private rental market functions efficiently even for low-income households. [11]

However, the increasing polarisation of income in Australia is evident in the private rental market, as elsewhere. The result is that we now have 'two distinct sub-markets, a largish and relatively successful sector of choice for those who have adequate incomes and a sizeable low-cost low-income sector for those who cannot access anything more affordable or appropriate'. [12] The incidence of 'housing stress' in the private rental market has increased: 44% of 'poor' households (the lowest two income quintiles -40% of the population) are now renting in the private rental sector. [13] At the same time, research shows that the supply of low cost private rental has declined significantly across Australia. The supply of rental housing in total has increased but the lower end of the market has contracted. [14] The growing concern about the shortage of affordable housing suggests some (late) recognition that demand-side responses are not adequate without some expansion of supply.

Thus, federal policy has silently accorded the private rental market a new importance. Fewer purchasers and less public housing mean more households have to compete for its accommodation. Some people are now opting to rent for lifestyle reasons. However, at the lower end the sector is being required to accommodate a large proportion of very precarious tenancies. These tenants are not really there by choice: if they could buy they would[15] or if long-term public rental were available they would opt for that. Many of these households may have special needs, in addition to affordability problems. Many of them are on state housing wait lists. Landlords understandably feel that 'the government expects us to both run a business and act as social workers'.[16] Despite efforts to research the provision of affordable housing and a variety of initiatives to mitigate social exclusion, it is difficult to see any improvement in the private rental sector in the short or medium term. Unless decisions are taken by states to use pro-active strategies to help sustain these precarious private rental tenancies where possible, the number of evictions will continue to rise. Just how far state involvement should and can go is uncertain. However, as noted at the beginning of this article, states already underwrite the private rental market extensively by means of the private rental assistance scheme, with bonds and emergency rent payments. Arguably it would be more efficient to assist tenants to sustain their tenancies than to pay their debts when they are evicted.

Who pays for evictions?

Private landlords pay. The study shows that in South Australia, when the tenant remains in occupation until the bailiffs arrive, the landlord will be out of pocket by at least the equivalent of a second bond. There will also be vacancy and reletting costs and possibly other debts and expenses such as cleaning and repairs. There are also management fees to sustain through all of these transactions for the majority of tenancies.

On the other hand, forced evictions represent only 2% of terminations. Only 10% of terminating tenancies result in Tribunal cases of any sort. The Tribunal process in South Australia, including the bailiffs' assistance, is free to private landlords. Furthermore, landlords are increasingly managing their risk with insurance.

The insurers pay. Landlords' insurance is not new. However, we were impressed by the energy with which one new product is being marketed. It gives broad protection for a very modest premium ($130 per year) if a property manager is employed. The brokers concerned claim to have covered most of the market. This suggests a 'businesslike' approach by landlords (or agents), a recognition of risk and, from the premiums, a sense that the extent of the risk is not inordinately great. The impact of widespread insurance on the market dynamic is yet to be seen.

The South Australian Housing Trust pays. The study showed a disproportionately high number of tenancies supported by Trust bond guarantees among the forced eviction sample. In the seven financial years July 1995-June

2002 the Trust's Private Rental Assistance program paid off customer debt to private landlords to the value of $27 million, an average of $4 million per year, some bf which will be repaid by customers. This was through bond guarantees paid out to landlords and exceptional needs payments to customers for rent in advance and rent in arrears. Work currently under way with Trust tenancies[17] may suggest more constructive ways of spending this money, to help keep customers in their private tenancies rather than helping them in and out of the market.

Tenants pay for evictions in three major ways. First: monetarily. It is the interest from their bonds that pays for the operation of the Tribunal, including the cost of bailiff call-outs! Second, lost bond guarantees are technically debts to the Trust and the tenants will be ineligible for further Trust assistance until the debt is repaid, at least in principle. Lastly, tenants pay dearly through the personal, social, health and welfare price exacted from them and their families by frequent forced moves. The study showed how quickly tenancies were ending by forced eviction. Studies here and overseas[18] have indicated how an absence of stable housing can produce lasting adverse impacts on tenants' physical, mental and emotional health, educational prospects, behavioural development, employment opportunities and social inclusion. These are costs that should never be imposed.

We all pay Tax and ratepayers will be paying for the results of instability and homelessness, whichever departmental silo they are charged to, whether it is Health, Education, Employment, Justice, Corrections or 'Welfare'. As citizens, we will all be paying the opportunity costs of a damaged society. Until the structural issues of poverty and the need for affordable, appropriate and secure housing are addressed, these costs will continue. Everyone pays for evictions.

[*] Michele Slatter teaches law at Flinders University, Adelaide.


© 2003 Michele Slatter (text)

© 2003 John Lynch (cartoon)

[1] Michele Slatter and Andrew Beer, Housing Evictions in South Australia: A Study of Bailiff-Assisted Evictions (Australian Centre for Community Services Research, Adelaide, 2003). For further details contact:

All the statistics quoted in this article are taken from the Report. The study was made possible by a University Industry Collaborative Research Grant, no 2001-0490, jointly supported by Flinders University and the South Australian Housing Trust. I would also like to acknowledge the invaluable contribution of our Research Assistant, Maria Scheffer, who was primarily responsible for collecting and collating the file data on which our Report is based.

[2] We are currently designing and negotiating a second, parallel, study to focus on the experience of evictees.

[3] Australian Bureau of Statistics, Household Investors in Rental Dwellings Australia, June 1997 (Cat No 8711.0 1998).

[4] For a discussion of these initiatives, see Anne Gale, 'Successful Tenancies: Stopping the Revolving Door' (Paper presented at the Third National Homelessness Conference, Brisbane 6-8 April 2003)



> at 29 September 2003.

[5] National Housing Strategy, National Housing Strategy: Agenda for Action (1992) 32.

[6] Jane Roland, Round my Place, 2000.

[7] It is estimated that 46% of South Australia's Supported Accommodation Assistance Program (SAAP) clients come directly or indirectly from tenancies. They may well not wait until the bailiffs appear but they are nevertheless not sustaining their tenancies: see Homeless People in SAAP: SAAP NDC Annual Report 2001-2 South Australia (SAAP National Data Collection Agency (NDCA) Report Series 7, Australian Institute of Health and Welfare cat no HOU 77, Melbourne, 2002) Table 8.1.

[8] Marc Galanter, 'Why the "Haves" Come Out Ahead: Speculation on the Limits of Legal Change' (1974) 9 Law and Society Review 95.

[9] Tenants Union of Victoria, Evictions 1988 (1988); Jennifer Ramsay, Early Intervention Pilot Project Final Report (Centre for Equality Rights in Accommodation, Ottawa, 2000).

[10] Ibid.

[11] See Blair Badcock and Andrew Beer, Home Truths, Property Ownership and Housing Wealth in Australia (2000) for an excellent overview of these changes, particularly in Chapter 8.

[12] K Hulse and T Burke, 'Social Exclusion and the Private Rental Sector: the Experiences of Three Market Liberal Countries' (Paper presented at the European Network on Housing Research 2000 Conference, Gävle, June 2000).

[13] T Burke, 'Housing and Poverty' in R Fincher and J Nieuhenhuysen, Australian Poverty: Then and Now (1998) 27.

[14] J Yates and M Wulff, 'W(h)ither Low Cost Private Rental Housing?', (2000) 18(1) Urban Policy and Research 45.

[15] Scott Baum and Maryann Wulff, Housing Aspirations of Australian Households: Positioning Paper (Australian Housing and Urban Research Institute, Melbourne, 2001) 5.

[16] National Key Centre for Research and Teaching in Social Applications of Geographic Information Systems, Adelaide Drivers of Contemporary and Future Housing Demand in Adelaide and Outer Adelaide (Department of Human Services, Adelaide, 2000) 6.4.

[17] For descriptions of strategies trialled by the Trust see Michele Slatter and Mary Crearie, 'Successful Tenancies: From Public to Private' (2003) 7 Flinders Journal of Law Reform (forthcoming); Anne Gale, above n4.

[18] Chris Chamberlain and Guy Johnson, Early Intervention: a Research Paper Prepared for the Victorian Homelessness Strategy (Department of Human Services, Melbourne, 2000); Alison McBrearty and Lori-Anne Bradley, Voices: Experiences of Eviction in Ottawa (Centre for Equality Rights in Accommodation, Ottawa, 2000); Peter Phibbs, 'Housing Assistance and Non-housing Outcomes' (Paper presented at the National Housing Conference, Brisbane, September 2001).

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